Italy says China trade deal not meeting expectations

Italy's Foreign Minister Antonio Tajani speaks in London, June 21, 2023. [AP Photo]

A controversial investment deal with China has failed to meet Italy's expectations, Rome's top diplomat said Saturday ahead of a visit to Beijing, as speculation mounts that Italy will withdraw.

In 2019, the highly indebted economy became the only nation from the G7 club of industrialized countries to take part in China's Belt and Road Initiative.

Chinese President Xi Jinping's ambitious program, consisting of massive investments in infrastructure such as ports, railways and airports, aims to improve trade ties between Asia, Africa and Europe.

Critics say the plan is a Trojan horse to increase Beijing's influence.

The deal is due to be renewed automatically in March 2024 unless Italy withdraws this year.

"We want to continue to work closely with China, but we must also analyze exports; the Belt and Road Initiative has not produced the results we were hoping for," Italian Foreign Minister Antonio Tajani told an economic forum.

Tajani said Italian exports to China in 2022 were worth 16.5 billion euros ($17.8 billion), whereas the figures for France and Germany were much higher at 23 billion and 107 billion euros respectively.

Tajani will meet Chinese authorities during his trip to Beijing from Sunday to Tuesday and prepare a planned visit by Prime Minister Giorgia Meloni that some experts believe will confirm Italy's exit from the deal.

The withdrawal "has likely already been agreed in principle with Chinese authorities," Lorenzo Codogno, a former chief economist at the Italian treasury, said in a note.

Meloni "will make the official announcement during her state visit to Beijing, expected by mid-October, as a sign of respect for China's leadership," but the Italian parliament will have the final say, he added.

Meloni's predecessor Mario Draghi froze the agreement and blocked large-scale Chinese investment in sectors deemed of strategic importance.