Tuesday April 23, 2019
Home Lead Story Analysts Clai...

Analysts Claim, China’s New Silk Road May Raise Concerns Of Italian Workers

U.S. and Europe most impacted by trade with China are the ones which in recent elections and plebiscites have backed populist candidates and nationalist causes like Brexit, support fueled by anger at the effects of globalization.

0
//
China
Chinese President Xi Jinping, left, and Italian Prime Minister Giuseppe Conte shake their hands following the signing of a memorandum in support of Beijing's "Belt and Road" initiative, at Rome's Villa Madama, March 23, 2019. VOA

Italian Prime Minister Giuseppe Conte signed up his country Saturday to China’s Belt and Road Initiative (BRI), an ambitious trillion-dollar transcontinental trade and infrastructure project. The memorandum signing in Rome was the centerpiece of Chinese President Xi Jinping’s three-stop visit to Europe and it will make Italy the first G-7 nation to participate in China’s so-called New Silk Road.

Italy’s endorsement of the BRI, which spans Eurasia as well as the Middle East and parts of Africa, has prompted the disquiet not only of the United States, but also of European Union leaders, who have voiced concern about Beijing’s growing political clout in Europe and its use of commerce as a tool of statecraft. The U.S. has been critical of the trillion-dollar project and warned about the risks of “debt-trap diplomacy.” Members of the EU are worried the plan could add to fissures in an already strained coalition.

They aren’t alone in worrying about what the longer-term consequences on Italy might be if signing up for BRI moves from symbolism into full participation. Matteo Salvini, head of the populist Lega party, which represents one-half of Italy’s coalition government, is indicating his opposition by staying away from the signing ceremony and won’t be present at a scheduled gala dinner afterward.

Salvini, an ideological bedfellow of Donald Trump and friend of the U.S. president’s former adviser, Steve Bannon, frets the BRI risks turning Italy into a Chinese colony and will saddle it with more debt. He also has publicly indicated his security concerns about allowing the Chinese control of critical infrastructure, including major ports.

“Before allowing someone to invest in the ports of Trieste or Genoa, I would think about it not once but a hundred times,” Salvini said earlier this month.

Some Italian officials in the economy and finance ministry have also offered behind-the-scenes warnings. They argue that while engaging with Beijing in this manner may help boost Italian exports to China, a prospect highlighted by Xi in marketing BRI, it will likely result in a bigger boost for cheap Chinese exports to Italy.

FILE - A map illustrating China's so-called "One Belt, One Road" megaproject, is displayed at the Asian Financial Forum in Hong Kong, China, Jan. 18, 2016.
A map illustrating China’s so-called “One Belt, One Road” megaproject, is displayed at the Asian Financial Forum in Hong Kong, China, Jan. 18, 2016. VOA

Such a scenario, they caution, could have a ruinous impact on domestic Italian producers and workers.

“If trade does take off significantly, it might be a matter of short-term gain, but long-term pain,” one official told VOA.

Despite the warnings, as well as U.S. and EU disapproval of Italy’s BRI endorsement, Conte and Luigi Di Maio, leader of the anti-establishment Five Star Movement, which makes up half of the country’s populist coalition government, says Chinese investment could kick-start Italy’s sputtering economy.

Several of the EU’s smaller cash-strapped nations have also signed up in the past two years to China’s BRI, hoping that by doing so their economies will be boosted.

Italy slipped into recession last year and its debt levels are among the highest in Europe. The populist coalition government came to power in June 2018 with high-spending plans, promising expensive pension reforms and a living wage for all Italians.

Italian ministers favoring BRI accuse other large EU countries, including France, which is critical of the BRI, of hypocrisy, saying they conduct multi-million-dollar deals anyway with China albeit outside the framework of the New Silk Road initiative.

“The way we see it, it is an opportunity for our companies to take the opportunity of China’s growing importance in the world,” Italy’s under secretary of state for trade and investment, Michele Geraci, told foreign reporters.

