Xi Jinping heads for Italy as doubts linger over MoU

President Xi Jinping is visiting Italy, Monaco and France between Mar 21 and 26. In Italy, in particular, he is to sign a Memorandum of Understanding (MoU) which offers the Italian government as a partner to support the Belt and Road Initiative (BRI).

Mar 22, 2019

By Bernardo Cervellera
President Xi Jinping is visiting Italy, Monaco and France between Mar 21 and 26. In Italy, in particular, he is to sign a Memorandum of Understanding (MoU) which offers the Italian government as a partner to support the Belt and Road Initiative (BRI). The “New Silk Road” that Beijing supports with funds of up to 1,000 billion dollars, involves the construction of railways, roads and sea lines that should facilitate world trade.

In Italy there are those in favour of the signature, especially sinologist Michele Gerace, Undersecretary for the Economy. But there are also doubts and criticism because the MoU could become a boomerang that would not help Italian exports to China.

Beijing has already funded similar projects in Asia, Africa and (Eastern) Europe and there are critical voices that say that this has only benefitted Chinese industries and has enveloped Sri Lanka, Myanmar and Pakistan in a “debt trap”.

Additionally there is the fear that the MoU would facilitate the penetration of Chinese investments into Europe to the point of their hegemony.

Various experts cite what is happening with the “16 + 1” group, which since 2012 guarantees collaboration between China and several European Union member countries — such as Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Romania, Bulgaria, Croatia and Slovenia — together with five other countries not yet in the EU: Serbia, Bosnia and Herzegovina, Montenegro, Albania and Northern Macedonia.

So far, China’s promises to offer special loans have not been fulfilled. Instead, the trade deficit of these countries with Beijing is growing. For example, the trade deficit for Poland in 2012 was 10.3 billion dollars, and now it stands at 28.4 billion.

Some economists point out that the adhesion of Italy alone to the BRI, without consultation with the other EU countries, weakens the European Union dialogue with China. In a meeting next month the EU, which defines China as an “economic competitor”, would pursue more freedom in European investments, hitherto held back by many trade barriers.

“A dialogue with China which Italy is seeking alone, means having no clout to correct mistakes or injustices that could arise in the future,” said an economist who wishes to remain annoymous. And he gives the example of the new law on foreign investments, voted by the National People’s Congress last March in Beijing. It guarantees greater equality of treatment between foreign companies and local companies, but bans the forced transfer of technologies which the US and the EU have pushed for in recent years. In all probability, without the bargaining power of these two western economies, perhaps a similar law would never have been voted. -- Asia News

Total Comments:0

Name
Email
Comments