Italy Inc.’s China Embrace Ranges From Banks to Energy

(Bloomberg) -- Italy’s government is scrambling to firm up accords from banking and energy to soccer clubs for next week’s visit by Chinese President Xi Jinping, despite pressure from the rightist League of Matteo Salvini which is urging caution in the name of national security.

Many of Italy’s business players are lining up for deals in parallel with the planned signing of a memorandum of understanding that will give Rome a role in the massive Belt and Road Initiative, China’s trans-continental infrastructure project, according to people familiar with the matter.

Companies involved include gas pipeline operator Snam SpA, engineering company Ansaldo Energia SpA and leading banks, the people said.

Italy Inc.’s China Embrace Ranges From Banks to Energy

Deputy Premier and Economic Development Minister Luigi Di Maio is leading efforts to ready some 20 agreements currently under negotiation with the objective of signing them during the visit by Xi, expected March 21 to 23.

The drive by Di Maio of the anti-establishment Five Star Movement has triggered new tension with fellow Deputy Premier Salvini who warned against the risk of “foreign powers” influencing Italy’s economy and politics and about any involvement of Huawei Technologies Co. in 5G telecoms.

Italy’s openness to China has fueled U.S. concerns about a G-7 country signing up for Belt and Road, and ushering Chinese interests into strategic sectors such as telecoms and ports.

Companies Involved

Snam will sign a memorandum of understanding with China’s Silk Road Fund for cooperation on international investments, potentially also involving state lender Cassa Depositi e Prestiti SpA, according to a person close to the company.

The move would help Snam to tap into China’s growing demand for gas and cut its reliance on coal. Snam entered the Chinese market in 2018 with three agreements with State Grid International Development, Beijing Gas, and PetroChina Pipeline Company. A spokesperson for Snam declined to comment.

Ansaldo, which is partly owned by Shanghai Electric, will also announce an MOU next week, according to people familiar with the matter. A spokesperson for the company declined to comment.

Leading Italian banks, energy giant Eni SpA, gas distributor Italgas SpA and shipbuilder Fincantieri may also sign accords, the people said. A couple of soccer clubs in northern Italy could also announce sponsorship agreements during Xi’s visit, according to a corporate source.

Italian Ports

Port authorities in the northern harbors of Genoa and Trieste may sign MOUs with the China Communications Construction Company (CCCC), the Belt and Road’s biggest builder, according to a Rome government official. The deals would focus on synergies and infrastructure investments, the official said.

Trieste Port Authority head Zeno D’Agostino also said in a phone interview he expected to sign an accord with CCCC.

Newspaper Corriere della Sera reported earlier Thursday that some 21 accords are being negotiated, with the banks involved possibly UniCredit SpA and Intesa Sanpaolo SpA.

Salvini and League government members are pressuring Prime Minister Giuseppe Conte and Di Maio to limit the number and scope of both the main MOU on Belt and Road, and the agreements involving public and private sector firms, according to a Five Star government official.

The government is “united in its desire to sign the document,” Conte’s office said in a statement late Thursday, adding that the agreement meets European principles and standards.

Pending legislation on unblocking public works will contain wording to enhance so-called Golden Power rules to tighten guarantees on national interest in deals with foreign entities, according to the statement.

Salvini has campaigned on a Made in Italy crusade and heads the business-friendly League, and yet paradoxically he is slowing efforts to boost business opportunities for Italian firms, the official said. Salvini’s warnings on Huawei and 5G technology are just smokescreens, the official added, as those issues are not relevant to any of the accords.

Salvini warned earlier Thursday against “allowing the penetration in Italy of foreign powers that can condition the Italian economy and politics.” He told reporters in Rome that he favors new export channels for Italian firms but that every investment, especially in strategic sectors from infrastructure to telecoms, must be analyzed “not once but 50 times, we need extreme caution.”

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