China getting a rise out of reckless Italy?

Italy's populist government may become the first in Europe to endorse China's Belt and Road Initiative. The Western establishment from Washington to Brussels is apoplectic, and on this one, they are right to be

One Belt One Road, through Italy?
Tim Hedges
On 22 March 2019 12:21

A short distance west of Florence lies the city of Prato which has, since the time of the Medicis, been associated with the textile trade. It is now Chinese.

At least, when you go there it seems to be Chinese: there are only around ten thousand legally registered Chinese, but it is thought that more than 50,000, at least a quarter of the city’s inhabitants, are incomers from China.

The nature of Chinese diaspora is that they don’t register with the authorities, they police themselves, handle their own medicine and, of course, don’t pay taxes.

Chinese groups are literally a law unto themselves. The Chinese seem to like Italy and I think it is probably the informal way of life: plenty of laws but few of them observed or enforced.

I thought of Prato when I learned that the present government is desirous of endorsing the Chinese Belt and Road Initiative (BRI), the first European country to do so.

The BRI is the brainchild and flagship policy of premier Xi Jin Ping, who has made himself Leader for Life, like one of the old Mandarin emperors. The other thing you need to know about Xi is that he has also banned photographs of Winnie the Pooh, whom he resembles, and is never photographed staring at a pot of honey.

The aim of the BRI is like the creation of a worldwide Silk Road: infrastructure for trade involving Chinese ships, trains and trucks so they can enter every single market in the world with their goods. It is a project of which few people have any detailed knowledge. It will take decades to build and cost trillions, but even as recession stares them in the face the Chinese persevere with it. BRI is number one priority.

By chance I have just finished ‘Belt and Road: A Chinese World Order’ by Bruno Maçães of the Hudson Institute, who is also a fellow at China’s Renmin University.

His book paints a grim picture of the world slowly falling under Chinese control. China finds third world countries, Sri Lanka is a good example, and softens them up with infrastructure projects financed with cheap debt.

The Sri Lankans failed to capitalise on the infrastructure, particularly since they didn’t really need it, and couldn’t pay back the loans. The Chinese were mortgagees in possession of their own port in a very convenient location next to their main competitor, India. Chinese naval vessels can now dock at the facility, rather changing the power balance of the area.

This picture is being replicated from Vietnam to Indonesia, from Kazakhstan to the borders of Europe. You would have to be suffering from extreme naivety to believe these new trade routes are for everyone. Maçães tells of a newly built Malaysian port with Chinese street signs, Chinese restaurants. BRI is there to benefit China.

So what does Italy want with this? I sometimes think both the Vice-Premiers, Di Maio of 5-Star and Salvini of the League, take a perverse pleasure in upsetting people. The Western establishment from Washington to Brussels is apoplectic.

And particularly Brussels: the Budget office has said Italy can’t raise any more debt, so rather than raise it in the market they make a private, off balance sheet arrangement with China. Washington points out that this vast, international hegemonistic project has now reached the G-7.

What will happen next? If I were advising China I would counsel going for Trieste, with its Austro-Hungarian Empire rail links to Northern Europe and under-used port; or Genova, with its ports and shipyards and unstable local government. China could offer to rebuild the Morandi road bridge which recently fell down. And Genova is not too far from Prato.

If I were advising the Italians I would tell them to have nothing to do with it. Nothing good can come from such a dalliance and Italy will be no kind of equal partner. The Chinese will eat them for breakfast.

Can it really be that a major European country would throw in its lot with China? That President Xi and his hordes are on our very doorstep?

We must hope this is just a way of persuading Europe to loosen its purse strings and that Italy is not really serious. But I wouldn’t bet on it.

Tim Hedges, The Commentator's Italy Correspondent, had a career in corporate finance before moving to Rome where he works as a freelance writer, novelist, and farmer. You can read more of his articles about Italy here

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