Feature: Stronger Sino-Italian financial ties crucial for both sides

Strengthening financial cooperation between China and Italy is crucial to boost business internationalization on both sides, representatives from finance and credit institutions said at a Sino-Italian financial forum here on Thursday.

The conference was sponsored by the Chinese Embassy in Italy and the Italian Institute for Foreign Trade (ICE), and offered a wide debate over the mutual economic and banking system with a focus on how better support investment and trade exchange.

"With respect to China, we cannot do what it has to be done without a tight collaboration between Italian and Chinese institutions," ICE president Riccardo Maria Monti said in his opening speech.

"We have to expand and rebalance the trade flows between Italy and China. We have to increase mutual investments and tourism, and work more closely together in third countries," Monti said.

Within this set of priorities, a stronger synergy and more information exchange at financial level were seen as most necessary.

The two countries have already achieved good results in this perspective, Chinese Ambassador to Italy Li Ruiyu acknowledged.

"The Sino-Italian financial cooperation has deepened in latest years, gradually expanding from the simple credit financing to an increasing number of sectors," Li said.

New financial tools included commercial credit insurance, buying shares for the development of small and medium businesses, and infrastructure refinancing.

"This not only boosts the internationalization of firms in both countries, but offers successful examples (of cooperation), such as those concerning Shandong Heavy Industry Group and Ferretti, Shanghai Electric and Ansaldo Energia, or ChemChina and Pirelli," Li stressed.

A recent agreement was also signed between Bank of China and SACE, a major Italian export credit agency, insurance and financial group. The deal focused on strengthening communication and information exchange to facilitate access to financial resources for Chinese companies interested in Italian goods and services, and support Italian firms in their investments in China.

Yet, experts warned financial actors must also adjust to a fast changing environment.

"SACE guarantees portfolio up to 2005 was made of some 50 percent of sovereign risks, namely those supported by sovereign guarantees, and 50 percent of private risks," SACE Chief Executive Officer Alessandro Castellano said.

"Today, we have some 90 percent of private risks and 10 percent of sovereign risks only," Castellano said.

A risk-sharing mechanism has thus become vital to those giving financial support to business.

"This is the new paradigm for us, in China as in the world: we offer a Chinese bank to share their risk when they deals with an Italian company, and we look for a Chinese partner to share our risk when we deal with a Chinese company," Castellano said.

Economic ties between China and Italy have developed much in the last 10 years. China accounted for 2.6 percent of all Italian exports in 2014 from 1.7 percent in 2007, and Italy's exports to China grew by 21.9 percent between 2010 and 2014. On the other hand, Italy is China's 4th largest trading partner in Europe and the 15th in the world.

"Asia will have the world highest growth rate in the next 5 years according to IMF, and in absolute terms China will do the lion's share," Gianfranco Bisagni, Corporate and Investments Deputy Head of Unicredit Banking Group, said.

"China is expected to generate about 5 trillion U.S. dollars of new resources, which is more than 2 times Italy's GDP and a quarter of the global growth ... Beyond any doubt, any company searching new opportunities has to look to China," said Bisagni.

Unicredit Group has quite a long experience in the country. It set up its first office in China in 1982, and has now branches in Beijing, Shanghai, and Guangzhou in the mainland, and in Hong Kong.

"The collaboration with Chinese banks is vital to us and our clients, also because China's financial market is highly regulated and complex," Bisagni explained.

Moreover, China is large as a continent and its economy varies much from region to region.

"Chinese domestic demand in coastal areas and big cities is very sophisticated, for example, which matches perfectly with Made in Italy. Yet, Italian firms have to know where to sell, and for this they need support from institutions like ICE and the embassy, and the banks," he added. Endit