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Leader of the far-right Brothers of Italy party Prime Minister Giorgia Meloni waves to the people
Ciao Ciao China!
All belts are off now in Italy. On Wednesday, Rome officially withdrew from China’s Belt and Road Initiative, Beijing’s signature global infrastructure, trade, and investment scheme.
Flashback: In 2019, Italy – then governed by a strongly euroskeptic coalition– became the only G7 country to officially join BRI. For China, it was a coup to bring aboard Europe’s third-largest and the world’s seventh-largest economy. Rome, for its part, hoped for a bonanza of trade and inbound investment from Beijing.
Spoiler: It didn’t pan out. Italy’s trade deficit with China soared, and debates raged about Chinese access to key Italian firms and infrastructure. Meanwhile, the EU and Italy’s NATO allies saw BRI participation as both a strategic risk and a symbolic blow to Western unity in the face of growing challenges from Beijing.
Italy’s current prime minister, right-winger Giorgia Meloni, sees BRI membership as a mistake but has sought to delicately exit the scheme without angering the world’s second-largest economy. While the Italian government will not renew its BRI agreement when it expires next year, local governments and some companies will continue to work with China under BRI terms.
The timing is telling. Meloni’s move comes on the eve of a big EU-China summit, the first since 2019, where the two sides will seek to manage an increasingly contentious and competitive relationship. (Read our Viewpoint about that here.)
Russian President Vladimir Putin shakes hands with China Media Group anchor Wang Guan
Putin’s pessimistic prospects in Beijing
President Vladimir Putin – on a rare venture outside Russia – is in China for a forum marking the 10th anniversary of the Belt and Road Initiative. While Putin hopes to deepen the countries’ “no limits” partnership, what he really wants is Chinese President Xi Jinping’s promise to build the Power of Siberia 2, a massive pipeline project that would transport natural gas from western Siberia to China.
Russia’s Foreign Minister Sergei Lavrov, meanwhile, met with his Chinese counterpart, Wang Yi, on Monday in Beijing, where the two discussed resolving the war in Ukraine with “political and diplomatic methods” and the war between Israel and Hamas. They didn’t outline any concrete agreements, which may become a theme this week.
The Belt and Road Initiative, so promising a decade ago, is looking worse for wear. At its peak in 2018, Beijing was pumping nearly $60 billion a year into cargo ports, railways, power plants, and much more across Africa, Asia, and Latin America, and even attracting some interest from European economies.
But one global pandemic later, and the picture isn’t so pretty: Beijing is holding a ton of debt from developing nations that look like they may struggle to repay while China faces domestic debt problems. The political dividends in Europe have largely vanished as well, with the only G7 country to sign on to BRI, Italy, now looking for the exit.
As for Putin’s pipeline dream? The Russian leader wants it more than Xi, and China is hardly starved for energy these days. US and European sanctions on Russian oil exports have netted Chinese importers a cool $10 billion in savings thanks to steep discounts. Besides, publicly putting cash in Putin’s pocket would be hard for Xi to explain to US President Joe Biden should they meet as expected in San Francisco next month.