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Sino-Turkish Relations Beyond the Silk Road
John C.K. Daly, The Jamestown Foundation, China Brief
Since the establishment of diplomatic relations on August 4, 1971, nearly two decades after the end of the Korean War, the tempo of Sino-Turkish diplomatic exchanges has increased, especially during the 1980s. Turkish President Kenan Evren visited China in December 1982, the first visit to Beijing by a Turkish head of state. Three years later, Prime Minister Turgut Ozal visited China. Reciprocal visits to Ankara were made by Chinese President Li Xiannian in March 1984 and Premier Zhao Ziyang in July 1986. Most importantly, when President Jiang Zemin visited Turkey in April 2002, the two countries signed a joint communiqué regarding increased bilateral cooperation.
Bilateral Trade Relations
Despite growing diplomatic relations, trade tensions between the two countries have also been increasing during the same period. Like China, Turkey is attempting to expand its footprint in the global marketplace via a combination of expertise and low labor costs. In 2005, Turkish exports reached $73.4 billion, according to statistics from the Undersecretariat of the Prime Ministry for Foreign Trade, or GEME, making the Turkish economy the world’s 6th fastest growing economy (Zaman, January 15, 2006). Chinese exports for the same period were $260 billion. In 2005, the International Monetary Fund ranked the Turkish economy as the 19th largest in the world, with a gross domestic product of $362.5 billion, up from 26th in 2002 (Anadolu Ajansi, April 20, 2006). In March 2006, PriceWaterhouseCoopers predicted that if current projections stayed on target, with the Turkish economy continuing to grow at an annual rate of seven percent, Turkey’s economy would surpass Germany’s by 2050.
The primary impetus behind the growth in Turkey’s economy has been low-cost textile exports, which give Ankara a common incentive, along with Washington and the EU, to stem the flood of low-cost Chinese textile exports from decimating their national industries. While Turkish clothing and textile exports to the EU suffered in 2005 from the competition with their Chinese counterparts, Turkey's textile industry managed to revive itself due to the twin influences of a stronger Euro and EU quotas on Chinese products, ending 2006 with fiber and textile exports growing 25.15 percent to $526 million (Emergingtextiles.com). That same year, Turkey also joined 24 other countries in investigating China’s dumping and trade protection policies (Financial Express, January 16).
Turkey has benefited tremendously from the rising EU and U.S. alarm about Chinese textile exports, so much so that Chinese officials have complained that a Turkish proposal to the World Trade Organization to establish a working group to research the global trade in textiles was intended to set up Beijing as a “scapegoat.” In July 2005, Sanset and MHS Textile CEO Seyit Sahan bluntly acknowledged that U.S. quotas on Chinese textile imports have benefited his company, saying, “Following the quota on China, some U.S. industrialists and firms turned their eyes towards Turkey. We have customers from the U.S.” (Anadolu Ajansi, July 17, 2005). The trade imbalance is reflected in official statistics—according to the Turkish Consulate in Beijing, in 2005, 26 Turkish companies operated in China, while Turkey hosted 219 Chinese firms. Given that China has shown little indication of changing its practices, Turkey is likely to continue to impose quotas on imports from China in 2007 in order to protect its textile and apparel industries.
Turkey’s entry into the Chinese market has been primarily for “niche” goods. As the number of Chinese with disposable incomes increases, Turkish “luxury” items are finding an increased market. Jewelry exports have especially benefited—in 1995, only $48 million in jewelry was exported, which rose to $930 million nine years later, a twenty-fold increase (Zaman, July 27, 2005). Virtual Metals and Fortis Bank reported that in comparison to its Indian counterparts, Turkey's jewelry sales in 2006 were six times greater in terms of volume (Bullionvault.com, January 26).
Sino-Turkish trade totaled $4.8 billion in 2004; but by January 2005, it had risen to $1.4 billion in the first month of the year. In contrast, in 1990, bilateral trade was a paltry $98 million. During the period from January to November 2006, Turkey’s foreign trade deficit reached $48.7 billion, as its trade deficit with China grew by 45 percent, reaching $8.65 billion (Zaman, January 9). While bilateral trade between the two nations has continued to increase, bilateral direct investment is growing at a much slower pace. In 2005, Turkey had nearly $25 million in investments in China, while Chinese investment in Turkey was only slightly more than $1 million. In 2005, Turkey imported $6.9 billion worth of goods from China, whereas Turkish exports to China totaled only $500,000 (Panasianbiz.com, September 20, 2006). The view of China as a foreign competitor willing to bend the rules and acquiesce to corruption has been reinforced by the shipping of Chinese goods through Turkey’s Mediterranean Nusaybin customs port in the city of Mersin. From Mersin, China can transport goods to the interior of the country, avoiding up to 80 percent in customs duties (Zaman, August 1, 2005). A Customs Undersecretary Office official speaking on condition of anonymity said that Mersin, a minor entry point, had generated $20 million in revenue in 2004, with 440 out of 450 bills of entry recorded at Nusaybin relating to Chinese imports.
