Italy: Biopharma, automotive and telecoms sectors are facing China’s technological power

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By Aurelio Insisa, MERICS (formerly Istituto Affari Internazionali), and Francesca Maremonti Research Fellow, IAI

China’s capacity to innovate and lead in high-added-value industrial sectors is a critical element of its technological power, alongside its unparalleled strength in ensuring high-volume and cost-competitive manufacturing in traditional industrial sectors.¹ According to Goldman Sachs forecasts, Italy is one of the countries that will suffer most from the impact of Chinese industrial plans for the 2026-30 period, together with Mexico, the CEE-4 group, and Germany.²

China’s rise as a tech power poses two fundamental questions to Italian institutions and private actors. First, should Italy continue cooperating with Chinese players in sectors where China’s innovation capabilities could further diminish Italy’s already declining global share in high-tech manufacturing? Second, should Rome grant access to the Italian market to Chinese players capable of innovating in strategic sectors?

This second question presents two alternatives. The first leads to accepting the emergence of technological dependencies on Beijing and the security implications tied to these dependencies. The second entails absorbing the financial burden of selecting more expensive (and potentially less performant) players, while also risking turning the country into a technological backwater vis-à-vis other competitors more willing to engage with China.

To examine these dynamics and the choices made on the ground by Italian institutions and industrial actors, this chapter zooms in on three industrial sectors that are being profoundly reshaped by Chinese industrial capabilities: (1) biopharma, (2) automotive – focusing on electric vehicles (EVs) and autonomous driving technologies, and (3) information communication technologies (ICT) – focusing on 5G and the incoming 6G technological standard. These three sectors are subject to the Italian government’s “special powers” over critical technologies, enabling direct intervention in the governance of companies operating in these areas.³ Furthermore, these sectors exemplify three different dimensions of the technopolitical challenge facing Italy. The Italian biopharma sector is one of the most dynamic and innovative in the country’s industrial fabric, while the automotive sector is experiencing a profound crisis, if not a terminal decline. When it comes to ICT standards – and specifically 6G – instead, Italian companies and institutions play a marginal role in their development.

The rest of this chapter proceeds as follows. Three sections respectively cover biopharma, automotive and 6G. The conclusion sums up findings, assessing them in the context of recent developments in the Italy-China bilateral relations.

Biopharma: Italian companies struggle to compete with Chinese counterparts

The Italian biopharma sector is one of the most dynamic in the country’s stagnating industrial landscape, accounting in 2025 for US$ 15 billion in revenue, and employing 29,000 people in 178 companies.⁴ Against this backdrop, Italy’s Ministry of Foreign Affairs and International Cooperation (MAECI) led a working group with institutions and private players to enhance the international competitiveness of the national biotechnology industry – including the biopharma sector – between 2024 and 2025.⁵

The working group devised an operational plan aiming at identifying pathologies critical for national security, the emerging biotechnologies to treat them, and national companies capable of developing such technologies. These steps, in turn, are designed to support these national champions in their investments in R&D with the help of dedicated growth funds and eased interaction with venture capital, enhance their visibility abroad through public diplomacy initiatives, and finally support them through the national research infrastructure to facilitate their upscaling at an international level.⁶

An interview with a leading executive figure in the Italian biopharma sector, however, suggest profound disappointment with these efforts. Criticism focuses on the broad-brush distribution of ultimately meagre funding to a broad number of small and medium enterprises without the ability or political will to identify a small number of enterprises capable of being competitive at the international level.⁷ More broadly, industry leaders remain concerned about Italy’s inability to create an ecosystem capable of letting local companies compete against rising Chinese counterparts that are spurred by massive state subsidies for R&D.⁸

This situation, however, has not resulted in a systematic pivot towards Chinese capital or forms of cooperation with Chinese biopharma companies. Two factors in particular stop major Italian players from deepening engagement with China’s biopharma industry. The first is the inclusion of biotechnologies within the perimeter of its extensive, government-led FDI-screening mechanism, known as “golden power”, which, even in the absence of explicit red lines, deters Italian players from seeking Chinese investment. The second argument is US securitisation of relations with China – in a context where major Italian players in the field rely on US venture capital and primarily export to that national market.⁹

