Golden Power over Sinochem? On Monday, Bloomberg reported the Italian government is exploring the use of its special powers to reduce the influence of Sinochem, which is controlled by Beijing’s powerful State Council, over tyre maker Pirelli; in which the Chinese company is the largest shareholder.
- Pirelli’s shareholding structure had recently come under the spotlight, amid denials and announcements, while tensions between China and the West were growing globally.
- Sinochem, whose takeover began in 2015 through ChemChina, owns 37% of the tyre manufacturer.
What happens now? Unspecified Italian authorities are reportedly discussing several options with Pirelli investors. They “include limiting information sharing on sensitive and strategic technology with Sinochem-appointed board members,” reports Bloomberg, and might extend to curbing their voting rights.
- The government’s decisions are not expected to affect the shareholding structure or force Sinochem to sell. They would, however, limit China’s ability to influence the company’s operations.
- Spokespeople from both the government and Sinochem refrained from commenting.
Growing pains. In February, Pirelli had informed the Prime Minister’s Office of its intention to renew the shareholders’ agreement between Sinochem and the Italian shareholders, as required by the Golden Power legislation. In the same month, Bloomberg had spread the rumour of a Chinese disengagement (denied by Beijing) and preliminary interest from various sources.
- The day before (which was the eve of the arrival of Wang Yi, the Chinese Communist Party’s chief of diplomacy, in Rome), Bai Xinping had announced his resignation as Pirelli’s advisor “in view of taking on new professional responsibilities in the Sinochem Group”.
- Wang Feng replaced him in the Italian tyre maker’s board.
- Then, in early March, two of Pirelli’s top shareholders – MTP-Camfin and Brembo – agreed to consult and align their votes in advance, possibly to counterbalance Sinochem’s weight.
The Verisem precedent. In January, the State Council had rejected an appeal by Verisem, an Italian biotech company, on the veto the Draghi government had placed on it being acquired by Syngenta, an agricultural sector group owned by ChemChina. As China watcher Giulia Pompili noted, “Sinochem and ChemChina are not the same thing, but in 2018 the leadership in Beijing wanted a restructuring and the creation of a single pole. While Sinochem is the most presentable part in the EU, ChemChina is on the US list of Chinese military companies.”
Zooming out: Italy is the only G7 country to have signed a memorandum of understanding with China to enter the Belt and Road Initiative. That was 2019. By the end of 2023, the government will have to decide on its renewal. The issue is “still being assessed,” as Prime Minister Giorgia Meloni recently confirmed.
- Over the past years, however, Italy has been deviating from the Silk Road and distancing itself from the increasingly assertive China.
- Under former PM Mario Draghi, the government extended the Golden Power’s scope. PM Meloni also strengthened the protection of national strategic assets from foreign influence and takeovers.
- In parallel, the number of times when Rome triggered Golden Power provisions grew exponentially: the government went from flagging 83 operations of interest in 2019 to nearly 496 in 2021.