In contrast to China's engagement with resource-rich and emerging nations, its interest in Italy is motivated by the Mediterranean country's geographic advantages and advanced technological capabilities. Since launching the Italy-China Governmental Committee in May 2004, the two sides have expanded bilateral ties apace. The Italians have cooperatedwith the Chinese on numerous environmental, research and training projects, and have cultivated defense and trade ties. 

China has reciprocated with surging capital investment in Italy. This has been focused on advanced manufacturing industries, with moves such as the doubling in size of the Chinese-owned Campodoro electronics plant in Padua reinvigorating Italy's ailing industrial sector. Chinese firms are in talks to build a $3 billion sea-freight terminal at Civitavecchia, north of Rome, and are expanding their activities at the southern Italian ports of Naples and Taranto, which could have a transformative economic effect on one of Western Europe's poorest regions. China is also the fastest-growing export market for Italy's important luxury-fashion and automobile sectors, and represents a major new source of demand for Italy's domestic tourism industry.

To mark this year's diplomatic anniversary, 2010 has been dubbed the "Year of Italy in China," prompting accelerated economic, cultural and intellectual exchanges between the two nations. The initiative culminated with a visit by Chinese Premier Wen Jiabao to Rome in early October, followed by an Italian delegation to Beijing led by President Giorgio Napolitano later the same month. The two visits gave rise to a flurry of new deals, with Chinese companies advancing further into Italy's port and white-goods sectors andsignificantly expanding their involvement in the telecommunications and automobile industries. 

In all, the leaders signed $2.5 billion in trade and investment deals and vowed to double total bilateral trade to $100 billion by 2015. China also signaled that it sees the acquisition of Italian firms as an important aspect of its "Go Global" campaign for its industrial flagships. Another significant development was an agreement to begin joint defense and military training operations, an announcement that came on the same day as news of a similar Chinese deal with Poland. 

Viewed in isolation, the Sino-Italian relationship represents one of Beijing's deepest and most-developed partnerships with a Western European nation. But as it has done elsewhere, China has sought cooperation through a dual-track strategy of expanding bilateral ties at a state-to-state level as well as supranationally through regional institutions, in this case the European Union. Bilateral relations between the two countries exhibit considerable complementarity: Italy can benefit from China's burgeoning demand for luxury goods and increasing desire to divest its huge foreign exchange holdings through overseas investment, while supplying much-needed technical assistance to Chinese industry in return, particularly in terms of green technologies, where Italy is a world leader.

However, within the context of Beijing's unfolding regional approach, Italy serves several broader strategic functions. First, with regard to the EU, as outlined by the Chinese ambassador to Italy, Ding Wei, in a speech in July, "China strongly intends to boost dialogue with Europe and looks at Italy as a strategic bridge for this." Italy offers Chinese companies the benefits of Western European technology and expertise, but in a more compatible business environment than its northern neighbors -- the two countries received similar scores on this year's Transparency International Corruption Index. 

Furthermore, Italy's maritime access will be attractive to China as the latter seeks to improve its supply routes to Africa, Europe and the Atlantic seaboard. Following recent investments in Greece, by and large along the same lines as those made in Italy, China has significantly increased its access to the Eastern Mediterranean in the last 12 months. Chinese firms have also identified considerable commercial benefits from developing rail and road infrastructure throughout Europe.

Embryonic Sino-Italian military cooperation comes against the backdrop of deepening Chinese defense cooperation with Turkey and Eastern European states such as Poland. These exercises reflect China's new defense strategy and its vision of the People's Liberation Army as outlined by the "New Historic Missions" military doctrine (.pdf), which seeks to expand the PLA's operational capabilities beyond conventional warfare to better manage nonconventional and dynamic threats in a modern security environment. Cooperation with long-standing defense powers such as Turkey and Italy not only diversifies and enhances China's military capabilities, but also gives Beijing's leaders the international credibility they crave. 

With the European economy still spluttering, China's ability to bring cash to the table will continue to open previously locked doors throughout the continent. That will naturally raise concerns that China's checkbook diplomacy represents a Trojan horse. However, these should not be overblown, as Chinese investment and demand represent two of the most-viable mechanisms currently on offer to kick-start the structural realignment Europe needs to return to balanced and sustainable economic growth.

**Iain Mills is a Beijing-based freelance writer.