These concerns have indeed become even more pressing following the enactment of the BIOSECURE Act in December 2025. The Act prohibits US federal agencies from contracting with pharmaceutical companies that use “biotechnology equipment or services” provided by “biotechnology companies of concern” (BCC).¹⁰ While major Chinese biopharma players, including industry leader WuXi AppTec, are currently not listed as BCCs, the Act provides a legal platform to enable their ban in the near future – especially considering pressure from the Pentagon to blacklist such companies.¹¹ The exclusion of Chinese bio-pharma players from the US market, in turn, would potentially favour Italian companies operating in a national and supranational (EU level) ecosystem unable to match PRC state subsidies.¹²

This notwithstanding, research cooperation between Italian and Chinese institutions in the biopharma sector has moved forward within the framework of the Italy-China Action Plan to Strengthen the Global Strategic Partnership,¹³ with the establishment in November 2024 of the China-Italy Joint Laboratory of Pharmacobiotechnology for Medical Immunomodulation founded by the Shenzhen Institute of Advanced Technology (SIAT) and the Institute of Translational Pharmacology of Italy’s National Research Council (CNR).¹⁴

Automotive: Cooperation versus competition in EVs and autonomous driving

The automotive sector, historically central to Italy’s industrial development, has been sharply contracting since the 2000s, perhaps entering a phase of terminal decline since the 2010s,¹⁵ just as Chinese manufacturers reshape the global industry.¹⁶

How is Italy responding to Chinese looming dominance in EV manufacturing? Italy was one of the ten EU member states that voted in favour of the introduction of countervailing duties on made-in-China EVs in October 2024.¹⁷ Prior to the vote, Italian authorities conducted talks with PRC state-owned carmaker Dongfeng for establishing an EV factory in the country, but Chinese conditions for the investment were ultimately deemed unacceptable, given Beijing’s request to vote against the proposed countervailing duties and to provide wider access to Huawei in Italy’s telecommunications infrastructure.¹⁸

Against this backdrop, authorities have been primarily concerned with guaranteeing a future to the Italian automotive industry by preventing the multinational group Stellantis (owner of brands such as Fiat, Peugeot, Citroën, and Opel) from further shrinking or fully delocalising production away from Italy.¹⁹

In 2024, Stellantis announced a new industrial plan aiming to revive manufacturing in the country, yet Italy has not been included in the strategy of selective engagement with Chinese players that Stellantis is pursuing to maintain global competitiveness. The group chose Poland for its ultimately short-lived cooperation with Leapmotor to produce the T03 battery electric city car,²⁰ selected Spain for its new battery factory in partnership with CATL,²¹ and picked Luxembourg to start its cooperation with Pony.ai to jointly test and develop autonomous vehicles.²²

Autonomous driving technology, in fact, has been playing a central role in what is arguably the most consequential dossier in current Sino-Italian relations: Pirelli, a global leader in tyre manufacturing with a Chinese relative majority shareholder, state-owned enterprise (SOE) SinoChem. According to Italian sources, SinoChem became more assertive in Pirelli’s governance following a new shareholder agreement reached in 2022.²³ SinoChem’s assertiveness, in turn, pushed the Italian government to intervene in Pirelli’s governance using its “golden power” in 2023, severely limiting its shareholder rights, including involvement in strategic planning, operational strategies, and R&D.²⁴

Crucially, the Italian government justified its decision by referring to Pirelli’s development of its upcoming Cyber Tyre technology. This technology uses sensors to collect data on road configurations, geolocations, and infrastructure. The data is transmitted to cloud systems where AI creates complex digital models for applications like smart cities, digital twins, and autonomous driving.²⁵ Rome’s decision meant a considerable extension of the “golden power” perimeter, originally focused on defence, national security, and critical infrastructure.²⁶

While the turmoil within Pirelli traces back to the internal tug-of-war between Chinese and Italian leading shareholders, the US securitisation of relations with China played a decisive role. SinoChem’s majority shareholder position, in fact, threatened Pirelli’s access to the critical US market, in light of the Department of Commerce’s Bureau of Industry and Security’s final rule Securing the Information and Communications Technology and Services Supply Chain: Connected Vehicles, which has banned Chinese-backed hardware and software interacting with US cars since March 2026. Consequently, The company initiated Cyber Tyre production at its Pirelli Tire LLC facility in Rome, Georgia to provide carmakers with a compliant U.S. supply chain.

