Italy intends to exit China Belt and Road pact

BLOOMBERG

Italy has signalled to the US that it intends to pull out of a controversial investment pact with China before the end of the year.
Italian Prime Minister Giorgia Meloni reassured US House Speaker Kevin McCarthy during a meeting in Rome that while a final decision hasn’t been taken, her government is favouring an exit from its role in China’s massive Belt and Road Initiative.
Italy signed onto the infrastructure initiative in 2019 when Giuseppe Conte was premier, becoming the only Group of Seven country to become part of the deal. Participation will automatically renew in 2024 unless Rome actively exits the agreement.
Italy, like much of Europe, has been caught between escalating tensions between Washington and Beijing, which have compounded in light of Beijing’s continued support for Russia. European countries are struggling to balance a desire to engage with China on trade and investment while pushing back against claims of economic coercion.
China’s Ministry of Foreign Affairs stressed that the two countries have seen “fruitful cooperation” in trade, manufacturing and clean energy since signing the agreement.
“The two sides should tap further into potential in BRI cooperation and step up mutually beneficial cooperation across the board,” foreign ministry spokesman Wang Wenbin told reporters at a regular press briefing on Wednesday.
The US has actively pressured Rome to take a public stance on the issue, and ditch the pact.
Meloni’s diplomatic advisers are still discussing the details and timing of a decision, fearing economic retaliation from China, and nothing will likely be made public before the start of the G-7 leaders’ summit in Hiroshima, Japan, on May 19, according to the people.
The potential move is closely linked to Meloni’s stance on Chinese investments in Italy and in particular on an upcoming choice on whether to use executive power to curtail the influence of China’s Sinochem Holdings Corp, the largest shareholder in tire maker Pirelli & C SpA, the people said. That decision has been delayed to the end of May.
Bloomberg reported in April that Italian officials are discussing a range of options as part of talks with Pirelli investors over the company’s ownership structure.