Future of China-Italy Relations Uncertain Despite Giorgia Meloni's Productive Visit

Italian Prime Minister's strategic trip sought to balance national interests and international commitments amidst geopolitical tensions and domestic volatility.

Italian Prime Minister Giorgia Meloni's first trip to China was one of strategic balancing, as Italy seeks to maintain a workable relationship with the People’s Republic while avoiding alienation from the United States and the European Union.

Meloni’s five-day visit (July 27-31) included stops in Beijing and Shanghai, where she sought to strengthen both political and economic understandings between the two countries as well as bolstering Italy’s commercial interests in the world’s second-largest consumer market. In Beijing, she met with both President Xi Jinping and Premier Li Qiang, as well as attending the seventh Italy-China Business Forum and speaking at the opening of an exhibit dedicated to Marco Polo at the Beijing World Art Museum. She also engaged with the Italian business community in Shanghai, China’s major financial center.

The timing of the visit is deliberate as 2024 marks the 20th anniversary of China and Italy elevating their relations to a comprehensive strategic partnership, as well as being the 700th anniversary of the death of Marco Polo, who produced the first widely-known account of European travel to Asia along the ancient Silk Road.

Italy, like other European countries, has been described as having been “caught in the middle” of ongoing diplomatic, economic and ideological tensions brewing between China and the U.S. and EU. Now, two years into her term as Italy’s head of government, Meloni has signaled satisfaction with her visit where talks were aimed at “concrete results” though she conceded when speaking to the press on Tuesday that the involved parties had “limited [themselves] to defining framework agreements” rather than going “into the merits of the individual agreements.”

Italy Leaves the BRI

Hanging over the visit, if not serving as a supplementary motivation for it, is Italy’s withdrawal from China’s Belt and Road Initiative (BRI) at the end of 2023. Italy, the only Group of Seven (G7) country to do so, first signed a Memorandum of Understanding in 2019 regarding its participation in the BRI, which aims to develop new trade routes between China and the rest of the world based on the ancient Silk Road from which it takes part of its name.

Italy’s stated anticipation to participate in the BRI ran counter to the conventional wisdom in many Western countries, where the initiative has been criticized as a mechanism for China to engage in neo-imperialism and “debt-trap diplomacy,” the latter being the practice of one country extending insupportable lines of credit to another with the intent of extracting political gain or favor from the borrowing country when it can no longer fulfill its debts.

The Memorandum stipulated that the two countries would cooperate in several areas including policy dialogue, transport, logistics and infrastructure, unimpeded trade and investment, financial cooperation, people-to-people connectivity and green development cooperation. Beyond these key areas, the Memorandum is somewhat vague, leaving issues such as mechanisms for cooperation and settlement of differences to be addressed at a later time through “existing bilateral mechanisms” and “direct consultations.”

The writing was on the wall rather quickly, however. Both the governments of Giuseppe Conte, whose administration signed on to the BRI, and that of his successor Mario Draghi on more than one occasion exercised Italy’s power to restrict foreign direct investment in sectors it deemed relevant to Italy’s national security. Rumors of Italy’s impending withdrawal from the initiative began circulating healthily by early 2023.

In December of that year, Italy announced its intent not to renew the Memorandum, which was set to expire in March of 2024. Meloni had previously signaled her intent to remove Italy from the agreement in the leadup to the country’s 2022 general election, where her Brothers of Italy party won an absolute majority of seats in the Italian Parliament.

At the time, officials said that the agreement had not produced the expected results for Italy. Indeed, speaking to the media during her visit to China, Meloni cited Italy’s investments in China as being “three times” those made by China in Italy.

On Dec. 7, 2023, Wang Wenbin, then a spokesperson for China’s Ministry of Foreign Affairs (MFA), remarked on Italy’s withdrawal during a standard press conference. Though he refrained from directly addressing Italy, Wang, after noting the “enormous appeal and global influence of Belt and Road cooperation” said that “China firmly opposes attempts to smear and sabotage Belt and Road cooperation or stoke bloc confrontation and division.”

Affording a more liberal interpretation of Wang’s comments, which were sure to be as much as the Chinese government was willing to say on the matter at the time, the MFA’s messaging was surely directed not at Italy, but at Washington and its partners in the EU who had left Italy and many other countries “caught in the middle” of mounting tensions between themselves and China.

Most notably, perhaps, is that Italy remains the only country to withdraw from the BRI to date. While it warrants note that a memorandum of understanding is a comparatively low-commitment agreement, lacking the legally binding characteristics that give weight to treaties or contracts. Nonetheless, the symbolic message of a G7 country’s withdrawal from the BRI was anything but positive for Beijing, whose initiative remains clouded in suspicion for many Western countries.

Resetting for Tangible Results

Meloni’s visit produced an agreement between the two countries, titled “Action Plan on Strengthening Comprehensive Strategic Partnership between the People's Republic of China and the Italian Republic (2024-2027)” which aims to provide a framework for productive bilateral cooperation going forward.

Both longer and more explicit than the 2019 MoU, the plan provides seven areas of action with numerous points within each area for strengthening relations and their utility over the next three years.

