What’s going on here?
Italy becomes the first developed economy and the latest country to join the ambitious Chinese Belt and Road Initiative (BRI).
What does this mean?
The BRI project (which has been likened to the ancient Silk Road trade route) is part of Chinese President Xi Jinping’s vision to link China and the world. China provides loans to other countries to fund infrastructure spending (for railways, roads, ports, etc). It’s expected to cost it over £760m.
Italy’s economy has been lagging in recent years. The country slipped into recession (consecutive quarters of negative economic growth) at the end of 2018. Also, the quality of infrastructure is now a huge concern for Italians. Last year, the Genoa Bridge (a major motorway bridge) partially collapsed, causing 43 deaths. As money is tough to come by and Italy is in need of new construction, the country is optimistic that the BRI is the answer, putting the nation back on track.
For China, this agreement is a bold and symbolic move. It lends support and fresh interest in the BRI. In a period of separation and division across the world, China is showing the power of unity in its ambitious plans to be a global force.
What’s the big picture effect?
From China’s perspective, the BRI is no-doubt a daring venture. Naturally, there seems to be growing unease stemming from it.
At its core, the BRI is a massive multibillion-dollar stimulus package that intends to reinvigorate a slowing Chinese economy. The scheme helps China expand its reach into distant markets, as it creates economic ties and partnerships with new countries. Italy alone has signed 29 deals worth £2.1 billion. Deals in energy, finance and agricultural produce were signed in return for big Italian gas and energy firms being allowed entry into the lucrative Chinese market.
With China becoming the lender to countries across the globe, it calls the shots. There are concerns over whether the BRI will increase China’s political influence and economic power. Many EU leaders are evaluating their policies with China. Recently, France’s President Macron has called for a “coordinated EU-wide approach towards China”.
Nonetheless, the Belt and Road Initiative continues to gain interest from many new countries, with no end in sight. The question is, who will be next?
Report written by Jacky L.
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