As Turkish President Erdoğan embarks on a major visit to China, the importance of China-Turkey new silk road connectivity is more important than ever. Turkey’s Belt and Road (BRI) related initiatives can help to add new vitality into multiple economies and Turkey’s in particular by forging close ties with China and the mutual partners of both Ankara and Beijing across Central Asia and Transcaucasia.
President Erdoğan has written a piece published in major Chinese newspapers and websites about his goals for his visit. The Turkish President stated:
“The centuries-old cooperation between our nations continues to grow stronger today thanks to the BRI under the leadership of Xi Jinping, China’s president and my dear friend”.
It is an important component of the project, which links Turkey to Georgia and Azerbaijan via rail, crosses the Caspian Sea and reaches China through Turkmenistan and Kazakhstan. As part of this effort, we have recently launched the Baku-Tbilisi-Kars (BTK) Railroad Project…
…Other investment projects, which we undertake as part of the Middle Corridor, include the Yavuz Sultan Selim Bridge over the Bosporus, the Eurasia Tunnel and Marmaray, the 1915 Bridge over the Dardanelles, highways, high-speed railways, logistics hubs and communication infrastructure. Those projects will directly contribute to the BRI’s goal of connecting Beijing to London.
Among our goals is to double our bilateral trade volume with China to $50 billion and, subsequently, $100 billion on a more balanced and sustainable footing to serve the interests of both sides. I call on the Chinese business community to invest in Turkey – the crossroads of Asia and Europe, and the heart of the BRI.
Turkey shares China’s vision when it comes to serving world peace, preserving global security and stability, promoting multilateralism, and upholding the principle of free trade. The world seeks a new, multipolar balance today.
The need for a new international order, which will serve the interests of all humanity, is crystal clear. Turkey and China, the world’s most ancient civilizations, have a responsibility to contribute to building this new system”.
As Turkey bookends the highly important Pacific to Mediterranean routes of BRI, multiple opportunities are ripe for exploration as China and Turkey continue to strengthen ties.
China’s Belt and Road initiative represents a multi-continental project that will help to link south-east Asia with northern Europe and Africa through multiple maritime belts and terrestrial roads that seek to resurrect the spirit of the ancient silk roads and harness this magnetism to the most modern forms of transport technology the world has seen. Chinese policy makers have recently placed a great deal of emphasis on increased positive interaction with the Association of South East Asian Nations (ASEAN) with the aim to create a manifold maritime road stretching from Malacca and other important destinations in the southern most parts of the Asia-Pacific region to Chinese ports in north east Asia. The recent agreement to establish a dialogue mechanism as a means of resolving lingering issues surrounding the South China Sea helps make clear that in ASEAN China is seeking long term partners while the more enlightened ASEAN states seek to capitalise on China’s good will for their own long term sustainable development goals.
As the Korean peninsula’s leaders embrace the path towards peace, the possibility for north-east Asia to become more integrated remains another major leap forward in terms of creating a more cohesive Belt and Road. The rapidly advancing Russo-Japanese rapprochement combined with a more open Korean peninsula will help to further incentive more connectivity projects in the north-west Pacific region. Thus, the north-south trajectory of Belt and Road is coming to fruition in the form of both greater Sino-ASEAN cooperation and in respect of more meaningful cooperation in north east Asia.
In terms of linking China’s Pacific ports with the wider Afro-Eurasian space, the China-Pakistan Economic Corridor (CPEC) represents a key artery in making this all important journey possible. A future China-Myanmar Economic Corridor will help to compliment CPEC, while an Arctic maritime belt based on the strong Chinese partnership with Russia also holds a great deal of promise for the future.
In between CPEC and the Arctic however lies a trans-central Asian road which will ultimately stretch from China’s border with Kazakhstan to Turkey via a southward turn in the Caucasus. Such a road represents a close approximation to some of the most widely used paths of the ancient silk roads which linked the Mediterranean cultures with those of the north Pacific.
As part of China’s plans to intensify building works on this particular road, Beijing intends to construct a modern Kazakhstan to Baku railway which will then merge with the existing Baku-Tbilisi-Kars railway whilst rounding off and enhancing Middle Corridor connectivity. From there, China intends to build a railway linking the eastern Anatolian city of Kars to Edrine on the European side of the Bosporus. In this sense, a trans-Anatolian railway into continental Europe will help to complete this central leg of Belt and Road, thus replicating one of the most important ancient trading routes whose modern benefits to the world are substantial. This itself can connect to the Middle Corridor which seeks to link Turkey’s culturally fraternal Central Asian partners to The Republic of Turkey.
Against this background, it is not surprising that Chinese investment into Turkey and bilateral trade between Ankara and Beijing continues to grow. The modern infrastructure and economic health of Turkey are clearly vital to the central leg of Belt and Road just as sure as Pakistan’s economic health is vital to the all important Pacific to Afro-Eurasian portion of the global megaproject.
