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How to De-Risk From China: Lessons From Italy

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How to De-Risk From China: Lessons From Italy

Italy’s de-risking has been a gradual, and often winding, process of reducing critical dependencies on China. But is it permanent?

How to De-Risk From China: Lessons From Italy
Credit: Depositphotos

Italian policymakers have echoed other Western voices in calling for “de-risking,” especially avoiding economic overreliance on China. Italy, like fellow European governments, insists that de-risking is distinct from decoupling; indeed, de-risking has been largely fashioned to avoid the decoupling debate. 

Discussion on these issues began in Italy in the aftermath of the Giuseppe Conte government’s decision to sign a Memorandum of Understanding (MOU) on the Belt and Road Initiative (BRI) during Chinese President Xi Jinping’s visit to Italy in March 2019.

Calls to reduce risky ties with Beijing were initially made by national-conservative and right-wing political forces, such as Giorgia Meloni’s Brothers of Italy, which opposed the Conte government’s decision to promote closer relations with China across the board, including in areas deemed critical for Italy’s national security and that of its Euro-Atlantic allies. With the appointment of Mario Draghi as prime minister in February 2021, a process of reducing dependencies on China began. 

The victory of a national-conservative coalition in Italy’s parliamentary elections in September 2022 accelerated this process, unraveling the links that the previous Conte governments had established with China. These connections were seen as dangerous, and involved sensitive sectors ranging from Chinese involvement in Italian infrastructure projects and high-tech industries, to the involvement of Chinese information and communication technology (ICT) companies such as Huawei and ZTE in the rollout of 5G networks in Italy, to the way China had been able to influence Italy’s pandemic response. 

Italy’s Minister for Enterprise Adolfo Urso, a leading member of the ruling Brothers of Italy party, declared in September 2023 that the China-Italy relationship “must be returned to its original channels as a traders’ route, reducing political risks and increasing trade opportunities.” Antonio Tajani, Italy’s foreign affairs minister and leader of Forza Italia, a centrist party created by former Prime Minister Silvio Berlusconi, made clear several times that Italy wants to decrease dependencies on China, but that Rome will remain open to cooperation and economic ties with Beijing in selected areas that are considered risk-free.

In June of last year, the Italian government used specific legislation to block ChemChina, Pirelli’s largest stakeholder, from taking control of the tire-making giant – a move inspired more by national security considerations than market dynamics. The acquisition of Pirelli in 2015 had become a powerful symbol of China’s investment inroads into Europe. In December, Italy officially exited the BRI. With these moves, the Meloni government put an end to the most visible, and powerful, symbols of China’s influence in Italy, giving content to calls made by President of the European Commission Ursula von der Leyen to de-risk ties from Beijing.

De-risking in Practice

Cooperation between Italy and China had reached its apex under the Conte II government, a coalition between the anti-establishment Five Star Movement and the center-left Democratic Party that ruled Italy from September 2019 to February 2021. This period can be considered the heyday of China’s influence in Italy. The subsequent governments led by Mario Draghi and Giorgia Meloni would realign Italy’s China policy with that of the European Union and the United States, adopting measures to reduce ties with China in four areas considered sensitive: critical infrastructure projects, Chinese investments in key industries, telecommunications infrastructure, and pandemic response. 

On critical infrastructure, the Draghi cabinet blocked China’s attempts to acquire stakes in the port authorities of Genoa and the various ports in the North Adriatic Sea (Trieste, Venice, and Ravenna), which had formed the backbone of the MOU in March 2019. Draghi used specific legislation to keep Italy’s critical infrastructures in national hands, effectively closing the door to Beijing’s plans to make Italian ports the gateway of Chinese goods into Europe. As a further pushback against Beijing, in June 2021 Draghi supported the U.S.-inspired Build Back Better World, a plan expected to guide the G-7’s actions in countering China’s infrastructure projects.

The Draghi government also took concrete steps to contain Chinese investments, especially in key industrial and strategic assets. In April 2021, Draghi blocked the takeover of the Italian semiconductor firm LPE by the Chinese company Shenzhen Invenland Holdings. A few months later, Minister of Economic Development Giancarlo Giorgetti, an influential member of Matteo Salvini’s League, adopted specific measures to hinder the attempt by Chinese company FAW Jiefang to acquire Italian firm Iveco.

