Beijing-Ankara Economic Relations
15 m. | 2020-03-16Turkey’s transit and communication capabilities in the Chinese “One Belt, One Road” strategic initiative has been highlighted in China. Turkey is one of the key corridors of Asia-European communications. Turkey is included in one of the two main directions of the “One Belt, One Road” initiative’s road map, in the “Land Road”, also known as the “Silk Road Economic Belt” with the second direction the sea route (Maritime Silk Road Initiative).
Source https://twitter.com/Ambrosetti_/status
Ankara, in its turn, has been attempting to develop “Turkey’s Middle Corridor” or “Trans-Caspian East-West-Middle Corridor” multimodal (land-sea) transport route, which bridges Asia to Europe. In Turkey, “Turkey’s Middle Corridor” is also viewed in the “Silk Road Economic Belt” initiative. Turkey’s Middle Corridor consists of 4256 km of railways and 508 km of sea route.
Middle Corridor
Source https://logist.today/dnevnik_logista/2019
Besides transit-communication significance, Turkey, with its $2.2 trillion GDP and having the 13th largest economy in the world, is a large market for foreign and Chinese direct investments. FDI Inflows have increased sharply in Turkey over the last two decades: with a volume of just $15 billion between 1973-2002, it reached a staggering amount to about $209 billion between 2003-2018.
Source https://www.invest.gov.tr/en/whyturkey/pages
Statistics of foreign direct investment indicate that Turkey has been receiving particularly high contribution in the fields of finance and industry between 2002-2018.
Source https://www.invest.gov.tr/en/whyturkey/pages
Between 2002-2018, the Netherlands had been the leader in contribution to the FDI in Turkey, with 15.7% share of total investments. Then the USA with 7.7% share and Great Britain with 6.6% share.
In the graphic below, China is not among the top ten countries that reached the major investments category in Turkey’s economy between 2002-2018.
Source https://www.invest.gov.tr/en/whyturkey/pages
Thus, Chinese direct investments and transactions in Turkey are estimated at about $15.9 billion, the vast majority of which, about $9.7 billion was directed to the energy sector. These investments are not only about the FDI but also transactions signed with the public and private sectors of Turkey.
Source https://www.aei.org/china-global-investment
Between 2005-2018, 63.1% of Chinese FDI and transactions ($14.99 bil.) in Turkey were directed to the energy sector (mainly coal, gas, renewable energy) and 15.4% ($2.3 bil.) to the transport (mainly railways). Real Estate Market (construction) made 7.6% ($1.15 bil) of the total FDI and transactions [1].
Source https://setav.org/assets/uploads/2019
According to the Turkey’s Central Bank data, Chinese FDI reduced in Turkey in recent years: it was $451bil. in 2015, $300 bil. in 2016 and $115 bil. in 2017. According to the data of the Economic Policy Research Foundation of Turkey, China’s share in foreign direct investments in Turkey was 2.2% in 2017 [2].
The energy sector is particularly attractive in Middle East and North Africa’s investment field for Beijing and the transactions were directed to the branch between 2005-2019.
Source https://www.aei.org/china-global-investment
B ilateral statistics indicate: Ankara-Beijing trade turnover sharply increased since the 2000s. Moreover, the growth is mainly a result from the imports of Chinese products to Turkey.
Source https://setav.org/assets/uploads/2019
Between 2013-2018, the highest rate of bilateral trade turnover ($28.29 bil.) was recorded in 2013. In recent years, however, it declined due to a reduction in China’s volume of imports to Turkey: if China imported about $24.68 bil. worth of goods to Turkey in 2013, then in 2018, it imported $20.71 bil. worth of goods.
Source http://www.mfa.gov.tr/turkey_s-commercial
In 2019, most of Turkey’s goods were exported to Germany ($15.4 bil.) followed by Great Britain and Italy. Among exports, China is not included in Ankara’s list of top 10 major trade and economic partners. In the same year, about $2.5 bil. worth of goods were exported from Turkey to China.
Source http://www.tuik.gov.tr/UstMenu.do?metod
In 2019, China was the second largest importer country ($18.4 bil.) after Russia ($22.4 bil.) in Turkey’s imports. Germany’s indicator was also high ($17.9 bil.).
