China & Turkey — Strong Cooperation under the “Belt and Road” Initiative
As a geographical and cultural bridge linking east and west, Turkey plays a key role in the Belt and Road Initiative. China and Turkey have established friendship and carried out all-round cooperation, bringing tangible benefits to the peoples of the two countries, and promoting regional peace, stability and development.
Recently, Ali Murat Ersoy, Ambassador of the Republic of Turkey to China, accepted our exclusive interview, talking about bi l at e r a l e conomic and t r ade development, and displaying us a bright future. Q1：since the establishment of diplomatic relations between the two countries, bilateral relations in political, economic, cultural and other fields have been developing steadily. Would you please comment on the development of bilateral relations over these years?
Ali Murat Ersoy: Since the establishment of bilateral diplomatic relations between Turkey and the People’s Republic of China in 1971, both countries have displayed clear determination to build a productive partnership.
Today, as we are approaching the 50th anniversary of this important relationship, it stands at the level of “strategic cooperation”, with over 27 billion trade volume and regular high level contacts strengthened with numerous bilateral agreements.
President Erdoğan’s visits to China in 2015 and 2016, and President Xi’s visit to Antalya in 2015 were significant events, which contributed immensely to Turkey’s bilateral relations with China. President Erdoğan was the first Turkish Head of State to visit China three times in three years when he arrived in Beijing on the occasion of the “Belt and Road” Summit.
Foreign Minister Çavuşoğlu and Foreign Minister Wang have a solid working relationship and last year they also held the f irst meeting of the Foreign Ministers Consultative Mechanism, during which they discussed wide ranging internat iona l issues in a more detailed manner.
In add i t ion to the w e l lestablished Joint Working Group mechanism, our Foreign Ministries held their first high-level strategic dialogue in 2016.
We also held the first meeting of the Deputy Prime Minister level cooperation mechanism last year.
We have also witnessed some
major developments in regional and international institution building within the last couple of years. One such example was the establishment of the Asian Infrastructure and Investment Bank ( AIIB). Turkey became one of the founding members of the AIIB with a share of 2.48% and has a seat on the Board of the Bank
s the role of infrastructure is the key to development and connectivity, investments in this area, funded by AIIB, Silk Road Fund or others will benefit all countries involved, and provide significant support for our efforts and boost cooperation.
Last but not least, as of last year, China was Turkey’s number one trade partner in Asia-pacific and number two in the world.
In brief, our bilateral relations are on the right track and we will see further expansion of the bilateral area of cooperation in the coming years. Q2：would you please tell us about the bilateral trade and investment in the past five years, and what are the highlights? Can you give us some examples?
Ali Murat Ersoy: For Turkey, China has transformed from a distant trade destination to a key trade partner. Our trade volume has increased year on year from USD 238 million in 1990 to the level of USD 27.7 billion in 2016.
However, we need to create a more balanced trade structure and reach a higher volume of trade.
Turkey’s purpose is two- fold: increasing exports to China and narrowing the trade deficit as much as possible on one hand, and attracting more Chinese investment on the other.
To this end, our Ministry of Economy has recently launched a detailed “China Action Plan”, and business associations such as the Turkish- Chinese Business Council are actively analyzing the trade potential to China in products where Turkey has a comparative advantage.
In light of the advances in information technologies, more innovative methods are also employed to increase the bilatera l trade. Signing of an agreement between Turkey and China in the field of e- commerce in 2015 was a case in point.
The use of national currencies in bilateral trade can also help to produce a positive effect. Cooperation and contacts between the Central Banks of the two countries are increasing. Raising the levels of reserves in each other’s currencies and facilitation of the existing “Swap Agreement”, which was renewed in November 2015, could be possible ways to deepen the cooperation in this area.
What makes Turkey unique in terms of trade and foreign direct investment is that it is a gateway to Europe, the Middle East, North Africa, the Caucasus and Central Asia. Indeed, a four-hour flight from Istanbul gives access to more than 50 countries and a vast market that accounts for one fourth of the world economy.
