Beijing will likely retaliate. They will be wary of upsetting the EU as a whole, though. They played games with Australia when there were minor spats about unrelated trade.

From Italy's point of view, if it's not working, why stay and it looks like there was a specific out by giving notice. It'll probably be more damaging leaving than entering was beneficial.

From.chinas perspective it's embarrassing as if the terms are so poor that wealthy countries leave, poorer countries will feel emboldened, if they can afford to leave. If China keeps upsetting trading partners, they risk being always a necessary evil for cheap labour, but that advantage is dipping as they get wealthier.