Italy Withdraws from China’s Belt and Road Initiative

On December 6, 2023, the Italian government formally announced that Italy will not renew the 2019 memorandum of understanding (MOU) regarding its formal participation in China’s Belt and Road Initiative (BRI). This move effectively withdraws Italy from President Xi Jinping’s flagship diplomatic initiative first announced a decade ago. Through the BRI, China has become a major international lender and funded many infrastructure projects predominantly in developing countries, which has created controversy for China and other countries associated with the program.

Q1: What was the MOU?

A1: Formally titled, “Memorandum of understanding between the government of the Italian Republic And the government of The People’s Republic Of China on cooperation within the framework of the Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative,” the MOU was signed by the two countries during President Xi Jinping’s state visit to Italy in March 2019. Then prime minister Giuseppe Conte’s government hoped to benefit from China’s rapidly expanding international investments and growing internal market. As with all of the MOUs China signed with other nations, this arrangement was not structured as an economic or trade agreement, but rather stated a general willingness to cooperate under the BRI framework. The MOU was largely a symbolic gesture to enhance China’s global image as a provider of public goods. In Italy there was at the time a sense that the agreement would enhance Italian export opportunities and Chinese investment into Italy. Several accompanying agreements were signed between Chinese and Italian companies at the time, highlighting the Italian government’s hopes of economic benefits.

Q2: Why was the MOU controversial?

A2: The signing of the MOU caused significant hand-wringing in Washington and other European capitals, where there were concerns this indicated a shift in historical partnerships. It certainly marked a historical moment: Italy was the first (and only) country in the G7 to participate in China’s BRI, which many in the West perceived as one of Beijing’s attempts to curb the United States’ global economic influence. Over time the BRI has become associated with unsustainable debt and in some cases projects have encountered financial and quality issues. As relations between advanced democracies and China worsened, association with the BRI became a greater burden. 

In Italy itself, the MOU was not uncontroversial. Matteo Salvini, then interior minister and one of the top leaders of the coalition government in March 2019, was openly skeptical of the agreement. He is now part of the current government led by Giorgia Meloni that has decided not to renew the MOU. Prime Minister Meloni criticized the agreement during her election campaign, indicating she would not renew it.

Q3: Why now?

A3: The MOU was set to expire in March 2024, but a clause in the agreement requires the Italian government to announce its decision to withdraw three months before the agreement automatically renews.

The decision to exit the BRI was largely expected in Italy and elsewhere. Many Italian officials, including Minister of Foreign Affairs Antonio Tajani, stated that the BRI has not yielded the expected economic benefits for Italy. In 2019, Italy saw the BRI as an opportunity to boost exports of Italian goods to China, and yet Italy’s exports to China remain a very small share of total Italian exports when compared to that of other major European economies like Germany and France. Additionally, during the 2019–2023 period Italy’s imports from China have grown disproportionately compared to Italy’s exports to China. And high-level investments from China remain limited.

Growing U.S. and EU tensions with China are also reshaping the economic agendas of many Western countries toward China. An important sign is the recently announced anti-subsidy investigation on EV exports from China launched by the European Commission in September 2023. Italy had already cooled relations with China in the past couple of years in line with overall more skeptical attitudes toward Beijing in the West. For example, the country has strengthened its scrutiny of Chinese investments over fears about inappropriate technology transfer, under former prime minister Mario Draghi, who preceded Meloni’s government and followed Conte’s.

The decision to withdraw also serves the broader interests of Meloni’s government. First, it is an opportunity for the government to align more openly with Washington and signal Italy’s position as a strong U.S. and NATO ally at a time when economic, security, and political tensions are reconfiguring international trade, investment, and supply chains. Indeed, Italy has already signaled its support for U.S.-endorsed trade routes by signing an MOU on a new India-Middle East-Europe Economic Corridor, which some see as an alternative to the BRI. And second, it aligns Italy’s position with that of an increasingly China-skeptic European Union and other partners, potentially strengthening its negotiating position. Italy will be hosting the upcoming G7 meeting and Meloni’s team will need to work with Brussels’ and other allies to address the government’s stated priorities such as migration and the post-pandemic recovery plan.

Q4:What are the implications for the BRI, Italy, and the West?

A4: China’s BRI turned 10 this year and received a new injection of confidence at the highly publicized BRI forum that took place in October 2023. Moreover, Chinese authorities have embedded the BRI in China’s broader Global Development Initiative, which aims to promote a Chinese approach to economic development and governance for countries around the world. At the same time, the BRI has come under fire for its supposed role in fueling unsustainable debt, undermining international norms about development assistance, and burnishing China’s global image. Italy’s decision to exit the agreement will further weaken China’s argument that the initiative has broad global support and highlight its increasing challenges. This impression is made even more obvious given that the announcement came during the same week of the EU-China summit, which was dominated by contentious discussions over trade and highlighted European perceptions that they have little to gain from close economic ties with China.

Italy itself will have to navigate the relationship with the world’s second-largest economy carefully to avoid possible negative repercussions. Foreign Minister Tajani’s trip to Beijing in September seemed to have been aimed at laying the groundwork for continued engagement outside the MOU highlighting the Strategic Partnership that Italy signed with China in 2004, among other things. In many ways, Italy is finding that although the agreement itself had little impact when it was in place, it is far more challenging to undo something of such diplomatic weight.

Italy’s signing of the MOU was symbolic, and its withdrawal is similarly symbolic. Chinese media has been highlighting the United States’ role in pushing Italy to rescind the agreement, underplaying the fraught political debate that has played out within the country. It reinforces a broader trend of strengthened trans-Atlantic relations with regard to how to view and interact with China. Italy’s shift does not indicate any broader shift within the Global South, since Italy has always remained a core NATO ally and is squarely entrenched in the Western global order. But the decision does, however, signal the Meloni governments’ continued commitment to trans-Atlantic relations, including strengthening derisking policies when it comes to China. It also will provide a further example that U.S. policymakers can point to when arguing that discontent with Beijing’s policies is not limited to Washington.

Overall, Italy’s withdrawal from the BRI sends a symbolic message to China and the G7 at a time of high geopolitical tensions. The decision confirms Italy’s alignment with the transatlantic posture on China and furthers some key goals of the government’s agenda. It solidifies Washington’s broader economic security argument, while challenging the BRI’s image on the global stage. The Italian government will now need to recalibrate its relationship with China around this expected, yet remarkable, diplomatic move.

Ilaria Mazzocco is a senior fellow with the Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Andrea Leonard Palazzi is a research associate with the Trustee Chair in Chinese Business and Economics at CSIS.

Senior Fellow, Trustee Chair in Chinese Business and Economics