Far Eastern Promise or Pain?

Mixed Emotions of China’s European Inroads

By Helen Campbell

China’s influence on the rest of the world took a significant step forward in March this year, when Italy became the first of the G7 countries to sign a deal with Beijing under its ambitious Belt and Road Initiative, or BRI. This was the latest move by China to sign agreements with a fast-growing number of countries worldwide in its quest to construct a land and maritime trade and infrastructure network of ports, roads and railways. Designed to connect Asia with Europe and Africa, it is dubbed the “New Silk Road for the 21st Century.”

More than 150 countries and international organizations have signed BRI agreements with China, some of them no more than symbolic memoranda of understandings for the time being, but China’s ambitions and intent are clear. The big question is what it means for participating countries, their existing industries and the shape of trade across a very sizeable swathe of the globe.

Geopolitics and geography mean southern Europe has a particular role to play in China’s ambitions. Portugal and Greece signed up to become BRI partners in 2018; it is Italy’s status as the first of the G7 to do so that has raised eyebrows, and hackles. On the one hand, critics have warned the whole BRI strategy is predatory and risks indebtedness to China of participating nations, with figures in the Trump administration, for example, even going so far as to say the latest part of the project will bring no benefit to the Italian people.

Conversely, supporters have criticized the concerns as hysteria and say the BRI tie-ups will reboot and re-energize the national finances of countries that join up to be part of the Chinese chain. Regardless of the backdrop of criticism from European Union circles, link-ups with China under the BRI umbrella proved irresistible for countries like Italy and Greece to jumpstart their struggling economies.

Broad Scope of Work

BRI is about infrastructure of all descriptions; that includes bridges such as the Morandi in Genoa that collapsed in 2018, killing more than 40 people, leading to accusations of serial underinvestment.

The latest agreement, signed with Italy in March, includes investment in port infrastructure at Trieste, Genoa and Palermo, all key to Chinese ambitions. Trieste is perfectly placed to be the terminal connection for central Europe via Slovenia and its port of Koper, itself a signatory in 2018 to a BRI agreement with Ningbo, a major Chinese port, while Palermo, Sicily, is another gateway to North Africa that China needs in order to complete the next stage of its BRI. Palermo’s status would be raised if a project to build the Messina Strait Bridge were revived. Other key southern European/Balkan ports for China are Ravenna, Capodistria and Fiume.

There have been trials and tribulations along the way. When China bought a majority stake in the Greek port of Piraeus in 2016, there were concerns then that Greece had sold out and would end up massively indebted. Montenegro’s experiences of investment tie-ups with Beijing have not gone smoothly, and Sri Lanka and Pakistan have also had negative experiences.

However, concerns about Italy could well be overplayed. Whereas Piraeus was an insolvency situation, Trieste had been receiving investment for the past few years. “We don’t want to sell the port, we just want to rent it out,” Antonio Paoletti, president of the Trieste Chamber of Commerce, said recently. “I see that as a huge economic opportunity for the entire region.”

Eye to Future Progress

For Federico Bartoli of Titan Projects, whose project cargo operations predominantly involve oil and gas infrastructure packages, there can be only opportunities arising from the Chinese investment.

“I think that China is already in our area and if they put money in and invest, that can only be a good solution,” Bartoli said. “At the same time, it is important that it is Italian companies that will actually be working in Italy.

“I don’t see any negative implications from this, but maybe opportunities,” he continued. “This certainly does not create any crisis for us and any new activity creates opportunities. The most important thing is to be in the right place at the right moment.”

Cargo movers will need to prepare and to be reactive and nimble to take advantage of changes and opportunities as a result of the Chinese moves.

“Our strategy will come, once we’re ready to do so,” Bartoli said.

Guido Nazzari, executive vice-president of Tuvia Italia, sees Chinese investments as a chance to shake up a sluggish Italian economy and, perhaps, also stabilize the political climate. Dealing primarily with the energy sector, specifically oil and gas and also wind, solar and biomass cargoes, and also working with the construction and engineering and heavy industry sectors, Tuvia already has substantially closer links with China than some of its peers. In 2017, it became part of Asia-based shipping, transportation and project cargo company Kerry Logistics and its Milan-based project cargo division has branches in several international locations including Shanghai.

