Italy Pivots Away From China

What’s happening: Following a meeting with President Joe Biden, reports indicate Italian Prime Minister Georgia Meloni plans to announce a withdrawal from China’s Belt and Road Initiative, a global infrastructure project. Through this, Italy signals a hard political shift towards the U.S. and European Union while distancing itself economically from China.

Why it matters: Meloni aims to revive Italy's economy by strengthening Western ties. Italy became the first G7 nation to join China’s economic program under the previous prime minister in 2019. The deal did little to affect Italy’s trade with China but put the nation under China’s influence.

Between the lines: Meloni, much to the political right of her European counterparts, is seeking legitimacy in the E.U. as she pursues an alliance to fight illegal immigration. Leaving the controversial Chinese initiative and reconnecting with certain Western leaders, including U.S. President Joe Biden, might help.

  • However: Under Biden, Washington tends to exert pressure on allies who shift to the right, as we saw with the pressure on Israel to abandon conservative judicial reforms. This has long been on display in Hungary. Meloni might be dooming Italy’s hardline immigration aspirations by getting closer to Washington.

Zoom out: This development is the latest in a slew of Western countries shifting away from Chinese economic deals that often come with baggage. The president of the European Commission has publicly recognized the need to “de-risk” economic ties between Europe and China. Europe is also forging new China hawks like Lithuania as behemoths like Germany back away too.

  • Who’s with who? While Italy moves away from China and closer to the U.S., some are expressing reservations about an American-led alternative to China. French President Emmanuel Macron has stressed the need for Europe to act on its own accord apart from American priorities. He even oversaw a historic energy trade in Chinese yuan that struck a blow to the influence of the dollar.