China’s emergence as a global technological powerhouse is forcing Italy to rethink its relationship with Beijing, moving the debate beyond trade and investment toward industrial resilience, critical technologies and national security.
A new report by the Mercator Institute for China Studies (MERICS) argues that Rome is increasingly confronting a strategic dilemma shared across Europe: how to preserve economic competitiveness while limiting new technological dependencies on China.
The analysis, authored by Aurelio Insisa and Francesca Maremonti Research Fellow, IAI, forms the Italy chapter of the European Think Tank Network on China (ETNC) report Fragmented Europe: Dealing with China as a Technology and Innovation Power. Rather than focusing on China’s manufacturing strength alone, the authors argue that Beijing’s growing leadership in advanced technologies is reshaping Italy’s industrial choices across several strategic sectors.
Why it matters: Italy is extending national security considerations well beyond traditional defense sectors. China’s technological rise is reshaping policy in biopharma, electric vehicles and telecommunications. The report suggests Italy is gradually replacing an investment-driven approach to China with one centered on economic security.
Zoom in: Three sectors, one strategic challenge. The report focuses on three industries that illustrate how China’s technological capabilities are changing Italy’s industrial landscape: biopharma, automotive and information and communication technologies (ICT). Each reflects a different aspect of the same strategic question: how should Italy engage with an increasingly innovative China while protecting critical technologies at home?
- As the authors put it, Rome now faces two fundamental questions: whether to continue cooperating with Chinese companies in sectors where China’s innovation capabilities are rapidly advancing, and whether to grant Chinese firms access to strategic parts of the Italian market despite the security implications such cooperation may entail.
Biopharma: innovation meets strategic competition. Italy’s biopharma industry remains one of the country’s most innovative manufacturing sectors, but the report argues it is coming under growing competitive pressure from heavily subsidized Chinese companies. Although the Italian government has launched initiatives to strengthen the sector’s international competitiveness, executives interviewed by the authors describe existing support as too fragmented to create globally competitive national champions.
- At the same time, closer engagement with Chinese investors has remained limited.
- According to the report, two factors explain this caution: Italy’s expanding use of golden power screening over biotechnology investments and the broader securitization of U.S.-China relations, particularly following Washington’s BIOSECURE Act, which could significantly reshape global pharmaceutical supply chains.
- Yet scientific cooperation has not disappeared. The report highlights the creation in 2024 of the China-Italy Joint Laboratory of Pharmacobiotechnology for Medical Immunomodulation under the bilateral Action Plan for the Global Strategic Partnership.
Automotive: balancing competitiveness and security. The automotive sector illustrates the tension between industrial necessity and geopolitical caution.
- Italy supported EU tariffs on Chinese electric vehicles in 2024 while simultaneously exploring investment opportunities with Chinese automaker Dongfeng. According to the report, negotiations ultimately failed after Beijing reportedly linked the proposed investment to Italy’s position on EU tariffs and broader access for Huawei within Italy’s telecommunications infrastructure.
- The report identifies the Pirelli case as the clearest example of Italy’s changing approach. Rome used its golden power authority to restrict the governance rights of Chinese state-owned shareholder SinoChem, arguing that Pirelli’s Cyber Tyre technology—which combines sensors, cloud computing and artificial intelligence for connected and autonomous vehicles—had become strategically sensitive. The authors describe the decision as a significant expansion of Italy’s national security framework beyond its traditional focus on defense and critical infrastructure.
- The report also notes mounting pressure — including from the United States — for SinoChem to reduce its role within the company.
Telecoms: preparing for the 6G era. The same dynamic is evident in telecommunications.
- Italy progressively tightened restrictions on Huawei and ZTE after bringing 5G infrastructure under the scope of golden power. Agreements involving Chinese vendors have either been blocked or subjected to increasingly stringent conditions, while regulatory scrutiny has continued to expand.
- The authors argue, however, that these security measures have not been accompanied by an equally comprehensive industrial strategy. Interviews cited in the report suggest operators have faced higher deployment costs without corresponding public support, slowing investment in next-generation networks.
- Looking ahead, the report warns that Europe — and Italy in particular — will struggle to match China’s influence over future 6G standards despite ongoing European initiatives to strengthen technological sovereignty.
Between the lines: Across the three sectors, the report identifies a common pattern.
- Italy is increasingly extending the concept of national security into areas once considered primarily commercial. Rather than embracing broad economic decoupling, Rome has relied on targeted interventions through golden power, seeking to protect technologies considered strategically important while maintaining selective forms of cooperation with Chinese partners where possible.
- At the same time, the authors argue that Italy still lacks a broader public debate on the implications of China’s technological rise. While security concerns have become more prominent in policymaking, discussion of the country’s long-term industrial strategy remains limited outside specialist circles.
The European context. Italy’s evolving approach reflects a broader recalibration underway across the European Union.
- Days after the publication of the MERICS report, EU Trade Commissioner Maroš Šefčovič and Chinese Commerce Minister Wang Wentao agreed to relaunch structured trade talks while reaffirming efforts to reduce strategic dependencies.
- The diplomatic opening reflects Brussels’ attempt to combine dialogue with its de-risking strategy as concerns over industrial overcapacity, supply-chain resilience and economic security continue to reshape relations with Beijing.
- Read our previous analysis here.
The bottom line: The MERICS report suggests that Italy has entered a new phase in its relationship with China.
- The debate is no longer centered on whether Chinese investment should be welcomed, but on how Italy can remain competitive while safeguarding technologies, industrial capabilities and critical infrastructure in an era where economic interdependence has increasingly become a matter of national and economic security.
- As Insisa and Maremonti conclude, the country still needs a broader debate on the wider implications of China’s technological rise — one that moves beyond individual industrial disputes and addresses Italy’s long-term strategic position.