Source http://www.tuik.gov.tr/UstMenu.do?metod
Source http://www.tuik.gov.tr/UstMenu.do?metod
Within the last 2 decades, the main Chinese commodities imported to Turkey maintained their positions. Thus, China’s imports to Turkey totaled $1.34 bil. in 2000. The major commodity groups in imports were electrical equipment, recording equipment ($315.5 bil. or 23.5%) boilers, appliances and nuclear reactors ($209.7 bil. or 15.5%). In 2017, China exported $23.37 bil worth of goods to Turkey. The electrical equipment, recording equipment ($6.8 bil. or 29.4%) and boilers, appliances, nuclear reactors ($5 bil. or 21.6%) formed the largest part [3]. In 2017, salt, sulfur, cement (36.5%) and metal ores (20.1%) made the largest volume of commodities exported to China from Turkey.
China’s imports to Turkey in 2017 according to the commodity groups
Source https://setav.org/assets/uploads/2019
W e are presenting the general overview of China’s FDI and transactions in Turkey between 2005-2019.
|
China’s imports and transactions in Turkey between 2005-2019 |
||||
|
Year |
Investor |
$mil. |
Field |
Partner in Turkey |
|
2005 |
China Railway Construction, Genertec |
1270 |
Transport |
Cengiz and IC Ictas |
|
2007 |
Sinomach |
610 |
Energetics |
Eren Grup |
|
2008 |
China National Building Material |
110 |
Real Estate |
- |
|
2008 |
Datong |
760 |
Energetics |
Hema Enerji |
|
2009 |
China National Chemical Engineering |
440 |
Metallurgy |
European Nickel |
|
2010 |
Sinomach |
360 |
Energetics |
- |
|
2010 |
Sinoma |
780 |
Real Estate |
Eren Grup |
|
2011 |
China National Chemical Engineering |
640 |
Energetics |
- |
|
2012 |
China Power Investment and AVIC |
850 |
Energetics |
Hattat Holding |
|
2012 |
Chery Auto |
120 |
Transport |
- |
|
2012 |
China Electric Equipment |
600 |
Energetics |
- |
|
2012 |
Harbin Electric |
130 |
Energetics |
Hattat Holding |
|
2013 |
China National Chemical Engineering |
1100 |
Pharmaceuticals |
Ciner Holding |
|
2013 |
Genertec |
460 |
Energetics |
Aksa Enerji |
|
2013 |
Harbin Electric |
2400 |
Energetics |
Hattat Holding |
|
2013 |
Sinomach |
220 |
Energetics |
- |
|
2014 |
ICBC |
320 |
Finances |
Tekstil Bankası |
|
2015 |
Sinomach |
380 |
Energetics |
OEDAS and OEPAS |
|
2015 |
Sinoma |
160 |
Real Estate |
Limak Holding |
|
2015 |
Sinoma |
100 |
Real Estate |
Votorantim Cimento |
|
2015 |
China Merchants, CIC, China Ocean Shipping (COSCO) |
920 |
Transport |
Fina LimanıKumport |
|
2016 |
Dongfang Electric |
660 |
Energetics |
Hattat Holding |
|
2016 |
Bank of China |
110 |
Finances |
- |
|
2016 |
ZTE |
100 |
Technologies |
Netaş |
|
2018 |
Power Construction Corp |
1090 |
Energetics |
- |
|
2018 |
China Energy Engineering |
300 |
Energetics |
Toya |
|
2019 |
State Power Investment, AVIC |
1320 |
Energetics |
- |
|
2019 |
China Merchants-led consortium |
690 |
Transport |
- |
|
2019 |
China Electronics Technology |
110 |
Energetics |
Kaylon |
Source https://setav.org/assets/uploads/2019
In 2015, China’s 2 major port operators China Merchants Holdings International (CMHI) and China Ocean Shipping Company (COSCO), together with CIC Capital corp. signed a deal worth of $920 million, with which Chinese side acquired the control package of the Kumport Container Terminal of Turkey’s Port of Ambarli about 65% of the shares [4]. The infrastructure development of Turkey’s 3rd largest Kumport Container Terminal is viewed in The 21st Century Maritime Silk Road project, whose focus is on infrastructure development of the ports and sea routes from the Pacific to the Baltic Sea. Ankara works closely with Azerbaijan, Georgia and Kazakhstan in developing the Trans - Caspian Multimodal Route map.
