Staff writer Anezka Ferreira discusses China’s growing influence

Chinese President Xi Jinping just returned from a visit to Europe to promote the Belt and Road Initiative (BRI), China’s unprecedented plan to expand its geopolitical reach. As Rome and Beijing signed a significant deal on the BRI, several European leaders were miffed with the controversial development and also warned Italy about the agreement’s ability to divide Europe. 

During President Xi’s first stop, in Rome, the Chinese and Italian leaders signed a memorandum of understanding (MOU) indicating Italy’s participation in the BRI, a state-led investment effort that seeks to deepen Chinese infrastructural links across Asia, Africa, Europe, and Latin America. In total, Chinese investors signed twenty-nine separate deals amounting to $2.8 billion worth of projects. Notably, they agreed to invest in port infrastructure in Genoa and Palermo which could give Chinese goods faster access to Europe. For Beijing, Italian ports offer favourable trade terms and faster access to EU markets and for Rome; the BRI offers an opportunity to help a lagging economy by expanding trade and inviting Chinese investment. 

Italy is the eighth largest economy in the world.  Regrettably, it has faced three recessions in the last ten years  and the GDP projections for 2019 is expected to be at around 0.2 %. Thus, Italians endure a weak economy and endless political turmoil. As recent as May 2018, the country faced a political crisis which resulted in Giuseppe Conte, a virtually unknown law professor as the new Prime Minister. Even though he promised a revival of the economy, like his predecessors, he has failed to come through and blames external factors such as the trade war between the US and China or the EU’s strict budget as obstacles to Italian progress. Thus, his MoU with China is a desperate attempt to reboot the Italian economy. 

However, there is no such thing as a free lunch with the Chinese. At least eight countries who signed on the BRI are indebted to China and were compelled to hand over their strategic assets to the country in order to offset their debt. Therefore, downplaying the geopolitical risks, Italian proponents ignore China’s history of retaliating against partners that do not support its geopolitical interests. The BRI is not a charitable initiative developed for the betterment of humankind. It is a foreign-policy program explicitly designed to expand China’s economic and geopolitical influence globally that will give China access to strategically important locations, thereby strengthening its geopolitical influence and power.

Europe without a clear EU-level strategy remains vulnerable to the global giants’ divide-and-conquer tactics. Like Russia, which has used its advantage to turn states against each other with the Nord Stream 2 gas pipeline, China will engage bilaterally with as many European countries as it can. 

Historically, the EU and China share deep economic ties. Despite this, the EU has grown apprehensive about how to address China’s growing economic and political influence in continental Europe, unfair trade practices, assertive stance on the South China Sea, and worsening human rights record. In a strongly worded policy paper, the European Union called on its member countries to take a united stand against China, acknowledging that China is no longer a developing country but a global power, an economic and strategic rival. If Italy becomes indebted to China, it will have significant implications in the EU’s policies toward China. Therefore, the EU needs a better strategy than a policy paper.

A suggested solution has been to give the European Commission a veto over any Chinese investments in the EU. Unilateral decisions by individual EU states have far-reaching security and economic implications for the rest of Europe and the possibility of national governments going their way frustrates the EU’s own efforts to forge a closer relationship with China. However, such power would undermine the very principles of sovereignty which the EU is built upon and hopes to exert against China. Conversely, a strong EU-China relationship could have profound benefits. Thus, it is in Europe’s interest to strengthen the rules-based international order, by working with China to open up its economy, improve its human-rights record, and eliminate unfair trade practices. Hence, one thing EU leaders can agree on: cooperation with China must prevail over confrontation.

Presently, Italy stands alone, and it remains unknown whether other European countries will follow suit and accept BRI funds, or whether the EU will push for stronger oversight of Chinese investment. The Italian government’s decision to endorse China’s “Belt and Road Initiative” is antithetical to European and Italian interests alike, and plays directly into Chinese President Xi Jinping’s hands. The EU has been too slow to wake up to the challenges posed by an increasingly ambitious China.

In conclusion, with such developments is there a possibility for a Sino-European partnership in the future?