China & EU Trade
China’s flagship foreign aid project, the belt-road initiative, gained new ground in unexplored territory with the inclusion of Italy into the infrastructure agreement. Italy’s inclusion into the Belt-Road Initiative was confirmed following Xi Jin Ping’s visit to Europe in a series of discussion between Chinese and Italian leaders. The Chinese and Italians have agreed to sign on up to 29 separate deals totaling up to 2.8 billion dollars in funding. This would give China faster access to the European market than ever before and would signify a breakthrough in China’s efforts to expand into Europe.
Italy is the first G7 nation and the largest EU member state to receive funding from China. Xi Jing Ping’s European trip also included the purchase of airbus planes from France and the establishment of 5G network towers in Monaco. For many in Italy, China’s infrastructure funding is considered an economic boon as the country is being hobbled with recession and repeated fights with the European Union over budgetary issues.
The encroachment of China’s Belt-Road Initiative to one of the European Union’s largest member states has been met with consternation from the European Commission and several other member states. One reason for this defensiveness is because China’s infrastructure funding is perceived to be an encroachment on one of the EU’s traditional duties of providing infrastructure funding, education funding, and support for countries interested in integrating further into the union. This conflict is further exacerbated by the populist, Eurosceptic government dominates Italy. This government which is hobbled by an economic recession, looming financial crisis, recurring battles with the EU, and the overall unstable nature of Italian national politics wanted to seek economic funding from an outsider to buoy their standing.
The political undercurrents that lie beneath Italy’s inclusion into China’s Belt-Road Initiative is important because it may result in a long-term change in the EU’s relationship with China on trade. Furthermore, it may also alter the EU’s relative position on trade issues with China. This is because the European Union is about to have Parliamentary elections that may change the overall outlook of the next European Commission on trade issues. By including Italy into the Belt-Road initiative, China has added another layer of complexity in the intra-European political climate. If the Eurosceptic wings of Europe come out on top in the next European Elections than it may signal to other European countries that there are alternative trade organizations to be a part of besides the European Union. The fragmentation of the European Union as a political or trade entity may also be an issue with the United States if the trade war reignites once more as specific European member states may add additional leverage in China’s favor.