In November 2013, Baku-Tbilisi-Astana trilateral agreement on creating the Trans-Caspian International Transport Corridor Development Coordination Committee was signed in Astana. In December 2016, the International Association “Trans-Caspian International Transport Route” was established by the decision of the Coordination Committee, which started to operate in the beginning of 2017 [5].
11483 km long Xi'an-Ankara-Prague freight railway construction project is one of the important achievements of Chinese “One Belt, One Road” and Turkish “Middle Corridor” projects’ cooperation.
The longest parts of the railway pass through China (3157km), Kazakhstan (3157km) and Turkey (2285km). Xi'an-Prague railway will reduce the freight route between China and Turkey from 1 month to 12 days: Shipping from Xi'an to Prague takes 18 days. As of 2019, the trade turnover between China and Europe is $21 trillion, of which only 3% are allocated to the railway freights [6]. In the beginning of November 2019, the first cargo train arrived to Ankara from Xi'an [7].
In 2005, China Railway Construction Corporation and China National Machinery Import and Export Corporation won $720 mil. bid for Ankara-Istanbul 533km high-speed railway construction, which was loaned by China Exim bank [8]. Based on the projec the Chinese side was cooperating with Turkish Cengiz Construction and Ibrahim Cecen Ictas Construction companies. Ankara-Istanbul high-speed railway construction project is also partially funded by the European Investment Bank (1.25 bil. euro) and EU (120 mil. euro).
The total cost of the railway construction project is $4.1 bil., the construction of which started in 1994 and was exploited in July, 2014 [9]. ALSIM-ALARKO (Turkey) and Obrason Huarte Lain (Spain) also had contractual obligations in the project.
Source https://reconnectingasia.csis.org/database
Source http://www.globalconstructionreview.com
Erdogan on the first train of Ankara-Istanbul high-speed railway
In mid-2018, that China’s State Development and Investment Company plans to build a 170 MW wind farm in Turkey’s Aegean provinces of Aydin and Manisa. The project is estimated to cost about $226 million [10]. According to some data, at the initial stage of the project, the licensing and administrative work is already completed.
In September 2019, Hunutlu Thermal Power Plant (TPP Adana) construction works was launched. The project was already approved in 2015 [11]. Within the “One Belt, One Road” context, the implementing project in Turkey is China’s biggest direct investment to date at $1.7 bil. Shanghai Electric Power and Avic International Project Engineering Company provided the financing. The project is also funded by two Turkish investment companies, of which data is not published. 50.1% of the project’s shares belongs to Shanghai Electric Power, 2.99% to Avic International Project Engineering Company and the other 47% to Turkish investors.
The TPP is planned to be put into operation by 2022. It should produce 1.32 GW/h electricity.
In mid-2018, Chinese leading e-commerce company Alibaba bought the majority of shares in Trendyol e-commerce platform leading in Turkish fashion market for about $750 mil [12]. Within the framework of bilateral cooperation, the Chinese holdings will support its partner in expanding e-commerce, branding and innovative trade technologies. The sides consider this partnership an important step for the digital economic development in Turkey.
Trendyol start-up, founded in 2010, provides its commercial services to more than 16 mil. customers. Trendyol is the fastest growing e-commerce company in the region with monthly visits of 90 mil.
In 2019, Beijing was Ankara’s 3rd major trade and economic partner, however, it wasn’t included in the list of the largest investor countries in Turkey’s economy in the last decade, in which the European countries and the USA are leading. However, Beijing’s competitiveness is promising especially in the field of transport and communication.
The geographical factor is no less important in economic cooperation between China and Turkey. Both in Beijing and in Ankara, the importance of trade-economic cooperation is emphasized against the backdrop of economic and political conflicts with Washington.
[1] https://setav.org/assets/uploads/2019/07/R144.pdf
[2] https://mk-turkey.ru/blog/vesti-ekonomika/2018
[3] https://setav.org/assets/uploads/2019/07/R144.pdf
[4] http://www.cmport.com.hk/enTouch/news/Detail
[5] https://middlecorridor.com/en/about-the-association
[6] https://nation.com.pk/05-Nov-2019/-silk-railroad
[7] https://www.beltandroad.news/2019/11/07/china
[8] https://www.mei.edu/publications/chinas-belt-and
[9] https://ria.ru/20140725/1017532558.html
[10] https://setav.org/assets/uploads/2019/07/R144.pdf
[11] https://www.powergenadvancement.com/news/work
[12] https://www.chinamoneynetwork.com/2018/08/