FILE - Journalist take pictures outside the venue of a summit at the Belt and Road Forum in Beijing, China, May 15, 2017.
Journalist take pictures outside the venue of a summit at the Belt and Road Forum in Beijing, China, May 15, 2017. VOA

But some Italian officials worry that view might be short-sighted.

They say while the BRI may offer Italy new funding sources — the country is still lagging well behind the foreign investment levels it enjoyed before the 2008 global financial crash — it could trigger a significant wave of Chinese imports, which would have long-term detrimental consequences for Italian industry, employment and politics.

The officials in the country’s finance ministry, who declined to be identified for this article, have been scrutinizing recent academic studies on the impact of Chinese imports on local labor markets. A series of studies, including those by economists David Autor, David Dorn and Gordon Hanson, suggests that Western countries and regions exposed to rising Chinese import competition see a major jump in unemployment, lower labor force participation and lower wages. Unskilled and manual workers are especially adversely affected.

The impacts “are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income,” noted Autor, Dorn and Hanson in a paper for the National Bureau of Economic Research, an influential U.S.-based nonprofit.

Also Read: No Comeback Expected by Microsoft’s Old Office Assistant Clippy

Other recent academic studies have noted that the regions of the U.S. and Europe most impacted by trade with China are the ones which in recent elections and plebiscites have backed populist candidates and nationalist causes like Brexit, support fueled by anger at the effects of globalization. Brexit is Britain’s decision to leave the European Union.

“Ironically, looking to Beijing for an economic boost and to alleviate economic deprivation could well hurt the workers and businesses who backed populists in the first place and who the populists want to help — Salvini gets that, but the rest of the coalition doesn’t,” observed an Italian official. (VOA)

Next Story

Samsung Galaxy Fold Launch Postponed in China: Report

The Galaxy Fold is expected to be priced around Rs 1,40,790 in India

0
samsung foldable phone
FILE - The Samsung Galaxy Fold phone is shown on a screen at Samsung Electronics Co. Ltd.’s Unpacked event in San Francisco, Feb. 20, 2019. Samsung says it will look into some reports of flickering or cracking screens. VOA

Samsung has postponed the Galaxy Fold’s launch events in Hong Kong and Shanghai, which were originally scheduled for April 23 and 24, days after some units of the $2,000 foldable phone encountered major display issues.

“The firm is blaming the decision on a last minute issue with the venue, according to someone claiming to be familiar with the matter.

“But that seems a little too convenient seeing as the handset has been under heavy fire all week, after a number of units broke after being in the hands of reviewers for less than a day,” the SamMobile reported late on Sunday.

Tech reviewers from renowned media brands like The Verge and the CNBC noted issues like screen flickering, display distortion and unexplainable bulges bugging the industry-first device, reports said last week.

The handset maker obviously doesn’t want to associate these delays with the broken review units, but given the timing, chances are Samsung wants to buy more time to address these issues before the next wave of shipments, according to the Engadget.

Sub-titling the review “Yikes”, The Verge said that the flaws were “distressing to be discovered just two days after receiving the review unit”.

Smartphone, tablet folded phone
DJ Koh, president and CEO of IT and Mobile Communications, holds up the new Samsung Galaxy Fold smartphone during an event, Feb. 20, 2019, in San Francisco. VOA

Defending its devices just days before its roll-out, a Samsung spokesperson assured that the firm would “thoroughly inspect” the units.

The super-expensive foldable smartphone was launched during the Mobile World Congress in Barcelona in February followed by Huawei launching its own foldable phone, the Mate X.

According to market research firm Gartner, foldable phones would make up 5 per cent of high-end phones sales by 2023 with around 30 million units.

Also Read- Why you Should Make your Credit Card Bill Payment on Time: 5 Reasons

The phone comes with the world’s first 7.3-inch Infinity Flex Display, which folds into a compact device with a cover display that is capable of opening up to three active apps simultaneously on the main display.

The Galaxy Fold is expected to be priced around Rs 1,40,790 in India. (IANS)