GO
Loading...

Italy's Monti Seeks Chinese Investment, Says Reforms Working

Mario Monti
Alessia Pierdomenico | Bloomberg | Getty Images
Mario Monti

Prime Minister Mario Monti urged China on Saturday to step up investment in Italy and tried to reassure Beijing that the euro zone debt crisiswas close to resolution and tough economic reforms passed by his government were working.

Speaking after meetings with officials including Premier Wen Jiabao and the head of the China Investment Corporation (CIC), Lou Jiwei, Monti said there had been clear interest in greater cooperation but he had no concrete measures to announce.

"I don't want to be too ambitious but my hope is to generate some new enthusiam on Italy," he told reporters.

"We underlined one of the aspects which in our judgment should be reinforced, the aspect of investment," he said.

On the last leg of a tour that included Kazakhstan, South Korea and Japan, Monti reiterated remarks he had made in Tokyo - that the worst of the euro zone debt crisis appeared to have been resolved.

"No one can say the euro zone crisis is totally over, and I think it would also be a dangerous attitude for Italian policy if we were to come into a state of complacency," he told reporters.

But he said the crisis was "virtually over" and fears that Italy could become a new flashpoint had eased since the turmoil last year which swept away Prime Minister Silvio Berlusconi and brought Monti's technocrat government to power.

"This so far has not happened, and I believe it will not happen. So allow me no complacency at all, but some relief on this point," he said.

He said his government was aware of the sacrifices being demanded of Italians through spending cuts and tax rises and admitted that some of the measures, in the middle of a recession expected to last all year at least, were "rough".

"I always have to make clear to the Italian people that, although it's less obvious, it would be much worse for their families to end up like Greece," he said.

DEMONSTRATION

Monti's unelected government has passed a series of painful spending cuts, tax rises and pension reforms to help cut Italy's huge public debt but has run into difficulties after an initial honeymoon period in which market confidence improved sharply.

He faces a delicate balancing act as he tries to persuade international investors that his drive to repair public finances is on track while calming mounting discontent at austerity measures which have started to hit ordinary Italians hard.

On Saturday, several thousand people took part in a protest march in Italy's financial capital Milan, where an office of Unicredit, one of the country's biggest banks, was damaged by flares thrown by demonstrators.

Monti faces particular pressure over labour reforms that are strongly resisted by unions and by the centre-left Democratic Party, which backs his government in parliament in a coalition with the centre right.

The standoff has sharply increased political tensions ahead of local elections on May 6-7, with the centre-right PDL party insisting that the reform propsals must pass as they stand.

Monti says the measures, which would weaken the strong employment protection enjoyed by some Italian workers, are needed to attract badly needed foreign investment and help make the job market fairer for younger workers.

He said the CIC's Lou Jiwei had told him the CIC had considered investing in Italy last year but had decided against it, partly over concerns about the rigidity of labour market regulations.

"They hesitated to go further because they saw some problems in the Italian economy. One of the problems that was specifically mentioned was an insufficiently flexible labour market," Monti said.

Monti says rules which make it hard for companies to fire employees with permanent contracts discourage them from hiring full-time staff and condemn growing numbers of mainly younger workers to a series of insecure, temporary jobs.

In a mark of the opposition he faces at home on the issue, Susanna Camusso, head of the CGIL, Italy's biggest trade union federation, repeated demands that the government drop one of the key elements of the planned reform.

She said Article 18 of the Italian labour code, which ensures that workers deemed to have been wrongfully dismissed by their employers have the automatic right to reinstatement was a fundamental "measure of the freedom and dignity of workers".

The CGIL will join the other main union federations in a demonstration on April 13 against the government's reforms and plans a day-long general strike to demand that the Article 18 protections are preserved.

Contact Business

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More