With the removal of bureaucratic obstacles to a great extent, improvements in the tax system, support for transfer of profits and successful privatization programs, Turkey has emerged as one of world’s leading investment hubs.
The total amount of foreign direct investments exceeded USD 165 billion as of 2015.
Turkey-china investment relations have also witnessed a considerable lift within the last two years.
According to the data provided by the Ministry of Economy of the Republic of Turkey, China’s total direct investment in Turkey was USD 809 million as of February 2017. This was a substantial increase from USD 27 million in total between the years of 2002-2013.
Despite this major improvement, Ch i n a r a n k s 2 2 nd r e g a rd i n g incoming FDI to Turkey. Presently, there are about 849 companies with Chinese capital in Turkey. This puts China at the 14th place among countries with highest number of companies in my country. In other words, there is much room for further improvement and both Turkey and China should encourage their private sectors to invest more in each other’s countries.
There a re a lso investment opportunities in many areas for Turkish companies in China. For e xample, Turkey could make a substantial contribution in the service sector. Healthcare, hotel industry and education may offer major opportunities for bilateral cooperation. Bank ing and insurance sectors could also be in the list for further cooperation. Existence of strong textile sectors in both countries can allow cooperation in affordable design and fashion.
In recent years, Turkish businessmen have become increasingly aware of China as a big market, an investment destination and a central location regarding investments in surrounding countries. Turkish entrepreneurs, especially those with long- term investments, are enjoying preferential policies, as a result of China’s opening- up endeavors to attract and encourage foreign investments. We are proud to see that Turkish investors achieved success in sectors such as household appliances, auto parts, generators, textiles and also in other segments of the new economy.
We are working with our Chinese counterparts to improve our overall economic relations with opportunities for cooperation in f ields such as construction, consultancy services, tourism, small and medium sized enterprises, joint ventures, advanced technologies and industrial projects. Forging multi-dimensional economic and trade relations between Turkey and China would not only benefit the peoples of both countries, but also contribute to the welfare of their regions.
Taking this opportunity, I would like to invite Chinese investors to take a stronger interest in Turkey. Q3：turkey is a key point of the “Belt and Road”. What opportunities do you think the initiative will bring to the countries under this initiative?
Ali Murat Ersoy: “Belt and A
Roa d ” p rov ide s a n e x c e l l ent opportunity for making Eurasia one of the main arteries of global trade and commerce. It also has the ability to stimulate trade in the landlocked part of Asia as well as its periphery. Therein lies the critical component. The Modern Silk Road will alleviate the Vasco De Gama effect on the ancient land routes and combine t h e f low o f t r ade b ot h w a y s through land and sea. The world is seeking a new model to revitalize economic development and “Belt and Road” may provide an exciting new option.
Therefore, “Belt and Road” is a win-win project for the benefit of the countries and peoples in Asia, Europe and the world. It will create positive results in the form of employment, welfare, interconnectivity, peace and stability.
Turkey has declared its strong interest in the “Belt and Road ” Initiative right from the start. A memorandum of Understanding was signed between Turkey and China in 2015 on aligning the “Belt and Road” with Turkey’s “Middle Corridor” initiative. This MOU was not only about transportation and logistics, but creating connectivity in several fields, including people to people contacts.
Turkey has developed a range of major infrastructure projects that can be integrated into the “Belt and Road” initiative.
The Marmaray tunnel connecting the continents of Asia and Europe under the Istanbul Strait became operational in 2013. The Edirne- Kars high- speed railway will provide the essential modern connection across Turkey. Another major project, the Baku-tbilisi-kars Railway will provide an efficient railway connection linking Turkey, Caucasus and Central Asia. With its extensions into the Far East, this line will connect the East and the West. We call this project: “The Middle Corridor”.
The Middle Corridor constitutes one of the key land arteries of the Modern Silk Road system. It will create an additional transit trade route from China to Europe. synergy in a vast geographical area.
