Venice Port © Σπάρτακος / CC BY-SA 3.0 / Wikimedia Commons
Venice shares a long history of economic interconnections to Asia and, more specifically, to China. During the apogee of its power it was the crossroads of sea trade between the East and the West with extremely important routes ranging from Constantinople, via Central Asia, to China and India. Nowadays, the once glorious Venice has undergone a period of depopulation, bringing its inhabitants down to a figure of around 50,000. Despite this decline, its relevance as a trade and industrial hub for Italy remains significant. Moreover, following the initiation of the Xi Administration’s flagship policy, the Belt and Road Initiative, Italy seemed to have gained momentum in its relationship with the massive project.
A political understanding between Italy and China led to the Memorandum of Understanding of 2019. Nevertheless, subsequent changes in the political environment of the Southern European country that occurred during the summer of that year and the ensuing Covid-19 pandemic, caused a slowdown to these projects. In addition, the missed ratification of the Comprehensive Agreement on Investment further endowed the context with an aura of volatility.
This brief analysis aims at constructing a mind map of the initial phases of the apparent concordance between the Venetian, Italian and Chinese stakeholders , as exemplified by the 2016 conference Along The Silk Roads, which brought together business and political instances at a city palace. Secondly, the favourable feelings that arose after the MoU further contributed to this seemingly fruitful climate. Conversely, later developments accounted for a renewed BRI interest towards already established projects in the Balkans, and a renovated approach preferring Trieste over Venice, provided the geographical proximity to an area receiving notable Chinese FDIs. Recalling the approach towards Balkan countries and Greece, Chinese investments to Venice are centred on its port areas, exploiting a situation of high indebtedness. More recently, however, the Covid-19 pandemic reduced the perceived degree of favourableness of Chinese operations in Italy. These events have sent the Venetian participation in the BRI below the radar of political debate. As an infrastructural type of BRI appears currently to be hardly feasible, the window of opportunity is open for a strengthening of the cultural and tourist branches of the initiative, instead.
History and Current Issues Intertwine
The city of Venice’s economic history puts the one-of-a-kind Italian town in a prolonged and long-lasting experience of connection to China. Arguably, Venice embodied the perfect crossroads for the trade flow between Europe and the East, in a time in which Italy was still heavily divided by a pattern of small domains with very slim external projection. As the city’s predominance in world trade waned and its population plummeted across the decades, it became a major tourist hub. Apart from its worldwide known tourism-oriented outlook, Venice hosts the 7th largest port in Italy, with an estimated capacity of 26.49 million tons (Marine Insight, 2018). In conjunction with the establishment of the Maritime Silk Road, China looked at Venice as a symbolic crossroads of its new project. Marco Polo’s travels are, in this respect, revisited in a contemporary fashion: Eurasian connectivity has existed, and it possesses the requisites to be reborn.
The port facilities of the city are smaller in comparison to larger European and even Italian harbours, but the historical connotations and meanings accorded to the old splendour certainly provide an added value to the operation. On the other side, Italy and Venice looked at China as a key partner to revitalise the highly indebted industry after the Great Recession and the ensuing Sovereign Debt crisis. Thus, historical fascination and current trade and operational debt issues intertwine to produce a higher degree of interrelationship between China and Italy. However, recent developments hampered the linearity of the projects.
Venetian Steps to the Belt and Road
In 2016-2017, several commentators and local journals reported the renewed proximity between Asia and Venice. In those two years, the NAPA (North Adriatic Port Association), a grouping of the Port Authorities of the ports located in the northernmost area of the Adriatic Sea, fully participated with its business and institutional instances to several groundbreaking Asia-Europe conferences. One of them, the 2017 Belt and Road: Seize the Next Wave of Growth in Eurasia demonstrated the ability of Venice to garner its primary spot in the Italian links to China. The high level conference, organised by Italian think tank European House – Ambrosetti and China Development Institute in late 2017, underlines, in its title, the Eurasian outlook of the initiative. In-depth discussion on sustainability-linked investment, innovation, logistics and geopolitics ultimately stresses the comprehensive and holistic approach shared by both Italian and Chinese partners (Port of Venice, 2017).
In a trajectory towards these public-private meetings and discussions, the 2019 Memorandum arises as a logical continuation of these events. The main internal propellent, in the Italian political scene, was possibly provided by the Euroskeptic stance held by the governing coalition at that time, co-involving the League (formerly, Northern League) and the Five Stars Movement. Locking in a decisive move towards China epitomised an attempt to fulfil the anti-EU promises made by the two political formations during the 2018 Italian electoral campaign. Nevertheless, the euroskeptic commitments to their electorates ranged far beyond a Memorandum of Understanding with China. At some point, their positions went as far as envisaging a fully-fledged Euro Area withdrawal (Politi, 2018).
