Faulty lines in the Chinese-Italian commerce relations. The Chinese company FAW is in talks to buy the Italian automotive company Iveco (but the latter’s military division is off the table). However, Italian pork is rejected by Chinese customs over alleged Covid infection risk. Here’s why there’s more to these stories than what appears
The geopolitical and commercial ties between China and Italy are tangling in a singular manner in the wake of a historic EU-China investments deal. While a new Chinese-Italian automotive deal is reportedly close to completion, Beijing’s customs block two containers of Italian pork over concerns it could be infected, prompting backlash on the Italian side.
Automotive first. The Chinese industrial group First Automobile Works (FAW) has its eyes set on the established Italian truck maker Iveco, which is part of CNH Industrial, which in turn is controlled by Exor, a family-controlled Italian holding.
CNH confirmed that talks are underway. FAW is reportedly offering €3.5 billion for Iveco’s bus and lorry division, as well as a part of its engine division (FTP), and the accompanying technical know-how to develop next-gen (autonomous) vehicles. These assets would spearhead FAW’s truck division, Jiefang (willed into existence by Mao Zedong in 1953), in its European expansion bid.
Having heard the news, the Italian parliamentary security committee (COPASIR) raised its eyebrows. Adolfo Urso, its vice president, warned of the strategic risk posed by selling parts of a company responsible for providing military vehicles to the Italian army (that division is dubbed Iveco Defence Vehicles). However, reports emerged that Iveco’s defence and agricultural divisions are off the table.
Still, Mr Urso’s worries are far from unfounded. A November COPASIR report, accessed by Formiche.net, gauged the worrying extent of Italian companies under Chinese control. While the free market remains an indisputable tenet of Italian public life, the strategic risk that this amount of influence poses is increasingly coming under scrutiny – the Huawei 5G saga serves as an example.
This mounting friction between Italy and China could be the reason behind Beijing’s decision to stop the import of Italian-produced pork over concerns – unverified and unfounded as of yet – that the meat could be infected by the coronavirus.
This is not the first time China has limited its meat imports over similar concerns. However, this claim was immediately rejected by Italian industrials, who denounced the bad publicity and called on the Italian state to intervene, seeing how important pork export to China is for Italian producers.
Moreover, the fact that this happened mere days after the approval of the China-EU investments deal is reason enough to assume there are political overtones to the entire matter.
China’s muddy handling of the initial breakout of the global pandemic has come under intense scrutiny, prompting Beijing to deflect blame elsewhere and prevent WHO officials from conducting investigations. Part of the Chinese Communist Party’s strategy entails blaming other countries with the outbreak.
A few months ago, Italy fell victim to this ploy: a paper claiming that the virus was already circulating in Italy in the autumn of 2019 was seized upon by Chinese propaganda, who propagated the idea that Italy, and not China, was to blame for the Covid-19 outbreak. This claim has been debunked.
Perhaps the timing wasn’t coincidental. At the time this happened, Italy was in the process of distancing itself from China, both politically and economically, as the country had grown more wary of the Dragon since its entrance in the Belt and Road Initiative in March 2019.
Rome was studying heavy limitations to Chinese 5G tech such as Huawei, and it was considering whether to ban Chinese tech from its budding 5G networks due to security concerns. Foreign minister Luigi Di Maio had also condemned Beijing’s crackdown on human rights with Hong Kong. Finally, the idea that the rise of China had to be considered more carefully was gaining traction outside the US and across the West.
Given that the boundaries between the Chinese State and China’s companies are far blurrier than in Western countries, it’s fair to assume that China’s commercial and political response are one and the same. Which, to circle back to the matter of pork, could well explain this sudden hostility for Italian meat.
