Italy weighs moves to cut Chinese stakes in strategic firms

Prime Minister Giorgia Meloni’s government is exploring measures to reduce Chinese holdings in key Italian companies amid concerns over national security and U.S. relations, according to people familiar with the matter. The plan, according to Bloomberg, would target both private and state-controlled firms in strategic sectors.

Tiremaker Pirelli & C. SpA, where China’s state-owned Sinochem International Corp. owns 37%, is a prominent example. U.S. authorities have warned that Pirelli’s tires equipped with cyber sensors could face restrictions, citing data security risks. Rome has already used its “golden power” rules to limit Sinochem’s influence, and in April, Pirelli’s board downgraded the investor’s governance role. Officials are now weighing steps that could pressure Sinochem to sell, the people said.

Other potential targets include CDP Reti SpA, which controls Italy’s power grids and is 35% owned by a unit of State Grid Corporation of China, and Ansaldo Energia SpA, where Shanghai Electric cut its stake from 40% to 0.5% but whose Chinese ties still block participation in some U.S. tenders.

About 700 Italian firms have Chinese investors, but the government’s focus is on large entities in energy, transport, technology, and finance. Rome’s moves reflect a broader European effort to “de-risk” from China while maintaining selective engagement, particularly in green industries.

Beijing has warned against interference, with its Foreign Ministry saying investment cooperation is “mutually beneficial” and should not be influenced by third parties. Chinese diplomats have also cautioned that trade relations could suffer if no agreement is reached on Pirelli. China is one of Italy’s largest trading partners.

Meloni is balancing ties with both Washington and Beijing after Italy exited China’s Belt and Road Initiative in 2023, the only NATO member to have joined it. The withdrawal strained relations, prompting months of repair efforts, including Meloni’s visit to China last summer.

Europe once welcomed Chinese investment in critical infrastructure but has grown wary amid concerns over security and industrial competitiveness. EU trade data show the bloc’s deficit with China will more than double to over €400 billion ($466 billion) in the five years to 2025, fueled by subsidised exports in EVs, batteries, renewables, and chemicals.

“This is an asymmetric shock, accelerating China’s self-sufficiency while eroding Europe’s industrial base,” said Beniamino Irdi, head of consultancy Highground. “Without coordinated action, Europe will remain divided and reactive.”

By Tamilla Hasanova