The South Korean Foreign Ministry said Tuesday that high-level diplomats from South Korea and Italy met in Rome to discuss enhanced bilateral cooperation on economic and security issues.
South Korean Foreign Minister Park Jin spoke about his government’s ambitions to become a “global pivotal state,” a goal made much easier to achieve by the contraction of China’s Belt and Road Initiative (BRI).
Italian Defense Minister Guido Crosetto said on Sunday that Italy made an “atrocious” mistake when it signed onto the BRI in 2019, the first advanced economy in the world to do so.
Crosetto noted that the BRI has done very little for Italy while enriching China. Beijing gained economic influence over Italy, just as the U.S. and Italy’s European Union partners warned, while Italy’s exports to China saw little growth.
“The issue today is: how to walk back without damaging relations? Because it is true that China is a competitor, but it is also a partner,” he said, alluding to Italian Prime Minister Giorgia Meloni’s desire to pull out of the BRI before the agreement automatically renews in March.
The original Belt and Road deal was made under Meloni’s predecessor, as Crosetto quickly pointed out.
“The choice to join the Silk Road was an improvised and wicked act made by the government of Giuseppe Conte, which led to a double negative result. We exported a load of oranges to China; they tripled exports to Italy in three years,” the defense minister complained.
Fortune on Monday judged that the Italians are serious about getting out of the BRI, which has been a disaster for Italy’s trade deficit with China except for the very strange case of a nearly four billion dollar surge in Italian exports in the first quarter of 2023, due almost entirely to heavy Chinese purchases of an Italian liver and gallstone medication that was thought be effective against the Wuhan coronavirus.
The high-level meeting with South Korean diplomats in Rome, therefore, looks like Seoul auditioning to pick up the slack from China. The South Korean visitors stressed their government’s mutual economic and security interests with Italy, including the issue of semiconductors, which are currently the battleground in a trade war between the U.S. and China.
South Korea has its own delicate relations with China, and they appear to have gone sour over the past few months. The Financial Times on Tuesday wrote of a quiet but unmistakable South Korean “pivot” from China to the United States, driven by heavy U.S. efforts to attract South Korean tech companies with massive subsidies:
From semiconductors and electric vehicle batteries to biotech and telecoms, Korean companies are crucial players in sectors critical to national security and industrial strategy in both Washington and Beijing.
Chipmakers Samsung Electronics and SK Hynix, along with battery makers LG Energy Solution, SK On and Samsung SDI, are set to receive billions of dollars in U.S. subsidies as the Biden administration seeks to attract Korean technology and manufacturing prowess.
But in return, they must comply with a raft of U.S. restrictions on their activities in China and their partnerships with Chinese companies, raising the specter of retaliation from Beijing.
The South Koreans are worried China could target their companies with punitive sanctions, fears exacerbated by two episodes of official Chinese belligerence: dictator Xi Jinping paying a “menacing” visit to a Korean-owned company in southern China in April, and Chinese ambassador Xing Haiming warning that Seoul would “regret” betting on China’s economic defeat.
China has been increasingly curt with South Korea since the United States deployed the advanced Terminal High Altitude Area Defense (THAAD) missile defense system in 2016, but the South Koreans strove to keep their economic relationship with the Chinese intact, in part because they doubted any other trade partner could replace the business that would be lost by decoupling from China. Italy’s serendipitous dismay with the BRI might just give South Korea the new partnerships it has been looking for.