Italy on the new Silk Road
Lesson Date : 2019-04-15
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Italy has the world's tenth largest economy (America is number one and China number two). The country is a member of the G7 Group of Seven). These nations (Canada, France, Germany, Italy, Japan, Britain, and the U.S.) are the world's seven most advanced countries with democratic governments. Italy is also a founding member of the European Union (EU).
Xi Jinping is China's president. On March 21, he traveled to Italy for a two-day visit. During it, Mr Xi, and Italy's prime minister, Guiseppe Conte, signed a memorandum of understanding (MoU). The agreement is non-binding, or yet to be set in law. However, it means that Italy is likely to join China's Belt and Road Initiative (BRI). It would be the first G7 country and EU member to do so. Italy's decision angered the leaders of the EU and the U.S.
Mao Zedong (1893 – 1976) was China's communist leader. He ruled the country for almost 30 years. Under Mao’s leadership, China was a poor country. Most people worked in the fields. A communist nation normally has a “planned economy”. The government makes all investment and business decisions. After Mao's death, Deng Xiaoping (1904 – 1997) took over. He introduced a free-market economy. After this, Chinese people could set up businesses and invest money in new products and services. Since the change, China has been very successful. Within four decades, China had become one of the world's biggest economies.
Mr. Xi became China's president in 2012. Many people believe that he is China's most powerful leader since Mao. Five years ago, Mr. Xi launched his Belt and Road Initiative. It is a huge trade and infrastructure project. The BRI's aim is to link China to Asia, Africa and Europe. This is to encourage more trade between them. It will be done via two trade “corridors”. One, the Belt, is overland and the other, the Road, is a sea, or maritime, route.
The overland trade corridor is a series of railroads and highways. The maritime route is a number of high-tech ports. Here, modern ships can load and unload their containers easily. China will fund the railroads, highways and ports. Chinese banks supply the money for the infrastructure. The country in which the infrastructure is built has to repay the money. In less developed nations, Chinese companies will build the infrastructure. So far, over 100 BRI projects have been completed.
The BRI is meant to be “two-way”. Goods and services from China can flow to Asia, Africa and Europe. Equally, they can flow in the opposite direction to China. Two potential BRI projects in Italy are the rebuilding of old ports at Trieste and Genoa.
Some people describe the BRI as modern-day Silk Road. Many years ago, this was an important overland trading route. It connected the eastern Mediterranean and China. The route passed through present-day Iran and Central Asia. It was named after the traders that brought silk from China to Europe. The Silk Road was used for 2,500 years. It followed several routes between cities and towns.
Italy's economy has not grown for over ten years. Youth unemployment in the country is high. Italy has large debts as previous governments have borrowed large amounts of money. Nowadays, it is difficult for the Italian government to fund, or pay for, large infrastructure projects.
Ten months ago, there was an election in Italy. The traditional political parties did badly. Two parties that have never governed the country before won. They are called the Five Star Movement and the League. Before the election, the two parties pledged to improve Italy's economy and increase the number of jobs. Both are critical of the EU. They dislike many of its regulations and directives. The leaders of both parties did not want to be the prime minister. They agreed to appoint Mr. Conte.
EU leaders do not want its members, like Italy, to make their own agreements with China. They say that EU officials should negotiate trade agreements for all the EU’s 28 member countries.
Historically, Europe and the U.S. have worked together. Currently, the U.S. and China are involved in a trade dispute. The U.S. is unhappy about the trade imbalance between the two countries. Chinese companies sell many items in the U.S. Yet, far fewer American-made goods are sold in China. The U.S. would prefer European countries to increase their trade with America and not China.
Some people criticize China's new Silk Road. They claim that it favors Chinese-made goods and construction companies. These people worry that China will have extra influences in many BRI countries. This is because they will be indebted to Chinese banks.
ISSUES : Should the EU negotiate trade agreements for all its member countries?
Period : 2019-04-15 ~ 2019-05-15
Manager's Pro OpinionYes, the EU should negotiate trade agreements for all its member countries. The EU was created to foster economic cooperation among member countries. All members have a common goal. They have signed up to the policies set by the EU. Every member should follow them. The EU makes trade policies that should benefit all members. If a member negotiates its own trade agreement, it could badly affect others. As trade bloc, the EU works in the interest of all 28-member nations.
Manager's Con OpinionNo, the EU should not negotiate trade agreements for all its members. Trade agreements are needed to help a country develop its own economy. All countries should be free to choose which ones benefit them. Every EU member is still an independent nation. The EU does not have complete control over its members. It cannot stop them from making trade deals with other nations. With 28 member countries, it would be difficult for the EU to negotiate a single trade agreement that will be good for all members.
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