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China's Belt-and-Road Initiative in Europe | Assessing Germany and Italy's Responses and Strategic Shifts


The rise of China has coincided with the emergence of China as a major source of global infrastructure financing. Much of this financing has been provided under the auspices of Beijing’s much-touted Belt-and-Road Initiative (BRI), announced by President Xi Jinping during overseas visits to Indonesia and Kazakhstan in 2013. Between 2013 and 2023, Chinese firms are estimated to have inked contracts worth up to $1 trillion in infrastructure investments throughout the world, especially in low and middle-income countries in Africa and Asia (ChinaPower Project, 2023). Understandings of the BRI have often diverged substantially: whilst some have viewed it as an attempt to expand China’s economic and potentially even military footprint (Russel & Berger, 2020), others have seen it as a connectivity-driven initiative that does not propel any broader geostrategic aims (Ross, 2020). 

Over time, China has scaled down BRI investments and refocused on investing in more advanced economics, including in Europe. For a variety of reasons, BRI debtors have run into payment issues that have rendered them unable to service debt and thus created financial distress for their Chinese creditors, which frequently engaged in imprudent lending practices. In combination with a sputtering domestic economy, growing international concerns regarding the BRI have seen Beijing shifting toward smaller and more sustainable investments in an attempt to promote the BRI as an “open, green, and clean initiative” (Gong, 2023). As Chinese infrastructure lending has been scaled down, lending has also become more focused on countries and regions that are certain to be able to service their BRI debt, leading to a greater focus on lending to middle and high-income economies. 

Since 2013, European countries have featured prominently in China’s plans for the BRI. Through developing various forms of infrastructure, China aims to promote land-based commercial connectivity with the economies of Europe, which have emerged as a major export destination for Chinese firms. Although BRI investments in Africa and Asia outperform investments in Europe in terms of their total number and overall investment volume, Europe remains a key prize as China seeks to remodel the landscape of global infrastructure and trade. 

This paper examines how Germany and Italy, two of Europe’s largest economies, have responded to the BRI. Not only are both countries highly influential within the EU economically, their historical approach toward the BRI has also been markedly different. Germany has treated the BRI with scepticism, especially under the current coalition government (Hildebrandt, 2023). Italy, in turn, used to be one of the largest BRI lenders but chose to leave the BRI in 2023, reflecting growing concerns regarding China throughout large parts of the European Union (EU) (Mazzocco & Palazzi, 2023).

The first section of this paper introduces the role of the BRI in Europe, examining investment volumes and destinations as well as the EU’s collective response to the initiative. It then examines the German response to the BRI, which has become more negative over time as China-Germany relations have been hit by heightened economic tensions. Moving on to Italy, this submission outlines Italy’s initial reasons for joining the BRI, China’s objectives in the Mediterranean Sea, and Italy’s ultimate reasons for leaving the BRI. 


The BRI in Europe - Facts and figures

The BRI, previously known as One Belt, One Road (OBOR), provides a broader framework for Chinese foreign economic policy engagement since 2013. China has presented the BRI as aiming to enhance global connectivity and cooperation by promoting infrastructure development, trade, and investment along two primary routes, the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The Silk Road Economic Belt focuses on land-based routes that connect China with Europe via Central Asia and the Middle East, while the 21st Century Maritime Silk Road emphasizes maritime routes linking China with Southeast Asia, Africa, and Europe through the South China Sea and the Indian Ocean. Together, these routes aim to establish a network of infrastructure projects, including roads, railways, ports, and energy pipelines, to facilitate the movement of goods, services, and people. The BRI involves the development of extensive transportation and energy infrastructure to enhance connectivity between participating countries. To fund BRI-linked projects, China also created the multilateral Asian Infrastructure Investment Bank (AIIB), which is linked to State financing mechanisms and aims to provide financing for the BRI. At the time of announcement, the BRI thus embodied an increasingly ambitious foreign policy approach that sought to entrench China’s increasingly central in the global economy following the Global Financial Crisis.

