One of the upshots of the G7 meeting in Cornwall, UK last week (10-13 June 2021) has been a more coordinated response to the perceived threat of China to the world’s security. As well as criticizing the Chinese government for its actions in Hong Kong, the meeting has also resulted in a change of policy by G7 member Italy as regards China’s ‘Belt and Road Initiative’ (BRI).

For many decades, Italy has been keen to foster closer ties with China, and this led in 2019 to its then Prime Minister, Giuseppe Conte, signing a memorandum of understanding with President Xi Jinping, much to the displeasure of other EU members. The move was prompted by earlier agreements between China and Greece which saw an investment by state controlled shipping company, Cosco, in the Port of Piraeus. Although avowed ambitions to turn the port into the ‘biggest transit hub between Europe and Asia, and the biggest port in Europe’, according to the Greek government of the time, may seem farfetched, the port has attracted a far larger proportion of China-Europe volumes than before. Italy’s aim of closer cooperation with China was similarly to attract shipping transiting the Suez Canal en route to Northern Europe.

One of the first fruits of the BRI cooperation was an agreement between the Port of Trieste and the China Communications Construction Company (CCCC) which prompted local, national and regional concerns over China’s growing influence. In particular, CCCC was to invest in an intermodal project connecting the port with the Baltic and Adriatic hinterland (and beyond).

However, long before the latest G7 summit, Italy’s relationship with China had already started to cool. A new government, court cases related to a conflict of interest in the Trieste Port Authority and accusations levelled by the Chinese of corruption and bureaucracy meant that plans did not progress. Instead, China has doubled down on its relationship with Greece through an investment in a multimodal rail company that will allow it access to Europe’s rail network, by-passing Italy completely.

Prime Minister Draghi’s description of China as an ‘autocracy that does not adhere to multilateral rules’ and his commitment to re-assess the BRI agreement will be a relief to the European Commission, NATO and the rest of the G7 members. However, this will likely result in further Chinese investment in the Greek transport and logistics industry, where it will be welcomed by the present administration. The warm relations which Greece enjoys with China will be of continuing concern, partly as many other European partners may lose out from the diversion of shipping volumes but more importantly from the foothold that China has gained politically within the region.

Source: Foundation for Future Supply Chain, June 17, 2021
Author: John Manners-Bell
You must be logged in to post comments