Italian Ambassador to China
Attilio Massimo Iannucci. Photo: Courtesy of the Italian embassy in Beijing

As Italians emerge from the current holiday season, they know that 2012 will be a trying year - one that will possibly define the future of the country beyond the current generation.

 This comes as no surprise to Italians because 2011 has already tested them beyond expectations. 2011 was supposed to be a year of celebration as the nation feted the 150th anniversary of the reunification of the Italian peninsula, with a ceremony marked by the presence of high-level officials from around the world, including Chinese Vice President Xi Jinping.

But with the crisis from Greece, Ireland and Portugal spilling over into the bigger European economies such as Spain and Italy, the structural problem of public debt within the eurozone provided international financial speculators with painful leverage.

To prove its commitment to the economic benchmark of the times - budgetary discipline - Italy changed government and passed three austerity budgets, each one more severe than the other. The last one, just approved by the Italian Parliament, in a case of the government feeling the pain of the common man, even elicited public tears from a cabinet welfare minister.

Yet, despite the gloom of the current economic outlook, Italians know that the fundamentals of the economy are strong: a small budget deficit, low debt of the private sector, a strong manufacturing sector (second in Europe only to Germany, the fifth in the world), a solid financial condition of households, the soundness of banks, and limited foreign debt. 

While Italy has been thankfully endowed with unsurpassed beauty, its land is remarkably poor in natural resources. Its greatest asset is human capital, which over a span of 3,000 years - almost at a par with China - has made the Italian peninsula a beacon of civilization and ideas, a source of bewildered admiration from foreign visitors. 

Italians are not only an inventive, creative and resourceful people. They also remain a thrifty and industrious one. SMEs' niche specializations and high-quality products (Italy's "pocket  multinationals" as they are called) guarantee the country's prominence in world exports. It is no small feat that in the middle of the severest world recession since 1929, the country is still achieving one of the largest foreign trade surpluses in manufactured products. 

Italians remain frugal and wary of private debt. The household total net wealth is high by international standards, estimated at 178 percent of the size of the GDP. In the real estate market - as in China also Italy's favorite investment - prices are stable, thus preserving families' net worth. 

True to the legacy of a people that has produced 19 Nobel Price laureates, Italy's educational performances appear in line with the OECD countries. The scientific productivity of Italian researchers ranks at the top in Europe, a source of technological innovation for Italian firms of any size and sector with the country banking on a booming green economy. 

At times of crisis it is reasonable to take stock of one's own assets. While taking comfort in the fundamentals of its own economy and unique culture and creativity, Italy will remain in 2012 actively engaged in the international arena where since 1945 it has been a provider of peace and security also outside of its immediate reaches in Europe and the Mediterranean. 

History has often put Italy in the position of being "Europe's comeback kid." We have been there before and while we do not necessarily relish this situation - far from it - we know that we can overcome one more time the challenges ahead in the upcoming Year of the Dragon.

The author is the Italian ambassador to China.