European countries, including EU member States as well as non-EU States, have been key target countries for Chinese investments under the BRI. Europe represents a significant market for Chinese goods and services, and the EU is already one of China’s largest trading partners: in 2021, trade with China amounted to 16% of all trade in goods, with the bilateral trade volume standing at €696 billion (Statistisches Bundesamt, n.d.). Through the BRI, China aims to enhance trade relations and secure access to European markets to foster growth and commercial opportunities for Chinese businesses. In this context, the BRI's focus on infrastructure development, including ports, railways, and logistics hubs in Europe, facilitates the movement of goods and enhances connectivity. The 17+1 forum, which brings together China and countries in Central and Eastern Europe, has served as another platform to facilitate China-Europe ties. As Figure 1 indicates, the BRI aims to link mainland China with Europe via a series of railroads, oil and gas pipelines, ports, and economic corridors. 


Figure 1: BRI investments in Europe  

Source: Larsen & Maduz (2020)


China’s BRI engagement with European countries is conducted on a bilateral basis. As of early 2023, China had finalized BRI-linked Memorandums of Understanding (MoUs) with many European States (broadly defined), including EU member States and non-EU countries (see Figure 2).


Figure 2: European States with BRI MoUs
Source: Green Finance & Development Center (2023)


Belgium, Denmark, Germany, Iceland, Ireland, the Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom have not signed any BRI-linked MoUs. Considering the BRI’s umbrella-like and often poorly defined scope, however, this does not mean that locations within these countries cannot or do not feature in BRI-related infrastructure plans. The German city of Duisburg, for instance, has long functioned as a major railway hub for the transport of Chinese goods to Europe (Barkin, 2020). As such, a country not having signed a MoU regarding the BRI is not necessarily indicative of there not being any BRI-linked projects or infrastructure present in the country. As the case of Germany will highlight, doubts and opposition to the BRI thus also does not necessarily translate into a broader reluctance to welcome Chinese investments in critical infrastructure. 

Although European countries are a not negligible part of BRI spending, the relative strength of regional infrastructure means that the infrastructure gap supposedly targeted by BRI investments is less pronounced in the region. As of 2021, and therefore coinciding with the general drop in BRI financing amid the COVID-19 pandemic, projects in Europe, China had invested in 1000 projects in European countries under the BRI, amounting a total investment volume of over $226 billion. This made Europe only the fourth-largest investment destination of BRI funding after Asia (over $469 billion on over 4000 projects), the Americas (over $388 million on over 2400 projects), and Africa (over $338 billion on over 7900 projects) (Voice of America, 2024). Within the investments in Europe, Chinese financing clearly targeted non-EU countries, most notably Russia (see Figure 3).


Figure 3: Largest BRI investments in European countries
Source: Voice of America (2024)


In sum, China’s investments in these countries frequently respond to their acute need for investment in physical infrastructure. In this context, China capitalizes on the strategic vacuum created by the lack of concerted EU infrastructure investment in the European neighbourhood, including in countries that were given EU candidate status. In Russia, the size of investments reflects the growing strategic proximity between Beijing and Moscow as Russia increasingly decouples its economy from Western energy markets (Demarais, 2024). Chinese investments are thus specifically strong in countries in which the EU has not invested extensively.

Mirroring the issues raised elsewhere, recipient countries and EU representatives have voiced concerns regarding the sustainability of BRI projects and the financial transparency of Chinese investments. Especially in Asian economies, Chinese lenders have frequently been accused of pursuing a form of ‘debt trap’ diplomacy, with critics arguing that lenders actively structure loans in a way that creates debt problems for the borrower and ultimately allows China to extract geopolitical concessions (Rajah et al., 2019). Over time, the notion of debt trap diplomacy has been undermined by analyses that have outlined the agency of recipient countries and the role Western lenders and financial markets play in generating debt distress for low- and middle-income economies (Jones & Hameiri, 2020). Regardless of why debt distress occurs, it remains a palpable issue for a number of recipient economies, including in Europe. Consider the case of Montenegro, the government of which lent a total of $1 billion from China in 2014 to finance the construction of a highway as part the BRI. At one point, the debt incurred accounted for more than a third of Montenegro's annual budget and threatened to bankrupt the country before a group of European and US banks assisted the government in restructuring the loan and thus enhance debt sustainability (Ridgwell, 2023). Despite the debt distress caused by the loans, the Chinese firm contracted to build the highway ultimately did not even complete the construction. Others in Europe have also voiced concerns over Chinese investments in countries such as Serbia, which have helped to further undermine the deteriorating relationship between Belgrade and Brussels (Vladisavljev, 2022). Especially in the Balkans, growing Chinese influence is thus viewed with growing suspicion by policymakers in Brussels. In this sense, Chinese investments are frequently perceived as harmful to the long-term interests of European countries and the role of the EU in the wider European neighbourhood.

