China & Turkey — Strong Co­op­er­a­tion un­der the “Belt and Road” Ini­tia­tive

China's Foreign Trade (English) - - Focus - —An Ex­clu­sive In­ter­view with Ali Mu­rat Er­soy, Am­bas­sador of the Repub­lic of Turkey

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.

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