Turkey has strong economic relations with China and is one of the very early partners of the Belt and Road Initiative (BRI). In November 2015, China and Turkey signed a “Memorandum of Understanding on Aligning the [China-led] Belt and Road Initiative and the [Turkey-led] Middle Corridor Initiative.” Leaders of both countries view these initiatives as complementing each other and speak of further integrating them. However, despite their rhetorical support, China’s investments that Turkey expects have not materialized so far.
As an emerging market located as a gateway between European and Asian producers and markets, Turkey aims to become a transportation and logistics hub linking these two continents. It furthermore desires to play a central role in the global value chain. With such aims, the Turkish government plans to improve its transportation, telecommunications, and energy infrastructures. In terms of transportation, under the ruling Justice and Development Party (AKP) government, Turkey primarily focused on road transportation and highways, while also completing two high-speed railway investments between Ankara and İstanbul and Ankara and Konya. Others like the İzmir–Ankara and Ankara–Sivas high-speed railways are under construction. However, these investment projects geographically cover only a minor part of the country and are far from meeting the needs of the economy of an 85 million strong population. Therefore, new investments are needed. At this point, as a country with the world’s leading high-speed railway network, the Turkish government expected China and the BRI to play a key role.
In 2018, Turkish State Railways and the Chinese Ministry of Transport reached an agreement for the construction of a high-speed railway linking Edirne to Kars, namely the western and eastern borders of Turkey. However, for the moment, only a small portion of this project is completed. This project is important for both countries. It is important for Turkey because it aims to position itself as a gateway that connects Europe with Asia. The project is also important for China because it offers an alternative to the northern corridor that passes through Russia, as this Twitter thread shows with maps:
Other Chinese technology firms are also interested in investing in Turkey. In 2021, with a USD 30 million investment, Xiaomi started producing phones in Turkey. Chinese smartphone producers like TECHNO Mobile, TCL, Vivo, Realme, and Oppo also made investments in the country to set up production facilities in the country. However, these are relatively small investments, approximately around USD 30–35 million . On the other hand, there are rumors about Oppo’s decision to withdraw from Turkey.
As the country’s energy demand increases, Turkey also invests in its energy infrastructure. The Turkish government, in partnership with both Turkish and foreign companies, is trying to diversify and strengthen the country’s green as well as brown energy infrastructure. While Turkey worked with China to build its largest-ever coal-powered plant and China’s largest-ever investment in Turkey, Hunutlu Thermal Power Plant, it has chosen to limit China’s investments in the renewable energy sector. This is especially the case for Chinese state-owned enterprises. In the building up of power plants with over 1 GW capacity, the Turkish political elite tended to favor European-backed consortia, instead of Chinese-backed consortia. On the other hand, Turkish and Chinese private companies continue to partner in especially solar energy projects. Despite current problems in this field, energy is an area that offers more opportunities for the two countries to cooperate.
Another need of Turkey, though not directly related to the BRI, is financing. Here, especially since the 2016 coup attempt, Ankara and Beijing have deepened their relations through swap deals and credit mechanisms provided by China to Turkey. Since the first swap deal was signed between the two countries in 2012, Turkey has secured USD 6 billion from China.
Turkey’s unmet expectations
Despite Ankara’s desire for more Chinese investments, in terms of BRI-related projects, Turkey lags behind its expectations. Except for Kumport, a seaport in Istanbul, and Hunutlu Thermal Power Plant, China did not make significant investments in Turkey. From 2013 to 20202, Turkey’s share in Chinese investments is 1.31 percent and in BRI projects, this share drops to 0.8 percent. According to China Global Investment Tracker, as of 2023, the total amount of Chinese investments in Turkey is USD 5.11 billion. Considering China’s worldwide investment totals USD 1.368 trillion, this number is trivial.
There are also problems regarding some possible Chinese investments like Huawei’s desire to invest in Turkey’s defense technology sector. Initially, Huawei partnered with Turkcell to bid in a state tender to provide data network services to the Turkish Armed Forces. However, when due to cost efficiency Turkcell refused Huawei’s offer to lower prices, Huawei threatened to freeze maintenance operations on all active contracts with Turkcell. The dispute was communicated to Turkey’s Defense Minister Hulusi Akar and China’s ambassador to Turkey Liu Shaobin.
The China Index, which measures China’s worldwide influence, shows China has an important influence over Turkey’s foreign policy, especially regarding Turkey’s policies towards the Uyghur issue. However, this influence should not be exaggerated. While Ankara generally refrains from overtly criticizing Beijing’s treatment of Uyghurs, in December 2022, Foreign Minister Mevlüt Çavuşoğlu made a surprise critical statement on China’s policies towards its Uyghur minority. According to Çavuşoğlu, the slowdown in bilateral relations is the result of Turkey’s defense of the rights of Uyghurs in the international community as well as Ankara’s refusal to accept China’s extradition requests of Uyghurs. Çavuşoğlu further criticized China for not allowing Turkey’s ambassador to China Abdülkadir Emin Önen to visit Xinjiang and freely investigate allegations about China’s treatment of Uyghurs. As a response to Çavuşoğlu’s statement, China’s Ambassador to Turkey Liu “cordially invited the Turkish side to Xinjiang,” while also adding that “guests should behave according to the sensitivities of the house.”
According to Li Lifan, a senior fellow at the Shanghai Academy of Social Sciences, even though the Uyghur issue has the potential to create problems between Beijing and Ankara, such problems will not reach a level to disrupt bilateral economic relations.
By Emre Demir