On an EU level, concerns regarding the BRI have also shaped the Global Gateway Initiative (GGI), through which the EU aims to emerge as a more significant financier of infrastructure in low- and middle-income economies. Under the GGI, the EU aims to channel €300 billion into digital, climate and energy, transport, health, education, and research development projects until 2027 (Tagliapietra, 2022). The Global Gateway framework has been widely perceived as manifesting an attempt to compete with the BRI and develop a more comprehensive and structured geostrategic presence for the EU in the world (Barbero, 2023). This is mirrored by a broader shift in the EU’s discourse toward China: while the 2016 EU Strategy document on China still emphasized “reciprocal benefit in both political and economic terms” in China-EU relations, the EU-China Strategic Outlook of 2019 had begun referring to Beijing as a “strategic competitor” and even as a “systemic rival” (De Decker, 2019). The GGI is thus situated in a broader deterioration of the China-EU relationship, a process in which the BRI has played a key role. However, the GGI has also been subject to significant criticism as it does not provide new, additional funding but simply provides a framework for extant funding while remaining unclear on how the planned investments are meant to be mobilized in practice (Barbero, 2023). Irrespective of these financing issues, the GGI manifests a (thus far largely unsuccessful and undercapitalized) attempt to compete with China, reflecting a change in threat perceptions within the EU vis-à-vis China. 

In conclusion, both EU and non-EU countries are crucial targets for Chinese investments under the BRI. The nature and extent of the bilateral European engagement varies greatly, with some States signing MoUs and others declining formal participation in the BRI. Notably, China’s investments have most extensively focused on non-EU European countries, addressing their pressing need for physical infrastructure. In this context, instances of debt distress, as observed in Montenegro, and growing geopolitical tensions with China have raised concerns among EU representatives and recipient countries. As Europe grapples with these challenges, the EU has sought to respond via the GGI, reflecting an effort to compete with the BRI and establish a more comprehensive geostrategic presence, although criticisms linger regarding its funding approach. In the evolving landscape of global infrastructure development, the interplay between China's BRI and the EU's GGI underscores the shifting dynamics and competition in international relations and trade.


Responses to the BRI - Germany and Italy


  • Germany

Germany has historically not been part of the BRI, with the government of Chancellor Merkel largely remaining opposed to a greater role for Chinese investments in Europe. When China officially launched the BRI in 2013, Germany initially approached the initiative with caution amid concerns about the lack of transparency and questions about the BRI’s long-term sustainability. Chancellor Angela Merkel specifically warned that BRI investments were not necessarily conducted “in the spirit of free trade” and could enhance unwanted Chinese influence in Europe, especially in the Balkans (Brattberg & Soula, 2018). As discussed above, these concerns have been sustained over time as Chinese investments in the region, most notably in Serbia, have grown. German officials also criticized Chinese policy on issues such as cyber espionage and the treatment of the pro-democracy activist and Nobel Peace Prize winner Liu Xiaobo, who was suffering from cancer (Voice of America, 2017). Yet, the Merkel government selectively engaged with the BRI: in 2016, the national railway company Deutsche Bahn signed a MoU with China Railways on the joint development of the BRI’s ‘Eurasian Landbridge’ (Gaspers, 2016). Despite such select engagement with the initiative, Berlin took an initially largely distant approach toward the initiative.