1. Trade and Investment: Both countries support a "free, equal, fair, open, transparent, inclusive and non-discriminatory multilateral trading system with the WTO at its core." They aim to "strengthen trade exchanges and promote the rebalancing of trade exchanges," expand bilateral trade, and eliminate non-tariff barriers. Intellectual property protection and geographical indications are emphasized with intent to "enhance corporate competitiveness and promote the innovation process."

2. Economic Cooperation and Finance: Both countries seek to "deepen communication and cooperation in macroeconomic policies, global economic governance, and fiscal and financial fields." They support multilateral development banks like the Asian Infrastructure Investment Bank, emphasizing green finance to "accelerate green transformation" and exploring a bilateral audit supervision agreement. Further, both countries are “willing to explore the feasibility of negotiating and signing a bilateral audit supervision cooperation agreement on the premise of mutual respect for sovereignty and each other's domestic laws and regulations.”

3. Science, Technology, Innovation and Education: Both countries agree that the “mechanism of the China-Italy Joint Committee on Science and Technology Cooperation should be further strengthened.” They plan to "enhance joint research cooperation in areas of common interest" and strengthen educational exchanges, including high-level training programs in "energy and environment, polar research and sustainable development."

4. Green and Sustainable Development: Both Italy and China remain committed to their obligations under the Paris Climate Accords and will seek to strengthen cooperation on "environmental protection policies, clean energy raw materials and technologies, energy efficiency, climate change response, biodiversity protection, circular economy, capacity building." They aim to "triple global renewable energy power generation capacity and double the average annual rate of improvement in global energy efficiency by 2030."

5. Medical and Health Cooperation: Both sides will aim to build and maintain connections between their respective medical and health bodies and will “strengthen personnel exchanges and practical cooperation” in areas ranging from treatment of chronic diseases to emergency health responses. Further cooperation will be carried out under the framework of the “China-Italy Health Cooperation 2024-2026 Annual Implementation Plan” and the “Memorandum of Understanding on Cooperation in Drug, Medical Device and Cosmetic Supervision between the State Food and Drug Administration of the People's Republic of China and the Ministry of Health and Drug Administration of the Italian Republic.”

6. Cultural and Academic Relations, People-to-People Exchanges, Cultural Heritage, Cooperation in Combating Crime and Disaster Management: Italy is one of the most-visited European countries by Chinese tourists, receiving 5.3 million Chinese visitors in 2019. The action plan places emphasis on promoting cultural exchanges, protecting cultural heritage and enhancing tourism and sports cooperation. Support for the establishment and expansion of direct flights between China and Italy is mentioned, as well as a prospective agreement on mutual recognition of drivers licenses. The longest section of the agreement, section six also mentions cooperation in combatting organized crime and disaster management.

7. China-Italy Government Committee: The plan ends by reiterating the importance of the China-Italy Government Committee and other bilateral mechanisms. The Committee last met in September 2023 and was attended by both China’s Minister of Foreign Affairs Wang Yi and Italy’s Minister of Foreign Affairs and International Cooperation Antonio Tajani, making it a critical, high-level dialogue between the two countries.

A Solid First Step

It goes without saying that Italy and China remain on speaking terms, for want of a better phrase. That being said, Meloni’s speech at the Italy-China Business Forum contained multiple remarks highlighting Italy’s areas of dissatisfaction with the status quo.

She began by mentioning “Russia’s aggression against Ukraine,” an area where Italy has been a vocal supporter of Ukraine and has provided military, economic and humanitarian support since the outbreak of armed conflict in February 2022. Italy is only one among many countries that have used their diplomatic channels with China to push the issue of the ongoing war in Ukraine since China has taken a stance of technical neutrality on the matter, which has been perceived by many as being pro-Russia.

Meloni also spoke of “the crisis in the Middle East, tensions in the Red Sea, and growing instability in Africa,” issues where Italy and China enjoy varying levels of congruence. Whether growing pressure from the U.S. or EU will factor into cooperation or dialogue between the two countries regarding these issues remains unclear.

During a meeting with Xi on July 29, Meloni stated “Italy attaches great importance to China's international standing and role, and is ready to carry forward the time-honored Silk Road spirit, foster a closer and higher-level partnership with China, open up a new chapter for the comprehensive strategic partnership between the two countries, and make new contributions to world peace and progress.”

Xi likewise drew on the aforementioned legacy of the Silk Road, emphasizing the ancient route’s both symbolic and literal connection between Italy and China.

“China and Italy should uphold and promote the Silk Road spirit, view and develop bilateral relations from a historical and long-term perspective and strategic height, and promote the steady and sustained growth of China-Italy relations,” an MFA release said of Xi’s sentiment in the meeting.

Meloni also conveyed that Italy “opposes decoupling and severing industrial and supply chains, rejects protectionism, and is ready to play a positive role in further deepening and consolidating EU-China relations.”

Most importantly, Meloni made a point to highlight ongoing trade imbalances, a grievance shared by multiple European countries, which lean in favor of China at Italy’s expense.

