Monday, 19 March 2012

China-Turkey Summit: Economic Enticements Overshadow Differences

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By Richard Weitz (vol. 5, no. 6 of the Turkey Analyst)

The decision of Chinese Vice President Xi Jinping to visit Turkey along with Ireland and the United States during his ten-day world tour before becoming president in about a year underscores the importance Turkey holds for China’s leaders. The AKP government’s desire for new partnerships and Turkey’s eagerness to join other states in benefitting from the strength of the Chinese economy has contributed to this flourishing relationship. Their growing mutual attraction has led them to overlook their diverging policies regarding some regional issues, such as Syria and the status of ethnic Uighur Turks in China, and instead concentrate on cultivating mutual economic and strategic ties. But that situation may not endure. Beijing will have to pay close attention to the power struggle within the governing coalition of Islamic movements in Turkey, and its implications for the future evolution of Turkey’s foreign relations.

BACKGROUND: The Justice and Development Party (AKP) has made increasing Turkey’s economic ties with China its main objective in Ankara’s foreign relations with Beijing. Trade between Turkey and China has flourished in recent years, but almost all of this has been due to Turks’ growing appetite for Chinese goods. Turkey’s trade with China is currently dominated by imports from China, which totaled $21 billion in 2011, with only $3 billion in exports.

China has become Turkey's third largest trading partner (after Germany and Russia) and the leading source of Turkey’s imports. According to the Chinese Ministry of Commerce, two-way trade has grown from approximately $1 billion in 2001 to almost $18.7 billion in 2011, a 18-fold increase during that decade.  Turkish government statistics indicate that bilateral trade amounted to $24.1 billion in 2011.  During the 2001-2011period, Chinese investment in Turkey reached $10 billion, with projects worth $4 billion already finalized.  PRC firms are very active in Turkey’s infrastructure, construction, mining and telecommunications sectors.  The joint China-Turkey construction of the Ankara-Istanbul high-speed railway is the most costly joint project. 

During Premier Wen Jiabao's visit to Turkey in 2010, the two countries pledged to increase trade to $50 billion by 2015 and $100 billion by 2020.  Turkey and China are especially eager to revive their traditional silk road links   though Central Asia and other Eurasian countries. China appreciates Turkey’s potential gateway status for sales in Europe, Eurasia, and the Middle East. Huawei Technologies Ltd. has chosen İstanbul as its headquarters for managing its businesses in Central Asia.

The two countries sometimes compete for sales as well as access to regional energy supplies. Another source of economic tension is their bilateral trade imbalance. According to the Turkish government, China last year imported $2.5 billion worth of Turkish goods, a rise of 8.7 percent over the previous year. But this makes China only Turkey 15th largest export market. At the same time, Turkey imported some $21.6 billion worth of Chinese goods, a 26 percent increase over 2010, which has sharpened China’s status as the trading partner with which Turkey runs its largest deficit.  Approximately 60 percent of China’s imports from Turkey consist of mined raw materials, with chemicals also ranking high on the list.   Meanwhile, more than three-fourths of Turkey’s imports from China are intermediate goods.  The Turkish authorities want Chinese companies to process more of these mining products inside Turkey. 

    
The more than one hundred Chinese business leaders accompanying Xi negotiated some $4.3 billion in deals during the visit, which include buying almost $500 million in Turkish goods.  The Export-Import Bank of China agreed to loan Turkey's Global Investment Holding $700 million in export buyer credits to purchase four bulk carriers from China's AVIC Weihai Shipyard.  The Turkish Energy Ministry also said that Hema Endustri, a Turkish engineering manufacturing company, would sign a $1 billion deal for power plant and coal production equipment with China's Avic International.  Turkish Deputy Premier Ali Babacan indicated that China might help build one of Turkey's first nuclear power plants, along with Russia and South Korea.  There is agreement that the two countries should enhance their economic cooperation in finance, energy, infrastructure construction and high-technology sectors such as aviation, aerospace, nuclear energy, and high-speed rail transportation.

In his address to the China-Turkey Economic & Trade Cooperation Forum in Istanbul, attended by hundreds of Chinese and Turkish business leaders, Xi praised the attendees as “participants and promoters of the win-win and mutually-beneficial economic and trade cooperation between the two countries.”  Xi urged the two countries to grasp the opportunities for their emerging market economies to “upgrade and push forward the win-win and mutually-beneficial economic and trade cooperation.” He specifically called for increasing cooperation on global and international hotspot issues; broadening cooperation into more sectors such as transportation and infrastructure development; jointly resisting trade protectionism including by mitigating trade imbalances; and increasing cultural exchange and people-to-people ties.

IMPLICATIONS:  Turkish and Chinese businesses reached twenty eight separate deals worth $1.38 billion.  Turkish exports to China accounted for $500 million of these, while PRC companies will provide $570 million in financial support to Turkey; a package of contractor and energy investments account for another $308.5 million.  Chinese investors seemed especially interested in the multi-billion dollars project to construct a canal linking the Black and Marmara Seas as well as to build a third bridge over the Bosporus near Istanbul.