At the same time, the Merkel government actively promoted China-Germany trade throughout the late 2000s and the first half of the 2010s. This focus on maximizing commercial opportunities for German multinationals was consistent with the China policy of Merkel’s predecessor, Gerhard Schröder from the social-democratic SPD, who was an avid supporter of China’s entry into the World Trade Organization (WTO) in 2001 (Barkin, 2020). Throughout the 2000s, expanding sales to the Chinese consumer market while increasing manufacturing operations in China was perceived as a safe bet for German manufacturers, and support for closer economic relations with China was widely supported by both the Schröder and Merkel administrations (Barkin, 2021). China was particularly crucial for the domestically highly influential German car industry, which subsequently grew increasingly dependent on China as a source of supplies, a manufacturing base, and crucially, an export destination (Sebastian, 2022). Merkel also supported a potential participation of Germany in China-supplied 5G networks, which led to a split between the pro-China and more hawkish foreign policy factions of the CDU (Bartsch & Wessling, 2023). The commercial profits German firms (and especially car manufacturers) could generate in China thus outweighed any broader concerns German governments may have had and reinforced a strong focus on maintaining and, if possible, expanding Germany’s commercial relationship with China. Crucially, commercial opportunities were also prioritized over concerns Berlin may have had regarding human rights.

This emphasis on economic opportunities meant that the Merkel government’s approach toward China began to slowly shift when Xi Jinping came into office in 2012 and began imposing economic and industrial policies that started undermining the commercial interests of German firms in China. Xi’s China became notably more assertive on a wide range of policy issues, including the issue of cross-strait relations with Taiwan, the status of Hong Kong, and the supposed threat posed by ‘separatism’ in Tibet and Xinjiang (Gill, 2022). Xi also intensified policies that restricted market access for foreign companies, including through stringent regulatory requirements, limited access to key sectors, and the preferential treatment for domestic companies (Borst, 2021). Furthermore, the State-backed drive to acquire foreign intellectual property for Chinese firms has propelled persistent concerns surrounding intellectual property rights and have required foreign firms to hand over expertise and know-how in order to be able to sell in China (Miller, 2022). China has also begun implementing cybersecurity regulations that impact foreign businesses, especially in technology and related industries, and further undermine the protection of data. The continued industrial policy emphasis of China under Xi, embodied in the "Made in China 2025", additionally seeks to enhance China's domestic capabilities in strategic sectors and bolster the market shares of Chinese State-owned enterprises (SOEs) globally (Kennedy, 2015). Not only did the various measures introduced by Xi curtail the profits German companies could earn in China, Made in China 2025 also directly threatened the global commercial interests of key firms. It was ultimately this change in market environment rather than China’s worsening human rights record that drove the Merkel administration to rethink its China policy (Barkin, 2021). Changes in Chinese policymaking subsequently undermined the German emphasis on “Wandel durch Handel” (“change through trade”), which had dominated German policymaking toward China since the 2000s (Bartsch & Wessling, 2023). As geoeconomic tensions increased, Berlin’s policy began to shift.

As Chinese investment regulations became more invasive, German and European policy on Chinese investments in Germany and Europe responded in tandem. Germany tightened the rules on foreign investments in 2018 and in collaboration with Paris, Germany began pushing for stricter EU-wide regulations on foreign takeovers as well as stricter competition regulations that would target Chinese SOEs and State-subsidized firms (Barkin, 2021). In 2019, the Federation of German Industries, BDI, also warned against market overdependence on China whilst describing Beijing as a “strategic competitor” (Mercator Institute for China Studies, 2019). This terminology was then picked up by the EU in its 2019 strategy document on China (De Decker, 2019). Although Germany did not adopt the hostile rhetoric toward China that was employed in Washington by the Trump administration, the political approach toward China became clearly more restrictive. In this context, a German official was quoted as suggesting that Merkel had no issue with pushing back against China but that the pushing back was not to be done by Germany (Barkin, 2021). Crucially, 2019 also marked the point at which the development of a more consolidated, EU-wide approach became more prevalent. Although this has not eliminated the centrality of the Chinese economy for the German (and European) economy, a tacit shift in tactics has been observable. 