We have also initiated and/ There are already several blueprints or become a signif icant party of coming from countries along and several multilateral transportation beyond the “Belt and Road”. This and logistics mechanisms between initiative will help new markets, Asia and Europe. Lapis Lazuli improve infrastructure and increase Transit Transportation Project is one trade as well as social and cultural example. It is a project connecting contacts. It seems to be a good Afgha n i s ta n, Tu rkme n i s ta n, formula for a future based on “winAzerbaijan, Georgia and Turkey. In win” approach. Turkmenistan and in Azerbaijan,
Q4：under the “Belt and Road” “Lapis Lazuli” will join the “Middle
initiative, there are a series of Corridor” artery.
cooperation projects carried out These examples show that
smoothly between China and Turkey’s efforts in cooperation
Turkey. Please give us a detailed with several regional countries
description about the progress of have the potential for a multiplier
the projects. effect on our common work within t he “Be lt a nd Road ” to br ing Ali Murat Ersoy: As I mentioned concrete contributions to economic in my response to the above question, cooperation in Asia. a Memorandum of Understanding
Another Turkish initiative is the was signed between Turkey and “Caravanserai Project” which was China in 2015 on aligning the “Belt introduced as a concept in 2008 to and Road” with Turkey’s “Middle increase cooperation among customs Corridor” initiative. This MOU was authorities along the Silk Road. not only about transportation and This Project aims to facilitate trade logistics, but also for strengthening and transport by accelerating border the l ink ages in severa l f ields, crossing procedures in Asia. including people to people contacts.
All these projects and initiatives In the meantime, Turkey has will also enhance Turkey and China’s already started delivering on other prospects for cooperation in third concrete projects in the fields of countries on infrastructure related transportation, logistics, energy and projects. trade. These national projects will
“Belt and Road” can also provide also contribute to the revival of the ample opportunities for future energy ancient Silk Road. cooperation, especially in the field of Wit h t he inaug ur at ion of renewables. Marmaray on 29 October 2013,
Maritime Silk Road offers which coincided with the 90th opportunities for further cooperation anniversar y of the Republic of between our countries regarding Turkey, continents of Asia and ports and logistics. Europe are now linked with an
Land Transport Agreement will undersea railway tunnel. This project be another important dimension, will also enable uninterrupted travel which w i l l open way for more from Beijing to London through bilateral cooperation between Turkey railway. Therefore, it will be an and China along the “Belt and important part of the “Rail Silk Road”. Road”.
Also, “Belto and Road ” will ne of Turkey’s mega projects be instrumental to promote the completed in 2016 was the third de v e lopment of ne w bu s i ne s s bridge on the Istanbul Strait. Named models such as e- commerce. As “Yavuz Sultan Selim Bridge”, it is I mentioned earlier, Turkey and a combined road- rail bridge and China have a l ready sig ned a n carries four motorway lanes and one e-trade agreement. railway line in each direction. It is
With nece ssa r y f ina ncing among the top ten tallest suspension and cooperation, “Belt and Road” bridges in the world. initiative will surely create a positive Another mega project, the
Eurasia Tunnel, was completed and opened in December 2016. The double- deck tunnel provides additional connection under the Istanbul Strait, connecting Asia and Europe.
Within the last ten yea rs, Turkey has built more than 17,000 kilometers of dual carriageways, nearly tripling the 2002 coverage of 6,000 kilometers. The country aims to reach 37,000 kilometers by 2023, connecting all provinces of Turkey with dual carriageways.
We have a lso seen massive improvements in air transportation. The number of airports in Turkey has been doubled over the past decade. Passenger traffic has increased more than f ive- fold during the same period. According to the World Bank, Turkey ranked 9th globally in terms of the number of airway passengers in 2014 with 92 million. The third airport project in Istanbul will have a huge investment total. The third airport will make Istanbul a global airline hub. As of December 2016, 40% of the construction was completed.