Reporting in January 2026 stated that Italian authorities and shareholders within Pirelli, also responding to US requests, were mounting pressure on SinoChem for its divestment from the company.²⁷ In response, SinoChem proposed to spin-off Cyber Tyre from the parent company, a move that was rejected by the board in February.²⁸

ICT: Joint research with China on 6G, halted deals on 5G

Italian ICT companies and institutions are expected to play only a marginal role in the standardisation and production of the forthcoming 6G standard of cellular network technology. Italian research institutions have in fact been involved in 6G research – focusing on internet-of-things networks – as early as 2020, with the establishment of a Joint Innovation Centre (JIC) between Huawei and WiLab, the wireless communication laboratory of the National Inter-University Consortium for Telecommunications (CNIT).²⁹ While the agreement with Huawei will last until 2030, the JIC has operated in a heavily constrained environment since its establishment in 2020.

5G technology was included within the perimeter of the Italian government’s “golden power” in 2019.³⁰ Successive deals between Italian telecommunications companies and Huawei and ZTE were then either stopped (in 2019) or subjected to severe limitations (in 2021).³¹ Furthermore, regulations concerning the provisions of 4G and 5G technologies, as well as their future iterations, were further tightened in 2025.³²

Expert interviews suggest, however, that the securitisation of 5G technology, in turn, has had a profound impact on the landscape of telecommunications technology in Italy. Even without a formal ban, national players cannot buy Huawei and ZTE 5G equipment, yet they receive no state subsidies to make up for the higher costs of European and US suppliers, discouraging overall investment in ICT. As a result, only 2% of Italian territory had “standalone” 5G coverage as of 2025.³³

However, the development of next generation 6G technology will likely not provide a clean slate for Italy and the EU. The international consortium responsible for defining the 6G standard, the 3rd Generation Partnership Project (3GPP), has started to work on the earlier phases of the standardisation of 6G in March 2025. Among the 811 individual members of the consortium, only six are Italian: telecommunications companies Fastweb (owned by Swisscom), TIM and FiberCop (both majority-owned by the U.S investment company KKR), the defence industry giant Leonardo, the Ministry of Enterprises and Made in Italy (MIMIT), and the University of Bologna. In contrast, 3GPP counts 179 Chinese members and two Hong Kong members.³⁴

In addition, interviews with figures in the sector highlight the lack of meaningful interactions between research institutions and telecommunications companies on one side, and Italy’s MIMIT and Ministry of University and Research (MUR) on the other, and of strategic direction from these respective ministers, as well as the lack of an “institutional voice” by the MIMIT within the 3GPP.³⁵

Against this backdrop, the EU has issued an ambitious vision for the development of 6G technology, stating its aspiration to be both a standard setter and a “leading global provider”.³⁶ As of early 2026, Europe’s flagship research project on 6G is Hexa-X-II. The project, which succeeds the original Hexa-X 6G project, is led by Nokia, includes Italian telecommunication company TIM in the consortium, and does not see the participation of Chinese companies.

Expert interviews, however, point out that such projects have an “exploratory character” and cannot deliver on their own EU sovereignty over 6G technology, because China will play a dominant role in 6G standardisation independent of the EU’s plans to exclude Chinese companies. Furthermore, there is already an expectation that Chinese players will be eventually capable of delivering products performing better and at a cheaper cost than foreign rivals when 6G begins its roll-out by 2029.³⁷

Italy’s ongoing process of securitisation of its shrinking industrial base and its critical infrastructure within the broader context of transatlantic relations with Washington D.C. and of US-China relations shapes the country’s approach to China’s emerging leadership in technological innovation.

In the biopharma sector, Italian companies, while globally relevant, are facing encroachment by surging Chinese competitors spurred by massive state funding. Even though Italian authorities have recognised biotechnologies, and consequently the biopharma sector, as a key area for national security, and planned to support their presence in the global markets, national players still perceive these efforts as inconsequential. Against this backdrop, the US BIOSECURE Act, by opening a path for excluding Chinese companies from the most lucrative market in the world, may constitute a potential lifeline for Italian companies – albeit such a development would raise issues over the feasibility of current supply chains still relying on China.