The policy shift initiated by the Merkel government has been continued by the coalition government of Chancellor Olaf Scholz from the SPD, which has also become more overtly critical of China. Scholz’s SPD entered a coalition with the pro-business FDP and the Greens. Especially the Greens, whose leader Annalena Baerbock became Foreign Minister, took a more confrontational stance toward Beijing. In a conference hosted by the Australian Lowy Institute, Baerbock flatly described China as a competitor and strategic rival “when it comes to the very fundamentals of how we live together in this world” and argued that “China has changed, and that’s why our policy towards China also needs to change'' (Kemish, 2023). Like the SPD and the Greens, the FDP has also advocated for a coordinated European approach toward China while specifically emphasizing continued human rights violations and issues surrounding legal security (Reimers, 2021). The FDP also advocates for a closer bilateral German relationship with Taiwan (Reimers, 2021). Influential factions within the SPD have also called for reducing Germany’s economic dependence on China, with Party Chairman Lars Klingbeil highlighting that an attack on Taiwan by China would “fundamentally change” Germany’s relationship with Beijing, similar to how Russia’s attack on Ukraine has impacted ties with Moscow (Reuters, 2023). Within the coalition, the narrative toward China has thus not become hostile but more openly sceptical than it had been under Merkel.

This change in rhetoric and practice is epitomized by the China strategy adopted by the German government in 2023. The strategy outlines a number of key considerations that the SPD, the Greens, and the FDP view as shaping Germany’s future relations with Beijing. Key claims made in the document are:

    • China is aiming to establish “regional hegemony” while aiming to “reshape the existing rules-based international order” and “calling principles of international law into question”.
    • China is committing “serious human rights violations”, most notably in Xinjiang, Tibet and Hong Kong.
    • China’s economic strategy seeks to develop “economic and technological dependencies with a view to using these to assert political objectives and interests”.
    • China engages in “economic and academic espionage in an attempt to gain access to German corporations’ trade and research secrets”.
    • China is guilty of “illegitimate interference” and “acts of transnational repression”.
    • China’s increasingly close strategic relationship with Moscow manifests an “immediate security concern for Germany”.
    • “Elements of rivalry and competition” in China-Germany and China-EU relations have increased.
    • However, systemic rivalry does not preclude a greater degree of cooperation on select policy issues (Bartsch & Wessling, 2023).

In total, the document marks a significant departure from Berlin’s previous foreign policy approach toward China as well as a formal recognition that the hope of “Wandel through Handel” has ultimately been unsuccessful. While aiming to take a more principled position on China in the world, the policy’s focus on maintaining a “constructive relationship” concurrently indicates that other elements of the relationship (such as uncontroversial trade in low-grade technologies and people-to-people ties) could be maintained, signifying a clear focus on de-risking rather than decoupling the German economy from the Chinese market (Oertel, 2023). The formulation and finalization of the strategy document suggests that Germany now firmly views China as capable of impinging on its security as well as its economic interests - the traditional ballast of the relationship” (McElwee & Mazzocco, 2023). Although a change in policy discourse does not automatically translate into a shift in policy practice, the publication of the China strategy embodies the change in Germany’s strategic thinking toward China. 

Despite the change in rhetoric, Germany has surprisingly continued to partially welcome Chinese investment in critical public infrastructure. The conversation regarding de-risking has not been without substance. The Scholz-led coalition government has utilized German and EU-wide investment screening mechanisms to block the acquisition of European firms by Chinese SOEs, for instance in the context of attempts by Chinese firms to acquire stakes in German semiconductor firms (McElwee & Mazzocco, 2023). However, the Scholz government also went on a much-criticized trip to China in 2023, during which Scholz emphasized the continued importance of the economic relationship while avoiding discussions over more politically sensitive topics, such as human rights abuses in Hong Kong, Tibet, and Xinjiang (McElwee & Mazzocco, 2023). Prior to the trip, Scholz had also permitted the minority stake acquisition of a container terminal in Hamburg, Germany’s largest international shipping port, by the Chinese SOE China Ocean Shipping Company (COSCO) (Sullivan, 2023). The Greens and the FDP had heavily opposed the acquisition by COSCO, leading to the COSCO share being ultimately capped at a minority share of 24.99% (Sullivan, 2023). The sale had also been opposed by the European Commission and Germany’s intelligence service (McElwee & Mazzocco, 2023). As such, ambiguity within the coalition remains on how to effectively structure the future relationship with China. Given that the coalition government is unlikely to survive the next general election, it also remains to be seen what the future China policy of the CDU, which has adopted a more hostile rhetoric toward China while in opposition, will look like (Rinaldi, 2023). To some degree, the objective to de-risk the German economy from China while sustaining the commercial profits generated by German multinationals in China thus generates contradictory policy pressures for different factions within the State.

