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".

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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.

Belt and Road’s predatory overseas investment model

China is just partnering with other countries on infrastructure projects to grab their assets
By Owen Churchill

The head of the US government’s international finance development agency has stepped up criticism of China’s overseas investment strategy, dismissing Beijing’s efforts to give it greater legitimacy by partnering with other countries on infrastructure projects and accusing China of being “in it to grab their assets”.
Pushing back against international criticism that China’s finance model is predatory and smothers recipient countries in debt they cannot pay, Chinese officials and state media have recently scrambled to play down the geopolitical nature of the “Belt and Road Initiative”, instead focusing on sustainable development and job creation for recipient economies.
But Ray Washburne, president and CEO of the Overseas Private Investment Corporation (OPIC) – an intergovernmental agency that channels US private capital into overseas development projects in the form of loans, funds and political insurance – said on Wednesday that China did not appear to be changing its modus operandi.
“I haven’t seen it,” Washburne said. 

“[China is] not in it to help countries out, they’re in it to grab their assets.”
Washburne made the remarks at OPIC’s Washington headquarters, almost five years to the day that Chinese dictator Xi Jinping unveiled the “Belt and Road Initiative” – formerly “One Belt, One Road” – to build economic, political and cultural ties around Asia and beyond through state-led investment.
Repeating criticism his agency has frequently directed towards Xi’s signature foreign policy initiative, Washburne said China was purposefully plunging recipient countries into debt, then going after their rare earths and minerals and things like that as collateral for their loans.
A spotlight fell on the so-called loan-to-own nature of China’s overseas infrastructure ventures in December when China acquired a major port in Sri Lanka after the island failed to repay the loans that had funded its construction.
In recent weeks, amid growing resistance from the global community and shortly after Malaysian Prime Minister Mahathir Mohamad announced a review of a number of China-backed infrastructure projects because of concerns about Malaysia’s national debt, Xi sought to quell criticism of the initiative, saying it was not about creating a “China club”.
At a seminar on August 27, Xi said China needed to “prioritise the needs of the other party and implement projects that will benefit the local people”.
He also said the projects funded by the more than US$60 billion along the belt and road’s intercontinental route had led to the creation of more than 200,000 jobs.
In another apparent bid to bolster the initiative’s legitimacy in the eyes of the global community, Beijing is increasingly seeking partnerships with other countries, such as Japan, to co-fund infrastructure projects.
During a summit in May between Japanese Prime Minister Shinzo Abe and Li Keqiang, the two countries announced their intention to establish a committee through which ministries and agencies could discuss Sino-Japanese business cooperation in third-party countries.
Abe stressed that Japanese involvement would be contingent on the adherence to international standards, including transparency and financial sustainability.
Along with Australia, Japan is one-third of a trilateral agreement that OPIC is brokering to promote joint finance development projects in the Indo-Pacific region. 

OPIC has already signed separate memorandums of understanding with its Japanese and Australian counterparts.
Asked whether collaboration between Japan and China would jeopardise that agreement, Washburne dismissed the prospect of a substantive partnership between the two countries.
“I don’t see it really happening,” Washburne said.
Japan was one of the countries concerned about growing Chinese influence in the Indo-Pacific region, he said, adding that the two “are very competitive with each other over there”.
OPIC’s managing director of communications, Carol Danko, said Japan’s adherence to international standards of finance development would make any partnership with China a challenge.
“China would have to match the standards of working with their partner,” she said. 

“I don’t think Japan would allow otherwise.”
OPIC had been earmarked for elimination by the administration of US President Donald Trump in an attempt to streamline the government. 

But lobbying – both from within the agency and from lawmakers concerned with the sprawling influence China is exerting through belt and road projects – has given the agency a lifeline.
If it passes, legislation awaiting US Senate approval would not only keep OPIC alive but increase its portfolio cap from US$30 billion to US$60 billion.
In addition, the “Better Utilisation of Investments Leading to Development Act of 2018” (BUILD Act) would give the agency authority to invest equity in development projects, instead of just providing loans.
Though concern about China’s aggressive lending model has fuelled OPIC’s survival, Washburne insisted that impeding Chinese investment would not be a direct criterion when considering future investment projects.
“We’re not looking at something to say ‘Let’s go do something there to beat the Chinese there’,” he said. 

“It has to be a commercially viable project.”