Turkey expects China to purchase more Turkish products, and wants additional Chinese investments.  Meanwhile, the Chinese vice president denied that China “deliberately” sought a trade surplus with any other state, and he encouraged Turkish officials to ensure an attractive investment climate for Chinese investors. 

The near-exclusive focus on economic relations, and the fact that the disagreements regarding notably Syria and the question of China’s Turkic Uighur minority did not obscure the atmosphere during the visit of the Chinese vice president, should not lead to the conclusion that the developing Chinese-Turkish relation is devoid of political implications. While the Turkish government now affirms that traditional interpretations of national sovereignty must give way to the right of the international community to take measures to protect vulnerable civilians from government repression, the Chinese leadership remains firmly committed to the principle of inviolable national sovereignty, resisting foreign interventions as a matter of high principle. Turkish foreign policy, meanwhile, is not guided by any binding overarching principle, as evidenced by the way Turkey went from befriending the regimes in Libya and Syria to promoting their ousting.

However, that is not something that China is likely to make an issue of; on the contrary, the “flexible” nature of Turkey’s foreign policy holds an intrinsic “promise” for China: although Turkey today enjoys the best of relations with the United States, and is highly appreciated by Washington, that was not the case little more than a year ago, when Ankara did not mind sustaining the impression that it was orienting in another direction, as it took issue with its Western allies over the issue of Iran. The prospect of attracting Turkey away from the Western fold is something that is bound to entice Beijing, which seeks to promote a multi-polar world order where U.S. power is constrained. And there is, from the Chinese point of view, a potentially promising convergence between the Chinese vision of the international order and the multipolar world view that Turkey’s foreign minister Ahmet Davutoğlu has theorized in his writings. Although that vision is informed by Islamic sensibilities, the issue of China’s treatment of its Muslim Uighur minority is nonetheless not something that distracts the AKP government from developing the Turkish-Chinese relation; business interests and - political motivations trump Muslim solidarity.

The deaths of some two dozen people in violent clashes in late February 2012 in China's Xinjiang Uighur Autonomous Region nonetheless made it harder to ignore the Uighur issue during Xi’s visit.   Xi stressed how China had sought to promote Xinjiang’s development to raise the living standards of all the ethnic groups living there, including the Uighur, and he encouraged Turkish entrepreneurs to invest in the region and attend the second China-Eurasia Expo in Urumqi in September.  

In his meetings with Turkey's Parliament Speaker Cemil Çiçek and Prime Minister Erdoğan, Xi said Sino-Turkish strategic ties flourished when both sides respected each other’s interests. Xi committed China to support Turkey’s priorities of maintaining domestic political stability and economic growth, while Beijing expected Ankara to support the Chinese position regarding Taiwan, Tibet, and Xinjiang.  The Chinese news agency reported that “Erdoğan reaffirmed that Turkey has consistently adhered to the one-China policy, recognized the People's Republic of China as the sole legitimate representative of the whole Chinese people, and never allowed any activity on its territory that aims to undermine China's independence, sovereignty and territorial integrity.” 

CONCLUSIONS: The results of the Turkish sojourn of the Chinese vice president are bound to have been to Chinese satisfaction. However, Beijing will have to pay close attention to the power struggle that has surfaced within the ruling coalition of Islamic movements in Turkey, and to its implications for the future evolution of Turkey’s foreign relations. As recent developments have shown, the power of Prime Minister Erdoğan is being openly challenged by some adherents of the preacher Fethullah Gülen. The outcome of the power struggle will invariably have repercussions for Turkish foreign policy.

As discussed in the March 5, 2012 Turkey Analyst, there are significant differences between the two Islamic visions; in foreign policy terms, Erdoğan represents an Islamism that suits China’s global political aspirations, while the worldview of the Gülenists is at odds with Chinese interests. The Gülen movement promotes a pro-Western foreign policy – and is simultaneously intensely Turkish nationalist, and has been engaged in the diffusion of Turkish schools worldwide, notably in Central Asia and in Africa. A future Turkish foreign policy that is informed more by that worldview – Turkish nationalism and Turkic solidarity, together with a pro-Western stance – could pay more attention to the treatment of the Turkic Uighur minority in China even at the risk of impeding the development of ties with Beijing.

Richard Weitz, Ph.D., is Senior Fellow and Director, Center for Political-Military Analysis, Hudson Institute, Washington, D.C.

© Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center, 2012. This article may be reprinted provided that the following sentence be included: "This article was first published in the Turkey Analyst (www.turkeyanalyst.org), a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center".

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The Turkey Analyst is a publication of the Central Asia-Caucasus Institute & Silk Road Studies Joint Center, designed to bring authoritative analysis and news on the rapidly developing domestic and foreign policy issues in Turkey. It includes topical analysis, as well as a summary of the Turkish media debate.

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