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Italy, China deepen ties under wary eyes of U.S., EU

MILAN — Italy’s head of state told visiting Chinese President Xi Jinping on Friday that China’s new “Silk Road” linking Europe and Asia must be a “two-way street,” addressing concerns among Western allies that the colossal infrastructure project is meant merely to amplify Beijing’s global influence.

During Xi’s two-day official state visit, Italy is expected to become the first major democracy to sign an agreement to join China’s “Belt and Road” initiative. The program aims to invest in ports, roads, airports and railways in Asia, Africa and Europe to create a conduit for trade and China’s construction industry. Both the United States and Italy’s European partners, however, see it as a threat as China seeks to project its power.

While Xi was getting the red-carpet honors in Rome, the European Union’s leaders were in Brussels preparing a strategy to counter the growing influence of a China, described as a “systemic rival.”

The EU is, among other things, worried about unfair competition from Chinese companies, which are controlled by the Chinese government and benefit from the state’s financial backing.

The U.S., meanwhile, is in a trade war with China, imposing tariffs on billions of euros on each other’s goods, and wants to limit China’s ambitions to dominate future technologies, in particular the next-generation, superfast 5G networks. Critics say Chinese domination in 5G networks could allow it to snoop on global data. Both the U.S. and Europe also complain that China forces foreign companies to provide technological know-how in exchange for a presence in the country.

Xi’s visit to Italy is expected to produce dozens of deals worth billions of euros alongside the infrastructure framework covering cultural exchanges, sports cooperation and business deals. Officials have said China’s participation in Italy’s 5G networks is not on the table.

Mattarella told a joint press conference with Xi that the infrastructure initiative is “the ideal framework for increasing joint collaboration,” to stimulate Chinese investments in Italy and open the Chinese market to Italian exports. But he also addressed concerns that China’s state apparatus would be the real winner.

“The old Silk Road was an instrument of knowledge among peoples, of sharing, and of mutual discoveries. So, too, the new one must be a two-way street, along which travel not only merchandise but also ideas, talents, knowledge, long-term solutions to common problems and future projects,” Mattarella said.

He said both countries could reap the benefits of economic cooperation “founded on fair competition, respecting industrial and intellectual property and in the common fight against counterfeiting.”

Xi told reporters that the importance of China’s relationship with Italy went beyond bilateral ties.

“China appreciates Italy’s willingness to play a positive role in developing a healthy and stable China-Europe relationship,” Xi said.

Xi and his wife, Peng Liuan, were greeted with full honors in the courtyard of the presidential palace, overseen by the regal guard while a band played the Chinese and Italian anthems.

Xi later attended a wreath-laying ceremony at Italy’s monument for the unknown soldier, and visited parliament and was scheduled to attend a state dinner where Andrea Bocelli will perform. The state visit, reciprocating one by Mattarella two years ago, was being held under maximum security, with large swaths of Rome closed.

But the centerpiece of the visit will be Saturday’s signing of a memorandum of understanding to make Italy the first Group of Seven and core EU nation to join China’s “Belt and Road” project, which has so far seen investments totaling more than a trillion dollars.

Since Xi announced the ambitious project in 2013, it has been hit by complaints that it saddles participating countries with debt while doing little to boost local economies. Projects in Nepal, Hungary and Myanmar have been cancelled or stalled as a result of either financing difficulties or violations of local regulations.

In Brussels, French leader Emmanuel Macron called for a concerted EU approach to China, criticizing Italy’s singular move in agreeing to sign the deal with China.

“I believe that holding bilateral talks on the New Silk Road initiative is not a good method,” Macron said. “We won’t proceed like that.”

German Chancellor Angela Merkel agreed it would “be better if we act uniformly.”

She said it was important that Europe make it clear in discussions with China of the need for reciprocal market access. She noted there have been some signs of progress, with some German companies now allowed to own more than 49 percent of joint ventures in China.

China expert Francesco Sisci said Mattarella’s comments indicate “that he fears there hasn’t been enough transparency so far in relations between China and Italy. Allies may also have expressed to him their worries about how Italy is managing the new relationship with China.”

“The accent is that Italy risks becoming a Trojan horse for the Chinese invasion,” he said.

Sisci noted Italy’s contrasting interests, between its ties to Western allies, and its ambition to become a bridge linking to Asia and Africa, while expanding its footprint in the huge Chinese market.

Chinese investments in Italy have totaled 22 billion euros ($25 billion), officials say, well below that of other European nations. Britain, for example, has received investments worth 80 billion euros.

Italian exports into China lag other nations by a decade or more, running at 13 billion euros compared with 20 billion euros for France and 87 billion euros for Germany.

Sam Petrequin in Brussels and Geir Moulson in Berlin contributed to this report.

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