Italian Prime Minister Giorgia Meloni is facing a diplomatic conundrum as she tries to disentangle Italy from its close relationship with China. Meloni, who came to power less than a year ago, is leaning towards withdrawing from an agreement to join China's Belt and Road Initiative, which has funded $900 billion in infrastructure projects globally. This decision puts Italy and the European Union in a delicate position between the two superpowers.
The move comes at a time when US-China relations are deteriorating, and Beijing is looking to prevent Europe from following Washington's lead, particularly on measures like export controls of key technologies. The EU is struggling to balance a desire to engage with China on trade and investment with resisting economic coercion. However, Italy's stance on Belt and Road is starting to draw the US government's attention. For Washington and other capitals, it is a sign of Meloni's capacity to turn her staunch pro-US rhetoric into facts.
Italy is the only Group of Seven country that signed up for the infrastructure plan, agreed in 2019 under then-Premier Giuseppe Conte. It has not led to deeper integration between Italy and China compared to other EU nations, but the stakes in quitting are both economic and diplomatic, with the risk of Chinese retaliation.
Both China and Taiwan are key trading partners with Italy, which is the third-largest importer of goods from China in the EU, and the fourth-largest exporter of goods to the country, which is a key export destination for luxury brands crucial to its industry. Taiwan has planned to invest about $400 million in Italy's chip industry, according to the Taipei Representative Office in Rome.
Meloni's coalition is split on the issue, with her Brothers of Italy party mostly favoring ditching the pact, and others pushing to keep it. Meloni wanted to have an announcement on Italy's stance on Belt and Road by May's G-7 summit, but picking an option is proving harder than expected. In another delay, Meloni has yet to officially respond to an invitation to Beijing from Chinese President Xi Jinping, which had been tentatively scheduled for May. The trip is on hold as Italy studies ways to not renew the Belt and Road deal while limiting the impact on China ties.
Overall, Italy is stuck between a rock and a hard place, and what to do with the cooperation pact is a real diplomatic conundrum for Meloni. Renewing the pact would send a very difficult message to Washington, but not renewing it would put a strain on relations with China. It is key for Italy to coordinate with the US and other allies to react to a possible response if the pact is not renewed.