Nevertheless, Chinese efforts focused mostly on a closer relation to the Balkans under the recent 16+1, previously 17+1, Framework. In relation to this, the port of Trieste appeared as the chosen mega-infrastructural recipient of Chinese investments. The northern Italian port is easily accessible from the Balkan Peninsula, an area strongly engaged by China’s infrastructural projects: Trieste may become a conjunction spot to the Balkan flank of the BRI, exploiting its geographical advantage, even over Northern European ports such as Amsterdam or Antwerp. As of 2018, Trieste’s capacity amounted to an estimated 63 million tons, which outshines the values reported in Venice by almost 2.5 times (Marine Insight, 2018). Physical proximity to the Balkans and the presence of an already established connectivity system, involving even the presence of a pipeline, made Beijing’s enterprises more prone to accede this market provided the easier potentiality for economies of scale.
The projects involving the port of Venice, under this light, remained on paper rather than being materialised on existing and newly created areas in the Venetian docks area. Legal and structural difficulties relative to the inauguration of an off-shore port facility further slowed down the projects, in a trend observed also in the port of Trieste (Ghiretti, 2019). On paper, a noticeable increase in cooperation was expected by the implementation of the Memorandum signed between the Piraeus Port (a set of facilities largely in the operational hand of China) and the previously mentioned NAPA (Ansa, 2019). These forces seemed to suggest a possible rapprochement in logistic and financial terms between the two ports, with Beijing playing the role of the director. Despite these institutional arrangements, closer ties between the authorities materialised at an informational level, with enhanced sharing of know-how and best practices.
Possible Developments for the Future: The Tourist Sector
Latest events undermined the prospect of deeper rooting of the Belt and Road Initiative into Venice. The Covid-19 pandemic struck a blow to the economy of the city, highly reliant on tourism. Similarly, the passenger flow at the nearby port was strongly reduced by the virus outbreaks occurring all across 2020 and 2021, with pale signs of recovery to be experienced only in the summer of that year. If 2019 had produced the highest level ever of international tourist arrivals in Venice (5.52 million, according to Statista), 2020 saw a sharp decline down to 1.34 million visitors.
From the international standpoint, the perception of China has undergone a period of rethinking (Amighini, 2021) after the strong human rights conditionalities linked to EU-level negotiations. The missed opportunities derived from the freezing of the Comprehensive Agreement on Investment and the declining popularity of Beijing in the eyes of European investors, concerned with reciprocal conditions of market accession, have set additional hurdles to further cooperation.
Nevertheless, the BRI inherently possesses a comprehensive outlook, with spill-overs into the cultural and tourism domain. The Belt and Road displays, amongst the others, a R&D-oriented approach towards its interactions across Western Europe (Mariani, 2021), to which Italy and Venice clearly ascribes to.
The post-pandemic Venetian tourist sector is expected to continue its “v-shaped” rebound, but relevant data are still to be produced. This prospective trend could be proxied by the sheer increase in international tourist arrivals via aeroplane, displaying a eight-fold increase in March 2022, over the same period in 2021 (Assaeroporti, 2022).
However, some unknown factors may produce significant effects after the temporary halt caused by the spread of the highly contagious Omicron variant and the rise in price of energy.
As ENIT’s (Italian tourism agency, formerly Ente Nazionale Italiano per il Turismo) director Bastianelli maintains, Chinese bookings for stays in Italy had undergone a 30-percent increase in the early months of 2020 with respect to the same period of 2019, before the pandemic struck. By comparing the January to November 2019 Chinese tourist presence in the country, it is outlined that a 16-percent increase occurred with respect to the same period of 2018 (Xinhua, 2020). The virus has sunken the auspicious perspectives arising from these trends.
In a scenario of relative openness of borders as the Covid-19 pandemic wanes, the cultural sector of the city of Venice could show promising signs of recovery. These expectations might settle a fertile ground for Chinese BRI-related investment in the cultural and tourism domains, by strengthening connectivity for easier passenger flow and towards a revitalised hospitality sector in the Italian city.
Marco Zecchillo is a MSc student of International Economics at the University of Bologna. He holds a degree in International Relations. He currently works at Italian think tank Mondo Internazionale, as the Head of the Economic Research Division, dealing mainly with East Asia, EU affairs, trade and the analysis of crisis scenarios. You can find him on LinkedIn.
The opinions expressed here are those of the writers and do not represent the views of European Guanxi.
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