Turkey views China as an important economic partner but faces a large trade deficit. Turkey aims to attract more Chinese investment to balance the relationship. As a connector between East and West, Turkey wants to capitalize on China's Belt and Road Initiative to facilitate infrastructure projects and investment. However, Turkey must also maintain strong economic ties with the EU and US. While economic relations with China grow, political and societal differences sometimes undermine the relationship.
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Turkey’s View of China as an Economic Partner
1. Turkey’s View of China as an Economic Partner
Dr. Altay Atlı, Koç University and Reanda Turkey, Istanbul
NUS Middle East Institute Annual Conference “The Middle East Pivot: China’s BRI Between Geostrategy and Commercial
Opportunity” February 11-12, 2019, Singapore
2. Turkey’s Economic Relations with China
0
7500
15000
22500
30000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Export Import
Turkey’s Bilateral Trade with China
Source: TURKSTAT
(millionUSD)
Turkey’s bilateral merchandise
trade with China is defined by a
large trade deficit. > China as the
major contributor to Turkey’s
current account deficit.
3. Turkey’s Economic Relations with China
$1.56 b.$231 m.
Turkish FDI
stock in China
(2017)
Chinese FDI
stock in Turkey
(2017)
Investment Relations Between Turkey and China
Major Chinese corporations with investment in Turkey
4. Turkey’s Economic Relations with China
China is expected to be more actively pursuing
investment, contracting, transportation, tourism and
energy sector projects in Turkey, and this will also
contribute to our efforts of narrowing down the ever-
increasing trade deficit. Having deeper investment
relations is a vital condition for ensuring a stable and
lasting cooperation (with China).
China Paper by the Turkish Ministry of Trade
2013
It is extremely difficult to sustain our trade (with
China) in its current state, because there is a
significant imbalance. We take every opportunity to
make our Chinese counterparts be aware of this,
and we have a shared understanding with them
here, Turkey needs to receive more investment from
China.
Senior Turkish diplomat (interviewed by the author)
December 2016
➡ Turkey’s efforts aim to have a more balanced economic
relationship with China.
➡ A move from the rhetoric of “closing the deficit” towards
“balancing” through investments.
➡ Improving public-private partnership.
➡ Capacity building.
“100 Day Action
Plans” issued by
the Turkish
Government in
August 2018
Ministry of Trade
Use of local currencies to be facilitated for the
trade between Turkey and China.
Ministry of Treasury and Finance
Targeting Chinese financial markets in order to “achieve
greater diversification of partners and instruments of
external borrowing.”
Ministry of Trade
China designated as one of the four priority markets for
Turkish exporters (the others being Russia, India and
Mexico).
Ministry of Culture and Tourism
Attracting more tourists from China to Turkish destinations.
5. Turkey and the Belt and Road Initiative
➡ Turkey aims to capitalize on its strategic geographic
location between the East and the West, its links with
several emerging markets, as well as being part of China's
Belt and Road Initiative (BRI).
➡ BRI as a tool to facilitate investment flow and infrastructure
projects from China to Turkey.
Recep Tayyip Erdoğan
President of Turkey
This is a giant project that will profoundly affect
the economies of several countries. Turkey has
to be in the project, as a connector between
China, Central Asia and the Caspian on the one
side and Europe on the other, as this is the
shortest and most competitive route.
Initiatives (like the BRI) provide significant
opportunities for both enhancing the integration
between the countries of the region and
integrating them with the global economy. Due to
its geographical position, Turkey is one of the
most key countries within the BRI project. This
project matters profoundly for the strategic
cooperation between Turkey and China as well.
Cansen Başaran Symes
Chairwoman of TÜSİAD
6. Turkey and the Belt and Road Initiative
➡ Turkey’s focus on infrastructure development,
particularly transportation and logistics infrastructure.
> Vital for Turkey’s sustainable development in the
long term. + Important for Turkey’s aims to become a
major hub for international trade
➡ By the year 2025, the Turkish infrastructure industry
is expected to grow from its current value of TRY50
bilion to TRY125 billion.
