Italian Horse

Italy takes a shine to China's New Silk Road
BBC News

China has bought up a majority stake in the Greek port of Piraeus - and Italy might be next

China's president lands in Rome on Thursday, where he is expected to sign a landmark infrastructure deal that has raised eyebrows among Italy's Western allies.
Xi Jinping's project is a New Silk Road which, just like the ancient trade route, aims to link China to Europe.
The upside for Italy is a potential flood of investment and greater access to Chinese markets and raw materials.
But amid China's growing influence and questions over its intentions, Italy's Western allies in the European Union and United States have concerns.

By land and by sea
The New Silk Road has another name -- the Belt and Road Initiative (BRI) -- and it involves a wave of Chinese funding for major infrastructure projects around the world, in a bid to speed Chinese goods to markets further afield.
It has already funded trains, roads, and ports, with Chinese construction firms given lucrative contracts to connect ports and cities -- funded by loans from Chinese banks.
The levels of debt owed by African nations to China have raised concerns in the West -- but roads and railways have been built that would not exist otherwise:

• In Uganda, Chinese millions built a 50km (30 mile) road to the international airport
• In Tanzania, a small coastal town may become the continent's largest port
• In Europe too, Chinese firms managed to buy 51% of the port authority in Piraeus port near Athens in 2016, after years of economic crisis in Greece

Italy, however, will be the first top-tier global power -- a member of the G7 -- to take the money offered by China.
It is one of the world's top 10 largest economies -- yet Rome finds itself in a curious situation.

The collapse of the Genoa bridge in August killed dozens of people and made Italy's crumbling infrastructure a major political issue for the first time in decades.
And Italy's economy is far from booming.
The country slipped into recession at the end of 2018, and its national debt levels are among the highest in the eurozone.
Italy's populist government came to power in June 2018 with high-spending plans but had to peg them back after a stand-off with the EU.
It is in this context that China's deal is being offered -- funding that could rejuvenate Italy's grand old port cities along the Maritime Silk Road.
Italian Prime Minister Giuseppe Conte has mentioned the cities of Trieste and Genoa as likely candidates.
"The way we see it, it is an opportunity for our companies to take the opportunity of China's growing importance in the world," said Italy's undersecretary of state for trade and investment, Michele Geraci.
"We feel that amongst our European partners, Italy has been left out. We have wasted a little bit of time," he told the BBC.
So what's in it for China?
Italy's move is "largely symbolic", according to Peter Frankopan, professor of Global History at Oxford University and a writer on The Silk Roads.
But even Rome admitting the BRI is worth exploring "has a value for Beijing", he said.
"It adds gloss to the existing scheme and also shows that China has an important global role."

"The seemingly innocuous move comes at a sensitive time for Europe and the European Union, where there is suddenly a great deal of trepidation not only about China, but about working out how Europe or the EU should adapt and react to a changing world," Prof Frankopan told the BBC.
"But there is more at stake here too," he added.
"If investment does not come from China to build ports, refineries, railway lines and so on, then where will it come from?"
Ahead of his arrival, Xi declared that the "friendship" between the two nations was "rooted in a rich historical legacy".
"Made in Italy has become synonymous with high quality products. Italian fashion and furnishings fully meet the taste of Chinese consumers; pizza and tiramisu are liked by young Chinese people," he wrote in an article published by Corriere della Sera.Explorer Marco Polo's travels along the Silk Road were immortalised in the "Book of Marvels"

That "made in Italy" label carries a reputation for quality worldwide, and is legally protected for products items processed "mainly" in Italy.
In recent years, Chinese factories based in Italy using Chinese labour have been challenging that mark of quality.
Better connections for cheap raw materials from China -- and the return of finished products from Italy -- could exaggerate that practice.

Predatory investment
The non-binding deal being signed by the two countries on Thursday comes amid questions over whether Chinese firm Huawei should be permitted to build essential communications networks -- after the United States expressed concern they could help Beijing spy on the West.
That is not part of the current negotiations in Italy.
But a little over a week before the deal was due to be signed, the European Commission released a joint statement on "China's growing economic power and political influence" and the need to "review" relations.
As Xi tours Rome, EU leaders in Brussels will be considering 10 points for relations with China.
While they include deepening engagement, they also involve plans to "address the distortive effects of foreign state ownership" as well as "security risks posed by foreign investment in critical assets, technologies and infrastructure".
In March, US National Security Council spokesman Garrett Marquis pointed out that Italy was a major economy and did not need to "lend legitimacy to China's vanity infrastructure project".