Maritime sector in Turkey has seen its share of improvements. The total traffic in ports has more than doubled over the last eight years as a result of increasing trade and developing infrastructure. Turkey has greater targets in maritime transportation with important port projects such as the Çandarlı Port in the Aegean Sea, Filyos Port in the Black Sea and Mersin Second Container Port in the Mediterranean Sea. With these projects, Turkey will be able to increase its container hand l ing c ap a c it y thr e e fol d . Ma r it ime f leet of Turkey has grown to reach 30 million DWT ( Deadweight tonnage), ranking 13th in the world.
“Kanal İstanbul” is a project of artificial sea-level waterway, which will be connecting the Black Sea to the Sea of Marmara, and hence to the Aegean and Mediterranean Seas. It would bisect the current European side of Istanbul and form an island between the continents of Asia and Europe (the island would have a shoreline with the Black Sea, Sea of Marmara, the new canal and the Istanbul Strait. “Kanal İstanbul” aims to minimize shipping traffic in the İstanbul Strait. Turkey aims to finish the project in 2023, which will be the 100th anniversary of the establishment of the Republic. Q5：could you describe for us the Turkish economy structure and give some suggestions to the Chinese investors?
Ali Murat Ersoy: Turkey is one of the 20 largest economies in the world and 10 largest economies in Europe. It has a free- market economy where rules of competition are in place and the private and public sectors have pioneering and regulatory roles, respectively. A l ibera l foreig n t rade pol ic y is implemented and goods and products can be freely traded among individuals and institutions.
In Turkey, great emphasis has recently been placed on structural r e forms i n t he e c onomy. T he process of privatization has been accelerated and noteworthy reforms have been implemented in financial markets, as well as in sectors such as agriculture, social security, energy and communications.
Tha n k s to t h e s e r e forms and the creation of autonomous bodies, the structure of economic institutions has been strengthened and the countr y’s economy has become more resistant to probable f luc t uat ions i n i nte rnat iona l markets. Capita l markets have b e en r e v i s e d w i t h a mo de r n touch and numerous bureaucratic obstacles have been eliminated or minimized.
Turkey has been pursuing an export-led growth policy since 1980. By virtue of economic reforms and opening-up measures, restrictions on imports for many items were removed, safeguard practices were reduced and foreign exchange transactions were liberalized.
As a result of the economic reforms carried out during the last decade, both the volume and composition of the Turkish trade have radically changed.
In 2015, the volume of foreign trade exceeded USD 351 billion. Turkish exports increased to USD 14 4 bil lion in 2015 from USD 36 billion in 2002. For the 100th Anniversary of the Republic, the export target of Turkey is to reach USD 500 billion.
Its role as a hub with respect to transport and energy corridors makes Turkey an invaluable destination for any investor in the world. Taking into consideration my country’s geographical location and economic capabilities in the broader region, Chinese investors can also reach the markets of the European Union, the Mediter ranean, Caucasus, Central Asia and the Middle East through Turkey. Turkey welcomes investors from China especially for projects related to infrastructure, port, airport, channel, railway, subwa y, ene r g y, automobi l e , mechanical industry, banking and telecommunications.
Turkey’s planned infrastructure p r o j e c t s p r e s e n t imp o r t a nt opportunities for Chinese investors. Turkey has become one of the fastest growing energy markets in the world. Therefore, investment opportunities in mining and energy sectors could also be explored. Turkey is interested to work with China in the fields of green technologies and nuclear power.
My suggest ion to Chinese investors is to go and invest in Turkey as it presents ample opportunities for win- win cooperation between the two countries.
China has the dual centenary goa ls which aim to streng then the fundamentals of the “Chinese Dream”. Turkey also has a dream and a clear objective to become one of the major economies in the world by 2023. With its strongly motivated population of nearly 80 million people, Turkey’s ambitious goals for the year 2023, the 100th anniversary of the foundation of the Republic, will be within reach. Working together and stepping-up the cooperation will bring us closer to our dreams and pave the way for further development.