Everyman’s Strategic Survey: China expands, again … this time into Italy

So, just a few months ago the budget battles between Italy and the EU were seen, by some observers, as being even more important for the future of Europe than was the Brexit. The headline in Bloomberg Businessweek shouted that “The EU Is More Worried About Italy Than Brexit ~ Brussels can handle losing London, but it really wants to keep Rome.” Italy, that article said, was, in November 2018, “a more pressing—and existential—issue for Brussels than Britain. A founding member of the EU and the euro single currency, Italy has long been one of the most pro-EU countries. But its nationalist-led government is now straining at the bloc’s budget constraints. On the eve of the Brexit meltdown in London on Nov. 14, when May’s cabinet fractured over the withdrawal accord reached with the EU, the Italian government met in Rome to draft a riposte to European officials’ rejection of the country’s draft budget. Prime Minister Giuseppe Conte’s cabinet would stand behind a deficit target that the European Commission says breaks its rules and a growth forecast that officials in Brussels dismissed as being unrealistic. Italy’s economy is the third-DfAGbKqXkAETzbmbiggest in the euro region, and its debt mountain is the highest in real terms. Yields on Italian 10-year bonds, whose gyrations served as an alarm bell for investors, politicians, and the European Central Bank during the continent’s debt crisis of a few years ago, have doubled since May.” But, despite its very many, very real problems, Italy is important, not least because it is the only Souther or Eastern European Union nation that actually contributes, financially, to the Union. 

Even as the Brexit fiasco seems more and more and even more problematical, as Prime Minister May thrashes about, looking for a sensible way out, but the Italian budget woes continued, BELGIUM-EU-ITALYunabated while the Italian economy sputtered and shuddered and slipped into the red, again, but, in December, Prime Minister Conte signalled that Rome and Brussels had reached an accord  … and the came the Chinese, with the Belt and Road initiative. Just a few days ago the Financial Times reported that “Italy is considering borrowing from China-led Asian Infrastructure Investment Bank as part of plans to become the first G7 country to endorse Beijing’s contentious Belt and Road global investment programme … [and] … The two countries are planning to “explore all opportunities for co-operation” in Italy and “third countries”, according to the five-page draft accord obtained by the Financial Times. The wide-ranging agreement would span areas including politics, transport, logistics and infrastructure projects … [and the reports says that] … The Italian government intends to sign a so-called “memorandum of understanding” on the BRI on March 22, when Xi Jinping, China’s president, visits Rome … [and despite intense] … pressure from Washington and Brussels to drop those discussions at a time of rising concerns over Beijing’s ambitions and potential security threat.

Now I see, in a report in the South China Morning Post, that “Four ports in Italy may be in line for Chinese investment under China’s “Belt and Road Initiative”, despite security concerns within Italy and the European Union, according to diplomatic sources … [and] … A deal on the ports is expected to be on the agenda when Chinese President Xi Jinping heads to Rome this week for talks with Italian Prime Minister Giuseppe Conte … [it will involve] … The northwestern city of Genoa, Italy’s biggest seaport  [below] …

Genova_porto_panoramica2

… [which has] … said it would sign cooperation agreements with China … [and] … in the Porto_e_bacini_palermo_dall'altosouth the Sicilian port of Palermo [right] – which Xi is expected to visit this weekend – is the focus of Rome’s efforts to attract Chinese shipping operators. Two ports in the northern Adriatic Sea, Trieste and Ravenna, might also be part of Italy’s memorandum of understanding with Xi as part of a plan to compete with major European ports, the sources said … [all this because] … The Italian government has said that allowing Chinese state companies to manage or hold stakes in Italian ports would be key to expanding exports.

The Guardian says that “Italy has signalled its determination to play a central role in China’s grand plan to build a Silk Road-styled global trade network, despite rattling its EU and US allies with its plan … [because] … The country’s populist government is poised to endorse its participation in Beijing’s $1tn Belt and Road Initiative (BRI), a global trade project aimed at connecting Asia, the Middle East, Africa and Europe via a network of ports, railways, tunnels and other infrastructure, by signing a non-binding memorandum of understanding (MoU) during the Chinese president Xi Jinping’s visit to Italy this week … [and] … Italy, which would become the first G7 country to back the initiative, hopes it will revive its sluggish economy and help open up greater access to China’s lucrative market … [the report notes that] … The Five Star Movement (M5S), the populist party governing alongside the far-right League, has been the driving force behind the country’s collaboration in an initiative the US believes is being used by China, its trade rival, to embolden its political and strategic clout.” The reports goes on to explain that “Xi is expected to arrive in Rome on Thursday afternoon, before travelling to Palermo, Monaco and Paris. The French president, Emmanuel Macron, said last week that EU countries should have a “coordinated approach” towards China … [and] … “It’s not so much about Italy wanting to do a deal with China per se,” said Francesco Sisci, an academic at Beijing’s Renmin University of China. “The real problem is that no political homework has been done. Italy, a bridge to Europe and, objectively, the US, spoke to China without consulting either. Fractured relations with the EU and US won’t serve Italy well, or China” … [but] … Italy has also not bowed to US-led pressure to ban the Chinese telecoms company, Huawei, from building its 5G mobile phone network. The company is under international scrutiny over its links with the Chinese government and allegations that its technology is being used by Beijing for spying.

All this is happening while:

Europe is falling apart.

America is rudderless … it’s own economy is growing very nicely, but its entire foreign and trade policies seem to be based, mainly, on a fairly simplistic, quarter-by-quarter, analysis of “what country is making more money or gaining a financial advantage.”

China, meanwhile, is pursuing a long term grand strategy which, as former Australian Prime Minister Kevin Rudd says, “is one of Chinese nationalism suffused with a cocktail of economic achievement, political nostalgia, and national grievance together with a new culture of political self-confidence that represents a clear rudd.001departure from Deng Xiaoping’s orthodoxy of “hide your strength, bide your time, never take the lead” … [and which] … can be best understood as a set of seven concentric circles of interests, starting with the centrality of the party and expanding out to the unity of the country; the importance of sustainable economic growth balanced against environmental concerns; keeping China’s 14 border states under benign control; projecting its regional maritime power; leveraging its economic power across its continental periphery; and slowly reforming parts, but by no means all, of the postwar international rules-based order over time to better suit its interests.

Italy offers China an entrée into the West that might, neatly, circumscribe America’s strategic aims, however the current US president might misunderstand them, and 20120630_wom941challenge the US led West in almost every way. I have explained before how the global centre of economic gravity is shifting towards the “middle of nowhere,” near to where it was 2,000 years ago. This is caused by China’s “rise” and the demand, by is huge and growing middle class for Western, especially European (and often Italian) consumer goods. This new Chinese strategic offensive is not about aircraft carriers, missiles, bombers or even cyber-warfare. China is taking aim to the global economy … America is sitting on the sidelines, preoccupied with  … whatever. Italy is stepping into an opening … perhaps others (perhaps Britain) will follow. This is a strategic game changer … more the day after tomorrow,* because Dr Jane Philpott’s interview needs immediate attention.

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* Edited to reschedule a follow-up post. 

 

 

4 thoughts on “Everyman’s Strategic Survey: China expands, again … this time into Italy”

  1. P.P.S. — It’ll be interesting to see how China deals with … aggressively libertarian entrepreneurial forces associated with Palermo’s port 😉

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