NSC
✔@WHNSC
Italy is a major global economy and a great investment destination. Endorsing BRI lends legitimacy to China’s predatory approach to investment and will bring no benefits to the Italian people.
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Members of Italy's ruling right-wing League party have their owns concerns about national security
Interior Minister Matteo Salvini warned that he did not want to see foreign businesses "colonising" Italy.
"Before allowing someone to invest in the ports of Trieste or Genoa, I would think about it not once but a hundred times," Salvini warned.

Setting the scene
Italian officials are keen to point out that the deal being signed is not an international treaty, and is non-binding.
"There are no specific projects," Mr Geraci said.
"It is more of an accord that sets the scene."
Other European nations already accept Chinese investment through something called the Asian Infrastructure Investment Bank, he said -- something the UK was the first to sign up to.

"And then one by one, France, Germany, Italy and everyone else also followed suit," Mr Geraci said.
Similarly, he believes Italy's neighbours will soon follow it into the Belt and Road initiative.
"I do believe that this time Italy is actually leading Europe -- which I understand may be a surprise to most," he added.

Trojan horses: Pro-Beijing bloc in Eastern Europe undermines EU

At the 16+1 summit in Hungary, China further expanded its influence in Eastern and Southeastern Europe. 

By Sieren

At the annual meeting of the Cooperation Between China and Central and Eastern European Countries, known as 16+1, in Budapest, Li Keqiang said China wanted to "build bridges."
He told the gathering that his country's economic investments in the host region would serve "more balanced development in Europe."
Development of infrastructure development may indeed become increasingly more balanced, but with China's bridges comes a tunnel that will undermine the EU's authority. 
Over the next few years, China intends to invest $3 billion (€2.5 billion) into 16 countries in Central and Eastern Europe, including 11 EU member states.
Referring to the summit 1+16 would make more sense because it is China — as the world's No. 2 economy by gross domestic product — that is setting the tone.
Officials consider Eastern Europe an important hub for China's New Silk Road project with the goal of making Asia, Europe and Africa more interconnected economically.
Thus the historic new investments in land and sea trade routes.
China is not doing this for altruistic reasons, and officials have never made any effort to convince potential partners otherwise.
If construction projects are financed by Chinese banks, then they will also be built by Chinese workers. 
In return, Beijing would like some gratitude from politicians in the countries where it is active.
China already has interests in Hungarian car factories, Serbian steelworks, Romanian oil refineries, Albanian airports and Croatian power plants. 
At the summit, Li and Hungary agreed to modernize a railway line that will enable goods that arrive in the Greek port of Piraeus, which is controlled by China, to get to the Central European market more quickly via Serbia and Hungary.
There's a perception that the European Union neglects its eastern member states, which makes officials in such countries all the more grateful for China's lucrative investment programs.
And, in West Balkan states still waiting to be granted EU membership, there is a sense that at least Beijing is taking them seriously.

'A deepening division'
The interest is a real problem for the EU.
"China's investments in Eastern Europe contain the danger of a deepening division within the EU," the German member of the European Parliament Bernd Lange, a Social Democrat, recently warned. He is far too cautious in his wording: There is not only a danger — the division is already deep.
China's credit-based investment aid not has not only elicited gratitude, but has also created political allies to help the country further expand its influence. 
This summer, Greece — which Xi Jinping once described as China's "most reliable friend in Europe" — used its influence to stop the EU from being more robust in condemning territorialism in the South China Sea or restricting the country's investments within the bloc.
And Central European leaders such as Czech President Milos Zeman or Hungarian Prime Minister Viktor Orban are open about their admiration for China's authoritarian governmental system and welcome the fact that — in contrast to decrees from Brussels and Berlin — Beijing does not lecture them on the rule of law, democracy and refugee policy. 
"The world is changing," Orban said on Monday in Budapest.
"China has the resources to enable developments that would be impossible with EU funding alone."

An EU alternativeThe European Union should put more effort into driving its own infrastructure projects, such as the West Balkan road and energy networks that were announced as part of the Berlin Process.
Countries that seek to join the European Union — such as Serbia, which cannot yet receive the EU's Structural and Investment Funds — do not necessarily much where they get necessary money from. What's important is progress.
The European Union is too slow, too divided, and has increasingly less money.
All this has helped Beijing expand its sphere of influence without anyone putting on the brakes.
The "one EU" policy that Reinhard Bütikofer, a German Green in the European Parliament, has called for was inspired by Beijing's "one China" policy, but so far it is not working.
Why should China agree?
Well, there is one argument: Beijing and a stable, powerful EU could work together and position themselves against the United States — especially on the issues of trade and North Korea.
China, however, appears to have more of an interest in infrastructure projects and competition with the European Union than in a stable multipolar world order.