Turkey’s President Erdoğan was among the earliest and most enthusiastic backers of the Chinese One Belt–One Road initiative which was originally introduced in 2013. Since then, the economic partnership between two of Asia’s most important powers has continued to blossom.
Turkey’s rapidly growing economy is likewise a substantial point of interest for Chinese investors looking for growing, young and dynamic markets in western Eurasia. A 2018 report from Turkey’s Daily Sabah details how over 1,000 Chinese firms are now active in Turkey across a variety of sectors. According to the report,
“Chinese firms that have been operating in Turkey’s logistics, electronics, energy, tourism, finance and real estate sectors are expanding their businesses in the country. With the entry of Bank of China and Industrial Commercial Bank of China (ICBC), the flow of Chinese companies into Turkey has accelerated and also expanded into the e-commerce sector in the recent period.
The world’s second largest trader, China invests $120 billion annually in various countries across the world and Turkey has been enjoying China’s overseas investments in the recent decade.
Accordingly, the number of Chinese firms operating in Turkey had neared 1,000 by April, according to the data of Economy Ministry.
Drawing attention to the significance of Turkey within the “Belt and Road Initiative” (BRI), an infrastructure development project designed and launched by Chinese President Xi Jinping in 2013 and spanning over 65 countries, Foreign Economic Relations Board (DEİK) Turkey-China Business Council Chairman Murat Kolbaşı stressed that the entry of two Chinese banks to the Turkish financial sector and the acquisition of a port by Chinese investors indicate the country will expand its investments and business operations in Turkey in other sectors, as well, including in energy, logistics, tourism, transportation, infrastructure and e-commerce.
Turkey’s unique position in the BRI makes the country a gate to Europe and Africa for China’s trade operations on the project’s route. Therefore, Kolbaşı highlighted that Turkey will naturally become a logistics hub for trade on the three continents.
With the aim of expanding Turkish-Chinese cooperation in the logistics sector, Turkey’s national flag carrier Turkish Airlines (THY) announced that it will form a logistics company in Hong Kong in partnership with China’s ZTO Express and Hong Kong’s PAL Air.
The partners aim to make the new joint venture one of the world’s largest integrator, and generate revenue of $2 billion within the first five years of its operation. They expect growth performance in proportion to the rising demand in the e-commerce sector.
The new joint venture and Istanbul as a mega transport hub is expected to enable THY to deliver to its customers around the world with excellent service quality“.
The report goes on to detail further Chinese investment in Turkey’s shipping and rail sectors while China and Turkey are also cooperating in the energy sector.
The following major Chinese projects in Turkey look to help elevate both Turkey’s internal economic connectivity and energy independence while readying the west Eurasian power to play a vital role as a key hub in One Belt–One Road:
–A high-speed Ankara to Istanbul railway
–A third nuclear power station to compliment those presently being constructed by Turkey’s Russian partner
–The modernisation of Turkey’s Kumport container port which is now operated by the Chinese company Cosco Pacific
–Working cooperatively to expand Turkish eCommerce platform Trendyo which just received an investment from Chinese global eCommerce leader Alibaba.
Additionally, China and Turkey plan to conduct bilateral trade in a combination of Lira and Yuan in a move that will ultimately make the growing trade between the two nations Dollar free and thus sanctions proof. In 2017, China sold $23 billion worth of goods to Turkey while China imported $3 billion worth of goods from Turkey. Officials in both countries have expressed their desire to rapidly increase these numbers.
Furthermore, while Russians continue to represent one of the biggest single national groups to visit Turkey as tourists, Ankara and Beijing are working to expand the number of Chinese tourists in the country who last year increased their spending in Turkish businesses by 166%. Turkish authorities have already begun work to make the country increasingly appealing to both Chinese visitors and investors.
As President Erdoğan is a champion of small and medium sized businesses that represent the economic engine of the Turkish economy, BRI can help infuse these business with both new and more effective supply chains whilst opening up foreign markets to an increasingly flow of Turkish goods. In terms of Turkey’s developmental strategy, Erdoğan has opted to continue existing policies aimed at economic growth while further encouraging foreign investment including and especially from China.
As the Turkish Straits and the city of Istanbul in particular have long represented Europe’s gateway to Asia, European producers will be looking to secure trade with Turkey as part of a wider aim to define their role as one of the outlets of Belt and Road that will see European goods traversing Anatolia and then heading towards the Caucasus before turning towards central Asia and finally to China.
In this sense, just as Pakistan represents the ‘zipper of Asia’ which helps to link western Eurasia and Africa to north and south east Asia, Turkey is the central fulcrum that will link all of Europe to the wider Asian space. Because of this, while Turkey’s domestic economy continues to grow in spite of monetary pressure from western currency speculators, by once again positioning itself as the central element in the largest east-west trading route in the modern era, Turkey will become an invaluable partner to any nation that seeks to take advantage of the great opportunities of the Belt and Road initiative. China clearly understands this as do Turkey’s leaders. While Europe has been slow on the uptake, it will become increasingly apparent that without Turkey, Europe’s major inroad to the wider global east will not be as free and open as it needs to be.