The only G7 country to join China’s controversial Belt and Road Initiative now thinks that decision was a mistake.
“The choice to join the Silk Road was an improvised and atrocious act,” Guido Crosetto, Italy’s defense minister, told Corriere della Sera, an Italian newspaper, on Sunday.
Italy needs to decide whether to stay in the Chinese infrastructure investment scheme by December, or else the agreement will expire by March 2024. Prime Minister Giorgia Meloni has yet to publicly state her position beyond promising a decision by December.
Yet Crosetto gave a clear indication of where Rome is headed. “The issue today is: How to walk back [from the Belt and Road Initiative] without damaging relations,” he said on Sunday.
Then-Prime Minister Giuseppe Conte agreed to join the Belt and Road Initiative in 2019, making Italy the largest economy (outside of China) and the only G7 country to sign onto the scheme.
Meloni has noted on several occasions that membership in the Belt and Road is not required for tight economic links with China. “The paradox of the Belt and Road Initiative is that we’re the only nation in…but we are not the nation that has the best trade with China,” Meloni said on Sunday in an interview with Fox News. “That means you can have good relations with China without the Belt and Road Initiative,” she suggested.
What is the Belt and Road Initiative?
China launched the Belt and Road Initiative in 2013. The global infrastructure development program is meant to hearken back to historical trading networks between China and Europe, such as the overland “Silk Road” over Central Asia and the maritime trading routes through Southeast Asia and the Indian Ocean.
Around 150 governments have signed onto the Belt and Road Initiative, according to the Chinese government.
Yet Western governments like the U.S. view the program as Beijing’s attempt to expand its economic influence globally, and warn that recipients risk getting caught in a “debt trap.” (The U.S. has reportedly put pressure on Rome to publicly pull out of the Belt and Road Initiative, though Meloni denies that U.S. President Joe Biden has pushed the issue in meetings.)
Some recipients of Chinese government money are now devoting a third of their government revenue to paying back their foreign loans, half of which come from China, an Associated Press analysis found earlier this year.
Nor is it clear that the Belt and Road Initiative has met China’s expectations. Beijing started telling its banks to ease up on lending last year, after realizing that many funded projects were expensive, behind schedule, and unlikely to earn a decent return, reported the Wall Street Journal in September 2022.
Italy’s trade with China
On Sunday, Crosetto complained that the BRI hadn’t resolved the country’s trade deficit with China. “We exported a load of oranges to China, they tripled exports to Italy in three years," he said.
Italy had a $45.7 billion trade deficit with China in 2022, growing from a $20.6 billion deficit in 2019, according to Reuters. Italy’s statistics bureau reports a $34.2 billion global trade deficit for the country last year, though that may have been due to spiking energy prices: Excluding energy, Italy would have had an $88.4 billion trade surplus, the bureau notes.
Surprisingly, Italian exports to China boomed in the first three months of the year, hitting $7.8 billion compared to $4.1 billion the year before.
Analysts puzzled over the data, with some wondering whether Italy’s agreement to join the BRI might finally be paying off.
The answer was much stranger. The boom in Italian exports to China was fueled solely by pharmaceuticals, and just one drug in particular: a medicine used to treat liver disease and gallstones. Chinese consumers had flocked to the drug as an alternative method to prevent COVID-19.
