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With the eurozone growth and sovereign debt crises taking their toll on the member states of the EU -- Turkey’s largest trading partner -- the rise of Asia with booming economies, a growing consumer market and a vibrant labor force offers a good prospect for Turkish companies eager to expand their market share.
China stands out as the most important partner for Turkey in Asia as it has the largest economy on the continent with huge cash reserves for investment and cutting-edge manufacturing technology to share. Even before the crises in Europe, both countries’ leadership made a calculated decision to boost their ties, and they already upgraded their relations to a “strategic partnership,” a term that was coined during unprecedented high-level government exchanges in recent years.
There are many reasons to justify increasingly closer cooperation between Turkey and China. For one, China sees Turkey as the most important regional player in the Mediterranean rim as well as in the Middle East and wants to capitalize on the rising clout of Turkey in countries located in Turkey’s immediate neighborhood. Even in African and Central Asian markets where Turkish companies usually compete with Chinese for example in the textile and construction industries, we see a change of wind in the direction of cooperation rather than rivalry.
We know for example that Turks beat Chinese in terms of high-end quality textile and much more durable construction projects, while the Chinese secure deals with long-term financing tools tied to securing government tenders in third countries. If the rivalry was to be dropped in favor of cooperation, we may see a new modality emerging between Turkey and China for the benefit of both. This would create a win-win situation for both Chinese and Turkish companies in third markets in line with the expectations from a new strategic partnership model.
For that to happen, we may need to overcome some of the frictions poisoning the bilateral ties. First is the huge trade imbalance favoring China. According to the Turkish Statistics Institute (Turkstat), the trade volume in 2010 was $19.5 billion, up from $14.3 billion a year earlier. While Chinese exports to Turkey were $17.2 billion in 2010, its imports from Turkey were only $2.3 billion. In the first nine months of this year, Turkey imported $16.6 billion worth of Chinese goods, a 35 percent increase over the same period last year, while Turkish exports remained almost on the same level, posting $1.8 billion. Considering that both countries target an annual trade volume of $50 billion by 2015 and $100 billion by 2020, it becomes imperative that we address this imbalance.
There are two tracks both sides are working on to rectify this anomaly. China wants to invest heavily in Turkey to compensate for the trade imbalance. For that China is eyeing the car manufacturing, mining, hospitality, transportation and hospitality industries. Some of the high-speed train projects Turkey has planned are to be completed with financing from China. As part of an agreement signed with China in 2010, the country is offering a $28 billion loan for the construction of a 2,000-kilometer-long high-speed railway line. Chinese companies are also active in striking deals to acquire raw materials from Turkey. About 40 percent of Turkey’s total export to China was composed of boron sales to this country. With 3 billion tons of boron reserve, Turkey leads the world boron market and earns close to half a billion US dollars a year. China is also interested in expanding cooperation in iron and steel industries, piping and pipe fittings in Turkey.
With regard to the energy industry, both countries signed a five-year deal in July to boost cooperation in developing energy strategies, technologies and projects not only in their respective markets but also in third countries as well. According to the agreement, both countries will cooperate on nuclear power, renewable energy, thermal power, energy conservation, hydrocarbon exploration and production and mining technologies.
Another track to compensate the trade imbalance is to have more access for Turkish goods in China. This may be difficult and will take more time to realize. But it seems Chinese officials have committed to developing that track as well. Talks concerning a currency liquidity swap arrangement to promote trade by settling transactions in lira and yuan are already underway. At the İstanbul Financial Summit conference held in September, Central Bank of Turkey Governor Erdem Başçı announced that his bank had contacted the People’s Bank of China. China has made similar agreements in the past with Brazil and South Africa to reduce dependence on the dollar and euro, while Turkey has made similar agreement with Pakistan.
In addition to economic cooperation, both China and Turkey are working to develop ties on the political and security fronts as well. China’s full support for Turkish membership as a “dialogue partner” in the Shanghai Cooperation Organization is a recent indication that political consultations are on the rise between the two countries. Both countries have a vested interest in seeing Afghanistan stabilized and Pakistan keep its territorial integrity. They do not want outside military interference in either Iran or Syria and would like to see oil-producing Gulf countries maintain political and social stability.
The cooperation between China and Turkey went even further. Last year, to the surprise of many, Turkey invited China to join military drills held at the Konya airbase in Turkey’s Central Anatolian region. Though the move was more of a symbolic nature, nevertheless it showed that a NATO country might reach out to China, while the latter signaled recognition of Turkey’s rising importance in regional and global affairs.
It looks like both countries were able to set aside their differences over 2009 clashes between Uighurs and Han Chinese in China’s Xinjiang province and are committed to joint efforts to crack down on terrorism and separatism. While China has shown greater sensitivity to Muslim grievances in the region, Turkey reaffirmed the one-China policy with utmost respect to China’s sovereignty and territorial integrity.