In the automotive sector, production volumes continue to decline, and doubts persist about the relevance of Italian plants within Stellantis’ strategy. Yet these developments have not prompted a pivot towards China’s surging automotive industry. In fact, Rome refused Beijing’s request to link Chinese investment in EV factories to expanded access for Huawei and ZTE in Italy’s telecommunications infrastructure.

The government also limited the shareholder rights of Pirelli’s controlling company, SinoChem, after controversially placing the innovative Cyber Tyre technology – with implications for the development of autonomous driving – under “golden power” protections. Mounting pressure, allegedly including from the US, for SinoChem to divest entirely from the tyre maker further signals a hardline approach.

The same hardline approach is visible in the ICT sector, specifically in the governance of 5G technologies and in the initial steps for the development of the 6G standard, with severe constraints on Huawei and ZTE operations in Italy. However, this tight governance of critical infrastructure of the country has not resulted in a comprehensive national strategy to address either the consequences of restrictions imposed on Italian players in the provision of made-in-China equipment, or the implications of the likely Chinese dominance in future 6G technology notwithstanding the EU’s aspirations of technological sovereignty.

Against this backdrop, the public debate on the challenge of China’s emerging leadership in technological innovation has not really developed. In detail, what appears to be missing is a debate between political parties, corporate associations, and civil society organisations, possessing a range of different positions on Italy-China political and industrial relations, that is articulated in terms that are accessible to the general public. Rather, the issue has remained largely confined within the remit of legacy media with ever-diminishing audiences and framed within the broader problem of declining industrial production and foreign company acquisitions.³⁸

The only partial exception to this trend is the automotive sector. In this case, the growing presence of innovative yet affordable Chinese EVs on Italian roads has contributed to reshaping perceptions of what Made in China means nowadays.³⁹ However, even in this case, what is lacking is a broader participation in a debate over the wider implications of China’s industrial rise beyond the immediate benefit to the consumer.

Endnotes

1    | See: T. Cheung. China’s Competitive Model for Strategic Science, Technology, and Innovation  Development. Institute on Global Conflict and Cooperation. 2025.

2    | China’s Economy Is Forecast to Grow Faster Than Expected in 2026. Goldman Sachs. 21 November 2025. The CEE-4 group includes Poland, Czechia, Slovakia, and Hungary.

3    | Servizio Studi Camera dei Deputati. Disposizioni urgenti a tutela degli utenti, in materia di attività  economiche e finanziarie e investimenti strategici: D.L. 104/2023 – A.C. 1436 Parte I – Schede di lettura. September 2023: 49-57.

4    |  Il biotec in Italia 2025. Federchimica Assobiotec. 2025: 22, 27

5    | Italy’s Ministry of Foreign Affairs and International Cooperation. Tavolo di lavoro per l’internazionalizzazione delle industrie nel settore delle biotecnologie. April 2025.

6    |  Ibid.: 13.

7    |  Interview with leading executive figure in the Italian biotech sector. November 2025.

8    |  Ibid.

9    |  Ibid.

10    | B. McMillin, et al. The BIOSECURE Act Becomes Law in the United States: A New Era of Restrictions on Global Biotech Equipment and Service Providers. Arnold & Porter. 23 December 2025.

11    | A. Capacchio. Pentagon Cited Alibaba on China Military Aid in Oct. 7 Memo. Bloomberg. 26 November 2025.

12    | Interview with leading executive figure in the Italian biotech sector. November 2025.

13    | Government of Italy. Piano d’azione per il rafforzamento del Partenariato Strategico Globale  Cina-Italia (2024–2027). July 2024: 13.

14    | SIAT and Italian Partners Launch the China-Italy Joint Laboratory of Pharmacobiotechnology for  Medical Immunomodulation. SIAT. 8 November 2024.

15    | T. Puls, E. Kohlisch and O. Koppel. Production and Innovation in the Automotive Industry: A Comparison of Germany and Italy. IEP@BU Policy Brief 48. Bocconi University. 2025: 5-6.

16    | Production dropped from 542,000 units in 2019 to about 309,000 units in 2024. See: A. Sangiorgio and P. Raimondi. The Automotive Industry amid Decarbonisation and Competitiveness: An Italian-German Cooperative Framework. Istituto Affari Internazionali. 2025: 11-12.

