ONE year ago， Italy became the first member in the G7 group to sign a memorandum of understanding （MoU） to join the Belt and Road Initiative.
　　President Xi Jinping’s state visit to Italy in March last year has reaped great results. Michele Geraci， undersecretary of economy at the time， who was， among other things， responsible for international commerce， and a supporter of the MoU， declared， “The specific results of this agreement will depend on how the tasks related to international commerce are managed， from the Ministry of Economy to the Ministry of Foreign Affairs.”
　　A Necessary Dialogue
　　The economy is not everything. Without a dialogue between the two countries’ financial institutions， it would be impossible to move forward successfully. Therefore， Italy has simultaneously undertaken negotiations based on the acceleration of Chinese reforms， specifically on the financial side.
　　An example of this is the new Foreign Investment Law that Beijing approved in March last year during the plenary meetings of the National People’s Congress.
　　During the meetings at the G20 summit 2019， Chinese Minister of Finance Liu Kun and Italian Minister of Economy and Finance Giovanni Tria signed the MoU on Financial Dialogue. In July last year， this agreement was further boosted in Milan during the first bilateral financial forum， that saw the two stakeholders engage in a long-term action plan. The role of the Deposit and Loan Fund （CDP， its acronym in Italian） – the Italian sovereign wealth fund – was also crucial as it devised a specific strategy for China.
　　The positive results of this commitment are considerable. An example was the approval of the fund distribution license of Yi Tsai （a company under Intensa Sanpaolo’s full property management， headquartered in the city of Qingdao）. It is the first foreign bank subsidiary to offer wealth management services in China.
　　Before that， there was another agreement reached to avoid double taxation with the capacity of boosting cross-border investment and providing financial certainty to Italian companies in China. This agreement was also signed during President Xi Jinping’s state visit to Italy， and is now awaiting approval from the Italian parliament.
　　We cannot overlook the first issuance of “panda bonds” （Yuan currency debts sold by foreign issuers in China） on behalf of Italian operators on August 1， 2019. This was a strategy strongly encouraged by Fabrizio Palermo， executive president of Cassa Depositi e Prestiti（CDP）， the Italian Promotional Bank & Sovereign Fund， and given the thumbs up by the People’s Bank of China， the country’s central bank. The first tranche of “panda bonds，” in three-year notes with a yield of 4.5 percent， has a face value of RMB 1 billion. 　　The financial and political dialogue continued during the first bilateral financial forum at the China International Import Expo （CIIE） in Shanghai， which was devoted to the development of cooperation in the financial sector between China and Italy. Organized by the Shanghai Administration Institute （SAI） and the Tor Vergata University of Rome， the forum was attended by Peng Chenlei， deputy mayor of Shanghai， Xu Jiangang， vice executive president of SAI， and Guo Qingsong， vice president of SAI. On the Italian side， not only were representatives from the academic field present， but also high-level leadership from the CDP， UniCredit， Banca Intensa Sanpaolo， Fincantieri， and Snam， among others.
　　“The idea of launching a bilateral think tank endorsed by Shanghai Municipality and the Italian Ministry of Economy and Finance was born here，” said Professor Giovanni Tria， who headed the delegation from Tor Vergata University of Rome. “All of it was done to facilitate the access to markets by operators from the banking， financial， and security sectors.”
　　The part relating to regulations is also crucial. In fact， the think tank was developed to connect public institutions， the academic community， and Chinese， Italian， and European companies by providing them with a platform to discuss ways in which they can mutually benefit from the opening of the Chinese financial market. Consequently， this may also promote a larger presence of Chinese operators that support investments in the Italian and European financial markets.
　　Professor Giovanni Tria has had a long-standing relationship with China which goes back to his time as a university student and the period when he served as minister of economy and finance， and that connection has never been interrupted， not even upon his return to university lectureships.
　　His experience with China has allowed him to optimize institutional relations， because， along with the ambitious Belt and Road Initiative and the CIIE， the latter of which is preparing for its third expo， Beijing supports the idea of opening financial markets amidst a global environment characterized by strong neoprotectionist pressures.
　　There is also a big emphasis on innovative tools for sustainable financing to support long-term projects. In the meantime， because restrictions on foreign investments have been lifted significantly due to the opening of bond， stock， and futures markets， Qingdao is also hoping for the thumbs up for its investment funds. Intensa Sanpaolo has created a holding company with a local partner in which it is the majority shareholder. 　　Development of SMEs
　　CDP is now co-chair of the Italy-China Business Forum （BFIC）， previously in the hands of the Italian tire manufacturer Pirelli. The bilateral organization was created six years ago to support small and mediumsized enterprises （SMEs） already present or looking to establish themselves in China. Today， as the network of the CDP group， with its Simest and Sace branches， is in the phase of completely fulfilling the BFIC’s mission， the objective is drawing ever closer.
　　CDP has a solid record in China. Simest has 41 investment projects worth €48 million （US $54.47 million） under its belt， 38 of which are venture capital operations with a worth of more than €30 million （US $34 million）. On its part， Sace registered a balance of €35.7 million （US$40.5 million） during the first trimester of 2019.
　　CDP has directly participated in high-scale operations. China Investment Corporation （CIC） joined with seven percent in the Italian Fund for Infrastructure’s（F2i SGR） capital， as well as is the sponsor of the Second Fund administered by F2i SGR. In 2014， Shanghai Electric made its way with 40 percent shares in Ansaldo Energia， while State Grid acquired 35 percent of the shares in CDP networks for a value of €2，100 million （US$2，380 million）. Finally， NUO Capital bought 10 percent of ELITE’s shares two years ago.
　　A survey on Italian businesses in China， released in 2019 by the Italian Chamber of Commerce in Beijing， showed that it was much easier for big companies to make profits than it was for smaller enterprises.
　　Of the companies that were polled， 58.9 percent of them said they had made profits in 2018 compared to the previous year， while 19.5 percent registered a drop in their earnings. As for the EBITDA indicator（earnings before interest， taxes， depreciation， and amortization）， 79.2 percent of them experienced an increase and 39 percent a very positive one. Therefore， large Italian companies still represent the biggest share of the market， with 42 percent of them having more than 1，000 employees. Furthermore， in 2019， the number of companies with less than 15 employees dropped from 26 percent to 18 percent. Also in that same year， 40 percent had less than 100 workers based in China， which is less than the 46 percent who registered in 2018.
　　Nonetheless， we must also take into account the political environment regarding the relations between China and Italy， which has made significant strides. Towards the end of September last year， the Italy-China Business Forum formed by Confindustria， the Italian Agency for Foreign Commerce and the Italian Banking Association， and jointly headed by the Bank of China’s President Liu Lian’ge， met with a group of SMEs from a range of sectors， including automotive， biomedicine， food and beverage， chemistry and petrochemistry， metallurgy， robotics， machinery， and agrotechnology industries， in the port city of Tianjin.
　　After this multi-stakeholder meeting， another crucial step was taking part in the second CIIE， which was held in Shanghai， in which 100 Italian companies set up their own exhibit booths.
　　The path towards active collaboration has already been drawn.