We just have to wait and see how Turkey and China flesh out the concept of “strategic partner” in the future and what the ramifications of this concept are for the region and the world.
Turkey and China: strategic partners
China stands out as the most important partner for Turkey in Asia as it has the largest economy on the continent with huge cash reserves for investment and cutting-edge manufacturing technology to share. Even before the crises in Europe, both countries’ leadership made a calculated decision to boost their ties, and they already upgraded their relations to a “strategic partnership,” a term that was coined during unprecedented high-level government exchanges in recent years.
There are many reasons to justify increasingly closer cooperation between Turkey and China. For one, China sees Turkey as the most important regional player in the Mediterranean rim as well as in the Middle East and wants to capitalize on the rising clout of Turkey in countries located in Turkey’s immediate neighborhood. Even in African and Central Asian markets where Turkish companies usually compete with Chinese for example in the textile and construction industries, we see a change of wind in the direction of cooperation rather than rivalry.
We know for example that Turks beat Chinese in terms of high-end quality textile and much more durable construction projects, while the Chinese secure deals with long-term financing tools tied to securing government tenders in third countries. If the rivalry was to be dropped in favor of cooperation, we may see a new modality emerging between Turkey and China for the benefit of both. This would create a win-win situation for both Chinese and Turkish companies in third markets in line with the expectations from a new strategic partnership model.
For that to happen, we may need to overcome some of the frictions poisoning the bilateral ties. First is the huge trade imbalance favoring China. According to the Turkish Statistics Institute (Turkstat), the trade volume in 2010 was $19.5 billion, up from $14.3 billion a year earlier. While Chinese exports to Turkey were $17.2 billion in 2010, its imports from Turkey were only $2.3 billion. In the first nine months of this year, Turkey imported $16.6 billion worth of Chinese goods, a 35 percent increase over the same period last year, while Turkish exports remained almost on the same level, posting $1.8 billion. Considering that both countries target an annual trade volume of $50 billion by 2015 and $100 billion by 2020, it becomes imperative that we address this imbalance.
There are two tracks both sides are working on to rectify this anomaly. China wants to invest heavily in Turkey to compensate for the trade imbalance. For that China is eyeing the car manufacturing, mining, hospitality, transportation and hospitality industries. Some of the high-speed train projects Turkey has planned are to be completed with financing from China. As part of an agreement signed with China in 2010, the country is offering a $28 billion loan for the construction of a 2,000-kilometer-long high-speed railway line. Chinese companies are also active in striking deals to acquire raw materials from Turkey. About 40 percent of Turkey’s total export to China was composed of boron sales to this country. With 3 billion tons of boron reserve, Turkey leads the world boron market and earns close to half a billion US dollars a year. China is also interested in expanding cooperation in iron and steel industries, piping and pipe fittings in Turkey.
With regard to the energy industry, both countries signed a five-year deal in July to boost cooperation in developing energy strategies, technologies and projects not only in their respective markets but also in third countries as well. According to the agreement, both countries will cooperate on nuclear power, renewable energy, thermal power, energy conservation, hydrocarbon exploration and production and mining technologies.
Another track to compensate the trade imbalance is to have more access for Turkish goods in China. This may be difficult and will take more time to realize. But it seems Chinese officials have committed to developing that track as well. Talks concerning a currency liquidity swap arrangement to promote trade by settling transactions in lira and yuan are already underway. At the İstanbul Financial Summit conference held in September, Central Bank of Turkey Governor Erdem Başçı announced that his bank had contacted the People’s Bank of China. China has made similar agreements in the past with Brazil and South Africa to reduce dependence on the dollar and euro, while Turkey has made similar agreement with Pakistan.
In addition to economic cooperation, both China and Turkey are working to develop ties on the political and security fronts as well. China’s full support for Turkish membership as a “dialogue partner” in the Shanghai Cooperation Organization is a recent indication that political consultations are on the rise between the two countries. Both countries have a vested interest in seeing Afghanistan stabilized and Pakistan keep its territorial integrity. They do not want outside military interference in either Iran or Syria and would like to see oil-producing Gulf countries maintain political and social stability.
The cooperation between China and Turkey went even further. Last year, to the surprise of many, Turkey invited China to join military drills held at the Konya airbase in Turkey’s Central Anatolian region. Though the move was more of a symbolic nature, nevertheless it showed that a NATO country might reach out to China, while the latter signaled recognition of Turkey’s rising importance in regional and global affairs.
It looks like both countries were able to set aside their differences over 2009 clashes between Uighurs and Han Chinese in China’s Xinjiang province and are committed to joint efforts to crack down on terrorism and separatism. While China has shown greater sensitivity to Muslim grievances in the region, Turkey reaffirmed the one-China policy with utmost respect to China’s sovereignty and territorial integrity.
We just have to wait and see how Turkey and China flesh out the concept of “strategic partner” in the future and what the ramifications of this concept are for the region and the world.
Turkey and China: strategic partners