17    | A. Garcia Herrero. European Union Duties on Electric Vehicles Point to New Era of EU-China Relations. Bruegel. 9 October 2024.

18    | F. Fubini. Dongfeng, ecco le (pesanti) richieste cinesi in cambio dell’investimento in Italia. Corriere della Sera. 27 September 2024.

19    | Italy’s Ministry of Enterprises and Made in Italy. Mimit-Stellantis: al via il Piano Italia. 17 Decem-ber 2024.

20    | The agreement lasted only a few months between 2024 and 2025. Stellantis stops making Leap-motor EV in Poland, eyes other options. Reuters. 8 April 2025.

21    | Stellantis and CATL Sign Strategic MoU for the Local Supply of LFP Batteries for European Market. Stellantis. 21 November 2023.

22    | Stellantis and Pony.ai Partner to Advance Robotaxi Development in Europe. Pony.ai. 17 October 2025.

23    | S. Sciorilli Borrelli. Italy and Pirelli Try to End Chinese Involvement in Tyremaker. Financial Times. 6 January 2025. See also: K.I. Beck and K.E. Brødsgaard. Corporate Governance with Chinese Characteristics: Party Organization in State-Owned Enterprises. The China Quarterly vol 250 (2022): 486-508.

24    | For details on the limitations imposed to SinoChem, see: Patto parasociale comunicato ai sensi  dell’art. 122 del D.Lgs. n. 58 del 24 febbraio 1998 (il “TUF”) - Informazioni essenziali ai sensi  dell’art. 130 del Regolamento Consob n. 11971/1999 (il “Regolamento Emittenti”), come successivamente modificato e integrato. Pirelli. 23 December 2023.

25    | Government of Italy. Golden power Pirelli, dal Governo via libera con prescrizioni a tutela dell’as-set strategico. 16 June 2023; Pirelli: Cyber Tyre Awarded as the Most Innovative Tyre Technology at the AutoTech Breakthrough Awards 2025. Pirelli. 17 October 2025.

26    | L. Piccotti. Pirelli: dal takeover cinese del 2015 al golden power del 2023. Osservatorio Golden Power. 1 February 2024.

27    | S. Sciorilli Borrelli. Italy and Pirelli try to end Chinese involvement in tyremaker. See also: US Department of Commerce, BIS. Securing the Information and Communications Technology and  Services Supply Chain: Connected Vehicles. 16 January 2025.

28    | M.Mangano. Pirelli boccia l’idea di scorporo: “Cyber Tyre resterà integrata”. Il Sole 24 Ore. 6 February 2026.

29    |  WiLab, WiLab-Huawei JIC.

30    |  S. Riela. Golden power al tempo del friend-shoring. ISPI. 6 September 2022.

31    | X. Hong. Italy Changes Track: From the Belt and Road to (Re)Alignment with Washington. IAI Commentaries 21/62. Istituto Affari Internazionali (2021).

32    | Decreto del Presidente del Consiglio dei Ministri 2 ottobre 2025. Gazzetta Ufficiale della Repubblica Italiana, Serie Generale vol. 243 (2025): 1-2.

33    |  Interview with leading Italian academic in the field of telecommunications. December 2025.

34    |  The Italian branches of Ericsson, Qualcomm, Xiaomi and ZTE are also listed as “Italian” individual members of the 3GPP consortium but are not considered so in this analysis. See: 3GPP. 3GPP Membership: Individual Members.

35    |  Interview with leading Italian academic in the field of telecommunications. December 2025.

36    |  European Commission. 6G Networks in Europe. 30 June 2025.

37    |  Interview with leading Italian academic in the field of telecommunications. December 2025.

38    | M. Gabanelli and R. Querzè. 429 imprese italiane passate in mani straniere in un anno: cosa succede al Made in Italy. Corriere della Sera.9 February 2025.

39    | M. Cianflone. Auto cinesi in Italia, ecco perché sono un’opportunità e non una minaccia. Il Sole 24 Ore. 11 December 2025; R. Lo Vecchio. Auto cinesi, il boom in Italia: tutti i marchi, dati e  strategie. Quattroruote. 5 December 2026. Auto cinesi: 7 italiani su 10 sono interessati, ma a un  prezzo sotto i 30 mila euro. Quattroruote. 10 February 2026.