In conclusion, Germany's response to the BRI and China more broadly has evolved over time and has been shaped by a combination of economic interests, geopolitical considerations, and shifts in Chinese policies. Under Merkel, Germany did not join the BRI but continued to aim to maximize commercial opportunities in China. However, as Xi’s policies began to undermine German firms' interests in China, particularly through restrictions on market access and the Made in China 2025 initiative, the Merkel government began reevaluating its approach. This reassessment led to a more restrictive stance on Chinese investments, increased calls for EU-wide regulations, and a shift in rhetoric towards Beijing. The change in Germany's policy trajectory continued under Chancellor Scholz, with the coalition government adopting a more critical stance, especially via figures such as Baerbock. The 2023 China strategy marked an overt departure from previous approaches, acknowledging the challenges posed by China and outlining key concerns related to regional hegemony, human rights violations, economic and technological dependencies, espionage, interference, and the growing strategic relationship with Moscow. Although there is now a clearer emphasis on de-risking the German and the European economy, some ambiguous elements remain, as evidenced by the sale of a minority stake to COSCO. In this context, factions within the government appear to prioritize the commercial interests of large interest groups over wider national security interests, undermining both the German policy doctrine as well as the EU-wide response to China. 


  • Italy

Unlike Germany, Italy’s initial response to the BRI was overwhelmingly positive. In 2014, China and Italy signed an MoU on jointly advancing the Silk Road Economic Belt and the 21st Century Maritime Silk Road, signalling an initial interest in cooperation within the framework of the BRI. One year later, Italy also joined the AIIB. In 2019, the populist government of Prime Minister Giuseppe Conte officially signed an MoU with China on participation in the BRI during a State visit by Xi to Rome. The MoU was widely “perceived as a way to secure more exports to China and more chances to access financing from the AIIB”, especially in infrastructure, and enhanced the access of Chinese firms to the port in Trieste while including the possibility of managing the ports in Genoa, Palermo, and Ravenna (Dasgupta, 2019). Under the MoU, Rome signed several additional agreements on matters such as double taxation, health and safety standards, other commercial dealings, and heritage exchanges (Sacks, 2023). Italy was the first G7 country to formally join the BRI, and the Conte government faced extensive criticism for its decisions from both Brussels and Washington. At the time, Italy’s participation in the BRI further undermined the Brussels-Rome relationship, which had already become strained amid disagreements over EU-wide immigration reform measures (Mitchell, 2019). At the same time, the US’ turn toward protectionism under the Trump administration heightened Italy’s regional isolation, providing a further incentive for closer relations with China (Bindi, 2019). Increased tensions between the EU and one of its member States thus generated strategic space that China could exploit. This marks a worrying lesson for the EU today as it becomes ever more fragmented amidst the rise of populist politicians.  

Italy’s main reason for joining the BRI, however, was potential commercial gain for an economy that had been stuttering since the outbreak of the Global Financial Crisis. Since the 1990s, a closer economic and industrial relationship with China has been backed by various Prime Ministers, including Romano Prodi, Massimo D’Alema, Matteo Renzi, and Paolo Gentiloni (Bindi, 2019). As China-Italy trade has expanded significantly over the past three decades, Italy has begun running up significant trade deficits with Beijing. In 2019, Italy’s then Minister for Economic Development, Luigi Di Maio, subsequently justified the decision to join the BRI by suggesting that “There is a lot of ‘Made in China’ coming into Italy and too little ‘Made in Italy’ that goes into China”, adding that the agreement with China would ideally allow for  “a substantial and gradual increase of exports” to “balance out the trade imbalances” (Mitchell, 2019). In this context, Italian policymakers saw China as the solution to the economic woes that had depressed growth performance in Italy since the Global Financial Crisis and the Eurozone Crisis (Zeneli, 2023). This Illustrates a broader dynamic in the relationship between China and BRI recipient countries: recipient countries possess agency in selecting how they interact with China and the BRI. At the same time, relative isolation at specific periods in time may make them more likely to welcome Chinese investments. 