➡ The railroads sector remain the predominant driver of
transportation infrastructure industry. > The objective
is to increase the total length of Turkish ralroads from
12,000 to 35,00 by 2035. > Also high growth in:
airports, roads/bridges, sea ports.
➡ $45 billion worth investment needed by 2035. >
Increasing need for international cooperation.
7. Turkey and the Belt and Road Initiative
➡ China is already a player in Turkish railways sector.
➡ Won the contract for Ankara-İstanbul high-speed railway in 2005; second phase completed. Undertaking the
Yozgat-Sivas segment of Ankara-Sivas high-speed railway.
➡ $30 billion loan for Turkey’s railroad projects. Supplying cars for Ankara Metro.
➡ Chinese companies looking forward to opportunities in what they see a high growth sector, supported by financing
from Chinese banks.
➡ Interested also in other major projects such as the $35 billion Kars-Edirne railroad.
➡ The market share China has created within the Turkish market will continue to provide Chinese companies
opportunities within this high growth sector, as China continues to increase its overland connections to Europe
and export its high-speed rail technology.
➡ Completing the legislative framework.
➡ MoU on “Aligning the Silk Road Economic Belt and the 21st Century Maritime Silk Road with the Middle Corridor
Initiative” (signed in Antalya, November 2015).
➡ Agreement on “Cooperation in the Field of Railways” (signed in Antalya, November 2015).
➡ Agreement on “Land Transportation” (signed in Beijing, May 2017).
8. Turkey and the Belt and Road Initiative
Kumport, Istanbul
Filyos, Zonguldak
Çandarlı, Izmir
Mersin
Cosco Pacific’s purchase of 65% stake at the container port near
Istanbul is to date the largest Chinese investment in Turkey.
Turkish ports can complement
Greek facilities in the
Aegean/Eastern Mediterranean,
strengthening the maritime
logistics networks between Europe
and Middle East/Asia.
Mersin port’s importance
will increase with the
reconstruction process
of Syria.
9. China as a technology partner for Turkey?
➡ Turkey’s economy is at a stage where it needs to
improve its own technological capabilities and reduce
its dependence on the outside world in this realm.
➡ FDI enabling transfer of technology and co-production
is preferred, including FDI from China.
➡ Energy: In addition to projects in solar energy, hydro
energy, coal and renewables, nuclear energy is
emerging as an area of cooperation between the two
countries. > Turkish government has already signed an
agreement of exclusivity with China’s State Nuclear
Power Technology Corporation (SNPTC) for the
construction of Turkey’s third nuclear plant.
➡ Defence industry: Cooperation since the 1990s + The
missile defense system tender of 2013.
➡ Telecommunications: Huawei and ZTE active in
Turkey, not facing obstacles due to “national security
concerns.” Both companies are investing heavily in
research and development activities in Turkey.
10. 0
22.5
45
67.5
90
Concluding Remarks
➡ Given its large trade deficit ait China, Turkey wants to achive a more balanced economic relationship by drawing
more investment from this country, which would not only imply inflows of capital into the Turkish economy, but also,
and more importantly, help Turkey to close its gaps in technology, knowhow, energy sufficiency and infrastructure.
➡ BRI is seen as useful instrument in this respect.
➡ Challenges faced by Turkey with respect to efforts for improving relations with China:
➡ Serious differences on the Uyghur issue, which undermines mutual confidence and trust between the two sides.
➡ Unfavorable mutual perceptions at the societal level in both Turkey and China.
➡ Political instability in the region, which forces the policy makers to divert their energy and attention elsewhere.
➡ Insufficient institutional capabilities.
Turkey’s
Exports/Imports with
EU, US and China
➡ Turkey remains deeply anchored to the West economically, and it is
simply impossible for Turkey’s economic relations with China or the
Asia-Pacific in general to reach the level of relations with the West in
the foreseeable future. > It is about “diversification” father than
choosing one partner over another.
11. Turkey’s View of China as an Economic Partner
Dr. Altay Atlı, Koç University, Istanbul
NUS Middle East Institute Annual Conference “The Middle East Pivot: China’s BRI Between Geostrategy and Commercial
Opportunity” February 11-12, 2019, Singapore