The Meloni government continued to use special powers to protect assets of strategic national relevance. Besides maintaining Pirelli in Italian hands, in March 2023 the conservative coalition took aim at EFORT Intelligent Equipment, a leader in robotics linked to the Beijing government, by imposing limitations on the transfer of a software library created by the Italian robotics company Robox. The Meloni cabinet used the Golden Power Rules to block EFORT’s ambitions. These rules allow the government to restrict, or block altogether, an investment deemed detrimental to Italy’s national security. 

Under the Conte II government, EU and U.S. calls to restrict components from Chinese firms in core parts of Italy’s telecommunications network and phase out Huawei equipment from 5G networks went unheeded. The Five Star Movement and important sectors of the Democratic Party took a more pro-China stance, arguing that action against Huawei and other Chinese ICT companies could antagonize Beijing. The Draghi governments put some limits on Huawei’s presence in Italy, but the legislation adopted on the rollout of 5G in Italy’s telecom systems still contained various loopholes that favored Chinese ICT companies. 

With the arrival of the Meloni government in October 2022, the push to reduce dependency on Huawei and other Chinese ICT companies gained momentum. The national-conservative coalition closed many loopholes in the legislation and put so many limits on Huawei’s 5G networks that the Chinese company eventually decided to shift the focus of its operations in Italy to issues such as innovation and biodiversity.

The Meloni government also unraveled policies promoted during the COVID-19 pandemic by some political parties, in particular the Five Star Movement and the Democratic Party, that had sought to impose a CCP-style model of social control in Italy. In September 2020, Italy had become the first, and only, G-7 nation to officially endorse China’s Health Silk Road, giving Chinese authorities the opportunity to influence Italy’s pandemic response. Italy became the first Western country to adopt a strict lockdown in March 2020, following the template adopted in the Chinese city of Wuhan. 

In November 2019, Ma Xiaowei, director of China’s National Health Commission and Italy’s then-Health Minister Roberto Speranza, a former member of the Italian Communist Party and at the time leader of a small leftist party named Free and Equal, signed the China-Italy Action Plan on Health Cooperation. A few months later, Italy’s Ministry of Health reached an accord with Google and YouTube in February 2020 on banning disinformation and “promoting reliable information,” raising concerns among several Italian journalists of Chinese-style censorship.

In various declarations, and in his bookPerche’ Guariremo, Speranza praised the Chinese model, expressing his admiration for the way China has succeeded in stopping the COVID-19 pandemic and controlling the population – without, however, considering the political implications of such statement for Italian democracy. Walter Ricciardi, scientific adviser to Speranza, also praised the Chinese model. In his book “Pandemonio,” Ricciardi stated that Italy “must copy China,” not only in its zero-COVID strategy, but also in the way Beijing controls and traces the whole population.

Speranza was the main architect of the Green Pass introduced to fight the pandemic. The Green Pass was a QR-code health certificate – like the one used in China – that proved the holder had been fully vaccinated. Beginning in July 2021, the certificate became necessary to enter most venues in Italy, including bars, restaurants, public transports, banks, post offices, and hospitals. Moreover, all Italian employees in the public or private sector aged 50 and older would need to show the Green Pass to enter their workplace. 

In January 2022, human rights group Amnesty International urged Italy to change its anti-COVID restrictions, including the Green Pass, to restore civil liberties and avoid discrimination against unvaccinated people.

In May 2022, the Draghi government suspended the Green Pass, though Speranza declared that the certificate should stay until 2025. His stance raised criticism from conservative politicians, including Meloni, who accused Speranza of being subservient to Chinese interests and influence. Following her appointment as prime minister, Meloni begun to unravel the ties that Speranza and other policymakers had established with Chinese authorities under the banner of the Health Silk Road, accusing them of upholding a “communist tactic of political control using infectious disease as the excuse.” Meloni declared that in case of another pandemic, “her government will not support the Chinese model of social control adopted by Speranza and his advisers.”

Italy under Draghi and even more so under Meloni has thus been able to adopt measures aimed at reducing dependencies on China in those areas considered risky for Italy’s national security and that of its Euro-Atlantic allies. Although the Meloni government has officially exited the BRI and has unraveled many ties with Beijing in sensitive areas, the process of de-risking could just as easily be undone by the return to power of those political forces that had previously opened the doors to Chinese influence in Italy.