Italy set to exit China's Belt and Road Initiative over Taiwan Semiconductor deal

Rome/Beijing – Italy, the only G7 country to participate in China’s ambitious Belt and Road Initiative (BRI), is preparing to withdraw. Sources indicated that the Italian government would soon decide on the BRI due to pressure from fellow European countries and the United States and its readiness to cooperate in the semiconductor sector with Taiwan. Meanwhile, Taiwan has announced the opening of a second diplomatic office in the country in Milan, Italy.

Moreover, Italian Prime Minister Giorgia Meloni took an aggressive stance against Chinese investment during the election campaign last year — Meloni’s ‘Brothers of Italy’ party also strongly opposed Chinese investment. After coming to power, Prime Minister Meloni has somewhat softened the tone against China, but her party’s position has remained unchanged. At the same time, Italy has adopted a policy that the US and other European countries on the Russia-Ukraine conflict and other issues. Analysts are claiming that the Meloni government in Italy will have to take a decision against China if it wants to maintain alliance and cooperation with these countries. Italy decided to participate in China’s BRI project in 2019. After that, although the bilateral trade between Italy and China has increased, Italy has not benefited greatly from it. Meanwhile, after the Covid pandemic, an anti-China atmosphere has begun to develop in Italy, and tension has also started increasing over the issue of Hong Kong, Xinjiang and Taiwan. There are indications that the Meloni government will not extend the BRI.

Furthermore, Italy’s decision also comes in the background of growing cooperation with Taiwan. Italy is one of Europe’s leading countries active in production and manufacturing. The automotive sector also includes leading companies in Italy, Germany, and the UK. In addition, Italian companies are also among the leading companies in the field of defence. There is a huge need for semiconductors for these sectors, which a country like Taiwan can meet. Considering this, the Italian government has also started talks with Taiwan and negotiations for a semiconductor agreement are in the final stages.

Italy is trying to include favourable provisions in the agreement, and a high-level delegation recently visited Taiwan. Taiwan has also given positive signals to enhance cooperation with Italy and announced the opening of its second diplomatic office in Milan. According to reports in Taiwanese media, Italy is reportedly considering pulling out of its agreement with China as it seeks to improve ties with Taiwan.

Chinese President Xi Jinping announced the Belt and Road Initiative (BRI) in the last decade. The main motive behind the ambitious plan is to increase China’s global influence. Over the past few years, China has seized strategic positions in various countries by making BRI part of its predatory economy. Western countries, including Japan, have been aggressive and have announced billions of dollars in investments to support China’s plan. China is believed to have invested more than $1 trillion in the scheme so far.

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