Italy has a pivotal role to play as China's Belt and Road Initiative unfolds

This year, China and Italy celebrate the 45th anniversary of the establishment of diplomatic relations. It was Italian prime minister Pietro Nenni, in 1969, who first mooted the idea of recognizing the People's Republic of China. In Europe, only France under General Charles de Gaulle had recognized the PRC, five years earlier. So Italy's decision preceded those of Germany, the United Kingdom and other West European countries, including the European Community, which established diplomatic relations with the PRC only in May 1975.

Italy has traditionally been at the forefront of political relations with China. It was Gianni De Michelis, Italy's Foreign Minister, who in 1989 made an official visit to Beijing, the first high-level Western policymaker to do so. On that occasion, De Michelis openly called for the normalization of relations between the West and Beijing, after the United States and the European Community had decided to freeze high-level contacts and visits with China.

Today, China-Italy relations have the potential to again be ahead of the rest of Europe, in particular with regard to the implementation of China's Belt and Road Initiative, arguably Beijing's most important diplomatic outreach in decades. In fact, the Mediterranean Sea, with Italy at its center, sits at the end-point of the maritime Silk Road, presenting the two sides with great opportunities.

Combining a land-based Silk Road Economic Belt and a sea-based 21st Century Maritime Silk Road, which connects China to Europe through Southeast Asia, Central Asia and the Middle East, the Belt and Road Initiative aims to boost connectivity and commerce between China and 65 countries traversed by this grand project.

China's total financial commitment to the project is expected to reach $1.4 trillion (1.3 trillion euros). Beijing has already committed about $300 billion for infrastructure loans and trade financing in the coming years, a sum that includes a $40 billion contribution to the Silk Road Fund for infrastructure development and the $50 billion initial capital (to be raised eventually to $100 billion) allocated to the China-initiated Asian Infrastructure Investment Bank. In March, after the UK lead, Italy - together with Germany and France - joined the bank as a founding member.

Since last year, Sino-Italian financial and monetary relations have developed dramatically to the point that in the past 12 months Italy has been the top destination in Europe for Chinese outbound investment, surpassing the UK.

The People's Bank of China, through the State Administration of Foreign Exchange, which manages foreign exchange reserves, has invested more than 3.5 billion euros ($3.9 billion) in stakes of about 2 percent each in 10 of Italy's largest companies: These include Monte dei Paschi di Siena, Unicredit, Saipem, Mediobanca, Fiat Chrysler Automobiles, Telecom Italia, Prysmian, Assicurazioni Generali, ENEL and the state-controlled ENI (oil and gas operator). This has made the People's Bank of China the 10th-largest investor in Italy's stock exchange.

Alongside the bank, Chinese state-owned enterprises have been active in the Italian market. For example, in May last year Shanghai Electric Group bought a 40 percent stake in the power engineering company Ansaldo Energia for 400 million euros. This was quickly followed by China's State Grid's acquisition of a 35 percent stake in the energy grid holding company CDP Reti for 2.1 billion euros.

In March, China National Chemical Corp bought a stake of 16.9 percent in Pirelli, the world's fifth-largest tire-maker, in a deal worth 7 billion euros. Beijing has so far invested more than 6.5 billion euros in listed companies on the Italian stock market, a sum that corresponds to about 10 percent of total Chinese investments in European stocks.

China-Italy relations are in a honeymoon period and can contribute to relaunching Sino-European ties too. Italian governments have traditionally been supportive of European Union institutions. Today, some Italian nationals are in key positions for advancing the China-EU strategic partnership. For example, the head of Europe's diplomacy is Italian. Federica Mogherini, Italy's former minister of foreign affairs, has been the high representative of the union for foreign affairs and security policy since November. And there is currently an Italian at the helm of the Asia-Pacific division in the European External Action Service.

Italy thus stands to play a crucial role in the development of relations with China at the national and community level. The ancient motto "All roads lead to Rome" has never rung more true.

Nicola Casarini is research head for Asia at the Istituto Affari Internazionali. Rita Fatiguso is head of Beijing office of Il Sole 24 Ore. The views do not necessarily reflect those of China Daily.

(China Daily European Weekly 11/06/2015 page12)