At a press conference on April 8, Italian Prime Minister Mario Draghi revealed new information on the deployment of economic security measures that his two-months-old government has been actively using to target strategically sensitive deals involving Chinese actors.
What you need to know:
- The measures are based on the “Golden Power Law,” which governs Italy’s investment screening regime. The law grants the government special powers to intervene on national security grounds in private business activity in multiple sectors including finance, energy, telecommunication, robotics, semiconductors or cybersecurity. The government is considering broadening the applicability of the measures to the automotive and steel sectors.
- So far Draghi’s government has used its “golden powers” to impose conditions on the following two 5G equipment procurement contracts and to block one takeover:
- March 11 – purchase of 5G network components from ZTE and the Taiwanese company Askey by the Italian telecommunications company Fastweb. The same company was barred from purchasing 5G components from Huawei in October 2020.
- March 25 – purchase of standalone 5G equipment from Huawei and ZTE by an Italian telecommunications company Linkem.
- March 31 (according to reporting) – acquisition of a 70 percent share in LPE (components for power electronics applications) by Shenzhen Investment Holdings. The related decree cites notes from the European Commission, Sweden and Holland suggesting wider European coordination.
Quick take: National and economic security appears to be one of the driving factors of the new government’s China-related agenda. With the active deployment of “golden powers”, the government is delivering on its promise to keep Italy’s digital transformation on a European track, thereby impacting Chinese operations. Another indication of how the new government intends to approach China will be its handling of the, now postponed, parliamentary vote on a memorandum on human rights abuses in Xinjiang, which some of Draghi’s coalition partners call to be labeled a genocide.