Italy’s buy-in on major project boost China’s place in world maritime trade, but Western powers decry what some call ‘vanity project.’

By many measures, China is one of the biggest commercial shipping powers in the world. Propelled by the twin needs of importing much of its raw materials and exporting much of the world’s consumer goods, Chinese companies own the third largest commercial fleet in the world, behind shipowners in Greece and Japan; China’s shipyards built one-third of the world’s commercial fleet in 2017; and its container ports account for over one-quarter of the worldwide capacity.

The furtherance of that sea reach is a major part of the “Belt-and-Road Initiative”, a multi-billion dollar, Chinese-financed project to build roads, marine terminals and other transportation infrastructure throughout Asia, Africa, and Europe. The BRI aims to connect China with a market comprised of two-thirds of the world’s population and nearly half of its gross domestic product.

China scored another notch in that belt with a memorandum-of-understanding signed this between Prime Minister Giuseppe Conte and President Xi Jinping. The deal calls for the two countries to jointly develop Italy’s marine ports, airports, roads and railways, with the goal of “improving connectivity between Asia and Europe and the role that the Belt and Road Initiative can play in this respect.”

China already has a toehold in Italy as Cosco Shipping Ports, one of the world’s largest terminal operators is developing Italy’s first automated container terminal at the Vado Port in Liguria.

The BRI deal expands that reach. As part of the new agreement, China Communications Construction will help Italy’s largest port, Genoa, in construction and modernisation projects.

China Communications Construction also struck a deal to improve rail infrastructure with the port of Trieste, which is a major gateway for delivering goods to Europe’s landlocked countries.

Italy is only one part of China’s stake in Europe, it’s second largest trading partner behind the United States. Cosco Shipping Ports also runs two of the three container ship docks at Piraeus, the biggest port in Greece. Along with stakes in terminals in Germany, Belgium and the Netherlands, Chinese firms own about 10 percent of the container capacity at European ports.  

Beyond port-specific deals, China’s wider agreement with Italy covering both maritime and surface transportation is a coup for the BRI, which has largely targeted developing countries in the Asian subcontinent. Now the project has the endorsement of the third largest economy in the European Union.

While its ostensible intent is the advancement of trade, the BRI is also perceived as giant debt trap due to the onerous loans, chiefly from Chinese banks, that some participants have been saddled with to fund the projects.

Moreover, China has also used the BRI to further its national interests. Three Chinese warships sailed into Piraeus in 2017 to conduct naval exercises with Greece’s navy as part of a BRI summit.

Along with hosting China’s navy, the Piraeus port has been named as a site for potential tax evasion by shippers seeking to avoid paying customs and other duties on imports into Europe.

With these issues in mind, the European Union is treating China’s overtures warily. While welcoming greater trade cooperation, the EU called China “an economic competitor in pursuit of technological leadership, and a systemic rival promoting alternative models of governance.”

The U.S. government, though, is more unsparing in its assessment of China’s move to court Italy, with one White House official calling the BRI a “vanity project.”