“You won’t hear everything always in a positive way or everything in a negative way and there are shadows and lights, but we definitely see more opportunities [from the Chinese investment] than threats,” Nazzari said to Breakbulk. “We are ourselves an example of investment by Chinese companies in Europe but, even before the direct investment in our own capital, we always tried to consider the BRI as an opportunity in the Mediterranean and not as a kind of colonization.

“It is true we are a European company, but we are now a European company with an Asian background and a very strong Asian focus. We consider the BRI will be a big boost to the economic exchange between continental or Mediterranean Europe and China. If you start being afraid of foreigners coming into our country, it’s not going to be a good way to become more competitive. We don’t see this as a trap.”

Nodes in the Network

No business in any sector can afford to sit still, and incoming Chinese investment is expected to stimulate European companies to compete more effectively. Elsewhere in southern Europe, Beijing has been making inroads in locations such as Marseilles, Spanish terminals such as Valencia on the Mediterranean and Bilbao on the north coast, Malta, and Piraeus in Greece.

It should perhaps be a consideration for project cargo carriers that the longer and more comprehensive the “belts” and the “roads” and the fewer the infrastructural breaks in them, the smaller the need for transshipments and those capable of undertaking them. Why search for different carriers to get your cargo from China to the Mediterranean, for example, if it can be sent by rail via a continuous rail-link from Wuhan in China to Lyon, in 15-18 days and at lower cost than air or ship? True, the China-Europe Railway Express trains that now hurtle the 10,000 kilometers towards Lyon on a weekly basis are carrying tightly packed containers of sports and other consumer goods rather than outsize wind turbines or giant generators, but the foundations are there for larger cargo moves in the future.

What may hamper the extent and reach of the Chinese ambitions in southern Europe is the reluctance of other European countries elsewhere, such as Germany for example, which are substantially less keen to welcome Beijing into its maritime infrastructure, although the port of Duisberg does have strong connections with China.
To really succeed and make their faith in China pay off, European governments like Italy’s will need to convince other European partner-states of the BRI’s strategic importance; crucially, they will have to clearly present wider take-up of the BRI as a way to promote European integration and not damage it.

Staying Adaptive

Whatever Beijing and its partners plan and however the BRI continues to evolve beyond memorandums of understanding to physical infrastructure development, project cargo carriers will have to be nimble and ready to react to stay competitive.

“The implication of this additional competition that I can see is that the project cargo sector will need to be more efficient and more cost-conscious, and I think it’s a good way to stimulate things to become better,” Tuvia’s Nazzari said. “So I see this as a good point and not a negative. For example, technology is changing a lot in our world, and if you remain stagnant, a company does not have a very brilliant future.

“I am optimistic and I do see a lot of people in the project cargo sector sharing this view.”

While the port of Trieste had a very important history as a gateway to central Europe in the days of the Austro-Hungarian Empire, today it is a container port not used to take project or heavy industry cargo. Other Adriatic ports, such as Porto Nogaro, Maghera or Ravenna, are of high importance to the logistics of moving outsize cargoes in and out of southern Europe where Italy is involved, owing to the favorably flat land contours and lack of physical land obstacles in the region of the Po River and the Padania Valley.

A project cargo engineer at another Mediterranean-based bulk transporter declined to comment on the latest move by China, other than to say: “The Chinese are powerful and they know what they want – the deal is done so they’re here and we will have to see what comes. We have to accept them here.”

However, one of the most striking characteristics of the BRI ambition, in addition to its sheer reach, is its apparent ambiguity. The paradox for breakbulk and project cargo movers made nervous by the lack of clarity is that the future looks like one where anything could happen. 

Helen Campbell is a freelance journalist based in London who has specialized in energy, environment, sustainability and technology for over 20 years.

Image credit: Mistrulli/Fotogramma/Ropi/ZUMA Press/Newscom