“Trade has increased, reaching approximately EUR 67 billion in 2023, and I believe there is still a lot of untapped potential, as we have discussed,” she said during her speech at the Italy-China Business Forum. “We cannot hide the problem of a major imbalance, with a large deficit for Italy; this is a very important matter and we want to address it together, gradually moving towards an equilibrium.

“In this regard, the Italian Government is of course ready to work together with the Chinese authorities and with the private sector. I firmly believe that dialogue on this issue, i.e., on improving conditions to access the Chinese market and protecting intellectual property, can have far more beneficial effects than we can imagine today.”

Where and when these improved conditions will come, and to what degree their improvements will be significant versus being symbolic remains to be seen.

Avoiding an Unavoidable Uncertainty?

Though Meloni’s first visit to the People’s Republic yielded a thorough action plan, multiple signed agreements, and picture-worthy engagements with Chinese leadership, the future of relations between China and Italy remains uncertain in no small part due to the conditions of Italy’s domestic politics.

Italy, like most of Europe’s parliamentary democracies, does not have a set term limit for its Prime Minister. The main condition of political survival for the head of government is instead maintaining the support of the bicameral Parliament, composed of the 400-member Chamber of Deputies and the 205-member Senate, composed of 200 elected officials and five senators for life who are appointed by the Italian President.

Despite Meloni theoretically being able to hold office indefinitely, the history of modern Italian politics says otherwise to an intriguing extent.

Since the end of World War II, Italy has had 68 governments formed by various ruling parties or coalitions. As Andrea Carlo notes, this makes for an average lifespan of 13 months per government.

Since taking office, Meloni has opted to walk a cautious line in terms of engagement with China, not unlike Draghi before her. Both Meloni and Brothers of Italy have taken a hawkish stance toward China while emphasizing stronger ties with the U.S. and EU. However, another change of government, even further to the right side of the political spectrum, could upend this stance.

The Meloni government, a coalition formed by Brothers of Italy, Lega, Forza Italia and Us Moderates currently hold a total of 238 seats in the 400-member Chamber of Deputies and 117 of the 205 seats in the Senate. Of these majorities, Brothers of Italy hold 118 and 63 seats in the Chamber and Senate, respectively.

Lega, the second-largest seat-holder of the ruling coalition, has adopted a stance regarding China breaks from that held by Brothers of Italy, opting for a more ambivalent and flexible attitude toward Beijing.

Forza Italia, the smallest seat-holding party in the colation, aligns more closely with the positions of Brothers of Italy vis-a-vis China than Lega. Forza Italia currently holds 44 and 18 seats in the Senate and Chamber, respectively.

Assuming stability for the current government, at least until the next general election which will be undertaken no later than Dec. 22, 2027, Italy will likely remain skeptical of China in terms of policy while continuing to seek manageable economic ties. To be sure, in the first five months of 2023, Italian exports to China increased 58% compared to the previous year, as well as having previously increased by 42% from 2019-2021.

As Italy’s largest trading partner in Asia, China boasts self-evident importance for Italy’s international relations agenda, while China remains in need of workable partnerships in Europe as much of the EU shifts further toward the American-led approach of caution toward the People’s Republic in matters of economic and diplomatic engagement.

Looking Ahead

An exigent feature of Asian affairs for many countries is the question of how their engagement with China will impact their ties to the U.S. As an EU state, this question is twofold for Italy.

Though the overarching strategy of the EU has shifted decisively toward one of risk management and concern for bolstering economic security, China has a vested interest in courting European leaders such as Hungary’s Viktor Orban who have demonstrated an affinity for breaking from the EU on major issues including but not limited to the ongoing war in Ukraine and immigration policy. Non-EU states such as Serbia present even further opportunities for Chinese engagement in Europe.

The 2024 U.S. presidential election, for example, may leave European and Chinese policymakers alike bracing for a more demanding and hawkish series of engagements with the U.S. if former President Donald Trump returns to the White House. Meanwhile, Vice President Kamala Harris’ status as the presumptive nominee for the Democratic Party tentatively signals a continuation of President Joe Biden’s foreign policy objectives in most areas.

As Italy and China navigate their intricate diplomatic and economic relations, PM Meloni's recent visit underscores a careful balancing act. This trip, framed by historical milestones and strategic realignments, represents a bid on Italy's part to foster productive bilateral cooperation without compromising its commitments to Western allies. The detailed agreements and mutual commitments set during the visit aimed to set the two countries up to benefit from tangible gains in trade, technology, and sustainable development.

However, the persistent volatility in Italian politics introduces an element of unpredictability. Frequent governmental changes could disrupt the continuity and effectiveness of these new frameworks. Moreover, Italy's relationship with China is intricately linked to its alliances with the United States and the European Union. Both Washington and Brussels have expressed concerns about China's influence in Europe, advocating for a cautious approach that balances economic engagement with strategic security interests.

This in mind, Italy may very well remain caught in the middle of competing interests from both East and West, and how much of their three-year Action Plan China and Italy will see through may only be discernible in three years’ time.

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