Chinese Peril

India's "new Silk Road" snub highlights gulf with China
Reuters

India's snub to the "Belt and Road" project was the strongest move yet by Modi to stand up to China.
NEW DELHI -- China invited Indian Prime Minister Narendra Modi and six cabinet colleagues to its "new Silk Road" summit this month, even offering to rename a flagship Pakistani project running through disputed territory to persuade them to attend, a top official in Modi's ruling group and diplomats said.
But New Delhi rebuffed Beijing's diplomatic push, incensed that a key project in its massive initiative to open land and sea corridors linking China with the rest of Asia and beyond runs through Pakistani controlled Kashmir.
The failure of China's efforts to bring India on board, details of which have not been previously reported, shows the depths to which relations between the two countries have fallen over territorial disputes and Beijing's support of Pakistan.
India's snub to the "Belt and Road" project was the strongest move yet by Modi to stand up to China.
But it risks leaving India isolated at a time when it may no longer be able to count on the United States to back it as a counterweight to China's growing influence in Asia, Chinese commentators and some Indian experts have said.
Representatives of 60 countries, including the United States and Japan, travelled to Beijing for the May 14-15 summit on Xi Jinping's signature project.
But Ram Madhav, an influential leader of Modi's ruling Bharatiya Janata Party (BJP) involved in shaping foreign policy, said India could not sign up so long as the China-Pakistan Economic Corridor (CPEC) -- a large part of the "Belt and Road" enterprise -- ran through parts of Pakistan-administered Kashmir that India considers its own territory.
"China routinely threatens countries when it finds issues even remotely connected to its own sovereignty question being violated," Madhav said. 

"No country compromises with its sovereignty for the sake of trade and commerce interests."
India, due to the size and pace of expansion of its economy, could potentially be the biggest recipient of Chinese investment from the plan to spur trade by building infrastructure linking Asia with Europe, the Middle East and Africa, according to a Credit Suisse report released before the summit.
Chinese investments into India could be anything from $84 billion to $126 billion between 2017 to 2021, far higher than Russia, Indonesia and Pakistan, countries that have signed off on the initiative, it said.
China has not offered any specific projects to India, but many existing schemes, such as a Bangladesh-China-India-Myanmar Economic Corridor that has been planned for years, have now been wrapped into the Belt and Road enterprise.
China is also conducting feasibility studies for high-speed rail networks linking Delhi with Chennai in southern India that would eventually connect to the modern day "Silk Road" it is seeking to create.
But if India continues to hold back from joining China's regional connectivity plans the commercial viability of those plans will be called into question, analysts say.
China has held talks with Nepal to build an $8 billion railway line from Tibet to Kathmandu, but it ultimately wants the network to reach the Indian border to allow goods to reach the huge Indian market.

STRATEGIC FEARS
India has other worries over China's growing presence in the region, fearing strategic encirclement by a "string of pearls" around the India Ocean and on land as China builds ports, railways and power stations in country such as Nepal, Sri Lanka and Bangladesh.
Ashok Kantha, who was India's ambassador to China until 2016, said India had repeatedly conveyed its concerns to China, especially about the China-Pakistan Economic Corridor and the need to have open discussions about it.
"Where is the economic rational for CPEC?" he said. 

"There is no major economic driver, the drivers are essentially political and strategic in character."
Just a week before the summit, China's ambassador to India, Luo Zhaohui, offered to change the name of CPEC to placate New Delhi and ensure it didn't boycott the Beijing conference.
Luo did no elaborate on the proposal, made during a speech at an Indian military think-tank, according to people who attended the meeting and local media reports. 

A transcript released later by the Chinese embassy did not include a reference to changing the project's name.
But Chinese officials in the past have suggested this could mean adding India to the name to make it the "China-Pakistan-India Economic Corridor".
A Chinese diplomat, speaking on condition of anonymity, suggested India could build infrastructure on its side of Kashmir which could eventually be linked to the roads and power lines China planned to build in Pakistani Kashmir.
Indian experts said another proposal explored in meetings between former diplomats and academics from the two sides was renaming the project the "Indus Corridor" to overcome India's objection that the "China-Pakistan" name endorses Pakistan's claim to Kashmir. 

Pakistan and India have fought two of their three wars over Kashmir, which they both claim in full. Chinese Foreign Ministry spokeswoman Hua Chunying did not comment directly on any offer to change the name of CPEC, but drew attention to Xi's remarks during the summit that China would follow the principle of peaceful co-existence and that New Delhi need not worry.
"I think the concerns from the India side should be able to be resolved," she said.
Indian Foreign Ministry spokesman Gopal Baglay said New Delhi had not received any suggestions through proper channels and that India wanted a meaningful discussion with China on the whole project.