For China, investments in Italy remained attractive due to its relative diplomatic isolation within Europe and its location in the Mediterranean Sea, where China has sought to expand its strategic presence through various investments. In 2016, COSCO acquired the port of Piraeus in Greece as a majority shareholder, and the influx of Chinese goods into the European consumer market via Piraeus has increased since then (Bali, 2022). After COSCO acquired the port, the share of total Chinese trade being shipped via Piraeus increased from 2% to 13%, making the port a key node for China’s commercial interactions with Europe (Bindi, 2019).  This reflects a broader trend in BRI investments as effectively manifesting a form of market-finding behaviour by Chinese SOEs (Banach & Gunter, 2023). COSCO also has minority shares in the ports in Bilbao, Genoa, Istanbul, Valencia, and Port Said, while China Merchants Port Holdings (CMPH), another SOE, holds minority shares in the ports in Istanbul, Marseille, and Marsaxlokk (Malta) (Duchâtel, 2019). Chinese SOEs are also involved in port development and construction projects, with the Shanghai International Port Group developing and managing the port in Haifa, China Harbor Engineering Company building a new port in Ashdod, and China State Construction Corporation and China Harbor Engineering Company cooperating on the development of the port in Cherchell, Algeria (Duchâtel, 2019). The Mediterranean Sea has thus emerged as a key geography for the BRI. For Italy, the acquisition of non-Italian ports by Chinese SOEs and subsequently rising trade revenues threaten the commercial role of Italian ports, especially if the port in Piraeus became linked to Central Europe via railway, which would then entirely bypass the Italian economy (Bindi, 2019). As such, becoming part of the BRI allowed Italy to theoretically become part of a new network reshaping regional economic integration. 

Italy’s support for the BRI being based on perceived economic benefits rather than a genuine political reorientation toward Beijing ultimately nevertheless meant that Italy’s support for the initiative deteriorated when the BRI failed to meaningfully shift the dynamic in the bilateral trade relationship. In 2021, Prime Minister Conte, who had signed the agreement, chose to resign following a series of domestic challenges to his populist government. Conte was replaced by the technocrat Mario Draghi, the former head of the European Central Bank. Draghi took a much more restrictive attitude on Chinese investments that Conte, freezing the 2019 agreement and launching a critical screening of Chinese investments in Italy that led to the government blocking at least three Chinese acquisitions of Italian firms in 2021 (Amaro, 2023). Draghi specifically focused on the domestic enforcement of the “golden power” rules by limiting Chinese strategic investments in infrastructure, blocking access to key strategic technologies, and shielding distressed Italian companies against takeovers by Chinese firms (Zeneli, 2023). As part of the pushback against Chinese technology acquisitions, Draghi used investment screening mechanisms to block semiconductor manufacturing acquisitions and re-investigate previous deals on food, applied materials, and drones that had been pushed through by the Conte administration (Zeneli, 2023). Under Draghi, “Italy completed a decisive change of track, distancing itself from a previous openness towards China” as Draghi “returned Italy to its dual Atlanticist and European frame while labouring to strengthen multilateralism and the rules-based system” (Hong, 2021). As Italy moved away from a populist government toward a more technocratic and pro-EU administration, attitudes toward the BRI changed. 

Draghi’s more sceptical approach has been continued by his successor Giorgia Meloni, under whom Italy has formally exited the BRI. Meloni, who entered office in 2022, described the decision to join the BRI as a “big mistake” and suggested that “Italy is the only G7 member that signed up to the accession memorandum to the Silk Road, but it is not the European or Western country with the strongest economic relations and trade flows with China” (Sacks, 2023). Her Defence Minister further called the decision to join the BRI an “improvised and atrocious act” (Sacks, 2023). Meloni has also taken a more active position on cross-strait relations, suggesting that she would support free and democratic elections in Taiwan (Amaro, 2023). Like Draghi, Meloni did not solely refer to economic imbalances as driving her doubts regarding China: instead, she has lamented the oppression of the Uyghurs in Xinjiang, China’s approach to the COVID-19 pandemic, China’s hostility toward Taiwan, and China’s close relationship with Russia since the invasion of Ukraine (Zeneli, 2023). China’s gradually closer relationship with Moscow has thus impacted strategic thinking toward Beijing in several European capitals. Meloni has also proposed that “there is no political will on my part to favour Chinese expansion into Italy or Europe” (Sacks, 2023). In 2023, the Meloni government then announced its decision to not renew the MoU on the BRI, and Meloni has realigned Italy firmly with the US in regard to its China policy (Amaro, 2023). Italy’s momentary rapprochement with Beijing has thus ended. 

Despite this realignment, Italy’s policy options remain curtailed by economic realities and a widening trade deficit with China. China is Italy’s second-largest non-European trade partner after the US. While the BRI agreement stimulated China-Italy trade, which grown from $50 billion to $80 billion since 2019, the gains made from this have been one-sided as Chinese exports to Italy grew from $35 billion in 2019 to nearly $61 billion in 2022 (Zeneli, 2023). The relative lack of dependence on China means that de-risking the Italian economy should be easier than it is elsewhere. However, growing trade deficits remain a perennial concern for policymakers in Rome. 

Ultimately, Italy's engagement with the BRI was driven by continued economic concerns, issues in the EU-Italy relationship, and the widening trade deficit with Beijing. The 2019 agreement signed by Prime Minister Conte aimed to boost exports and gaining access to Chinese financing. However, Italy's support for the BRI waned as the expected economic benefits did not materialize, and a shift in leadership to Mario Draghi brought about a more negative approach toward the BRI. Under Draghi's administration, Italy froze the 2019 agreement, implemented screening mechanisms, and distanced itself from the BRI, aligning with a more Atlanticist and European framework. This trajectory continued under Draghi's successor, Giorgia Meloni, who not only exited the BRI but also grew more openly critical of broader Chinese policy conduct. Notably, Meloni embodies a new generation of politicians that are right-wing but largely supportive of the EU and the US’ policy toward China.



This paper has examined the policy responses to the BRI and, ultimately, China more broadly, by two of the largest economies in Europe: Germany and Italy. Initially, the German and Italian approaches diverged quite significantly as Germany remained reluctant to join the BRI amid worsening trade relations with China. For Italy, in contrast, joining the BRI raised the prospects of additional financing, aimed to avoid being left behind in the connectivity environment of the Mediterranean Sea, and responded to the challenging relationship with Brussels at the time. As the promises of the BRI failed to deliver and Italy returned to a more technocratic administration, however, Rome’s approach changed. More broadly, Germany and Italy converge in their threat perceptions and their doubts regarding China. These doubts have become increasingly institutionalized on an EU-level, as reflected in the Global Gateway Initiative and the prevalent understanding of China as a systemic competitor. Italy’s exit from the BRI also tells a wider story about the initiative, “which has already been scaled back as recipient countries grapple with debt distress, Chinese banks seek to reduce their exposure to risky loans, and China grapples with mounting domestic economic challenges” (Sacks, 2023).

Although the BRI is not entirely dead, it has changed to a degree that makes it barely recognizable when compared to the umbrella-like framework launched by Xi in 2013. The decline and relative failure of the BRI nevertheless does not eliminate the challenges posed by Chinese investments in crucial firms, supply chains, and critical infrastructure. In the case of Germany, the sale of a minority stake at the port in Hamburg to COSCO thus raises doubts about whether key elements within German elite politics are sufficiently careful in their handling of deals with China.

While there is a broader shift throughout Europe toward more comprehensive investment screening mechanisms, the development of these mechanisms remains work in progress and must be accelerated to bolster the EU’s ability to respond to various geoeconomic challenges and ensure that European interests are protected going forward.


April 2024. © European Foundation for South Asian Studies (EFSAS), Amsterdam