In spite of such concerns, Sino-Turkish economic relations are still regarded as a priority by both sides. On January 26, China’s ambassador to Turkey Sun Guoxiang told Anadolu Ajansi press agency, “Turkey and the People's Republic of China have the prospect of cooperating with each other in many areas such as trade, international problems and the fight against terrorism. Turkey-China relations should be further improved in our multi-polarization and economic globalization-dominated world. Sino-Turkish trade has recently increased to $8 billion. We encourage powerful and esteemed Chinese firms to invest in Turkey...I do not agree that there is an imbalance in our trade volume against Turkey. Turkey mostly imports raw material from China, and exports them to the other countries after processing that material. We want to see Turkish goods of the same quality and price in Chinese markets. I am ready to assist Turkish firms to enter Chinese markets.”
Since the Korean War, Turkey and China have displayed a wary and grudging respect for each other’s military capabilities. Turkey occupies a unique position as the sole Muslim member of NATO that has nonetheless consistently placed issues of national sovereignty ahead of its ties with other countries, alienating the United States, Russia and China when it has felt necessary.
In 2000, China purchased the semi-completed Varyag aircraft carrier from Ukraine, announcing that it would be turned into a floating casino in Macau. The Varyag departed from Ukraine’s Nikolaev port on June 14, 2000, but Turkey, concerned that the hulk’s passage through the Turkish Straits would be a possible infringement of its sovereign rights under the 1936 Montreaux Convention, refused to grant passage of the ship until November 2001, much to Beijing’s chagrin .
Military ties between the two countries, while no longer confrontational, are slowly growing, but remain limited to the realm of military personnel exchanges. In June 2005, the commander of Turkey’s Military Academies, General Faruk Comert, made his second visit to Beijing, during which both sides agreed to further their military-to-military relations through educational exchanges. The president of China’s National Defense University, Lieutenant General Pei Huailiang, expressed his desire to continue sending Chinese military officers to Turkish military schools (Jiefangjun Bao, June 24, 2005). The following year, Xu Caihou, vice-chairman of China’s Central Military Commission, told reporters after meeting with a Turkish military delegation headed by Aydogan Babaoglu, commander of the Combined War Colleges of the Turkish armed forces, that “The Chinese armed forces value its friendship with the Turkish army, and is ready to further expand channels and fields for bilateral military exchanges” (Xinhua, July 12, 2006). Yet, it should be noted that the two countries have yet to hold any bilateral joint military exercises.
Separatists a Shared Concern
Both China and Turkey are grappling with ethnic minorities with separatist ambitions—China with its ethnic Turkish Uyghur population and Turkey with its Kurdish minority. The common thread drawing Beijing and Ankara together in the post-September 11 environment is a joint concern over their territorial integrity and the struggle against terrorism.
In 2002, Turkish Prime Minister Bulent Ecevit told visiting Chinese Premier Zhu Rongji that his government would step up the restriction of the activities of “East Turkistan” elements in Turkey (Xinhua, April 16, 2002). Zhu responded by saying that China and Turkey share major responsibilities in fighting international terrorism, commenting, “We hope that China and Turkey will cooperate more closely and work together to prevent the 'East Turkistan' terrorists from damaging Sino-Turkish ties.”
In December 2005, Chinese State Councilor Zhou Yongkang met in Beijing with Turkish Police Department Chief Gokhan Aydiner and praised the cooperation between China’s Ministry of Public Security and the Turkish Interior Ministry, which had agreed to support China’s requests regarding the East Turkistan groups based in Turkey. Aydiner, who was attending the second joint working group meeting between China's Ministry of Public Security and Turkey's Interior Ministry, in turn expressed the hope that Turkey could improve its exchanges and cooperation with China in fields such as anti-terrorism (Xinhua, December 26, 2005). While Beijing has consistently supported Ankara in its fight against the Kurdish separatists inside Turkey, it has played a far more ambiguous role in Iraq’s Kurdistan region (China Brief, January 3, 2006). The issue devolves upon the region’s rich energy resources, but Ankara and Beijing continue to be at loggerheads.
Competing on the Energy Field
Nowhere do Turkish and Chinese interests diverge more sharply than in their attempts to secure reliable sources of energy. The rivalry is particularly pronounced in the struggle for Caspian exports of gas and oil from the former Soviet states ringing the inland sea, whose reserves contain an estimated 32 billion to 220 billion barrels of recoverable oil. Turkey scored an initial demarche in Azerbaijan with the May 2006 opening of the 1,092-mile-long, $3.6 billion, Baku-Tbilisi-Ceyhan pipeline, capable of handling one million barrels per day. In a second Azeri project, Turkish Energy Minister Hilmi Guler noted that Turkey’s involvement in Azerbaijan’s Shah Deniz project, the Caspian’s second biggest project after the Baku-Tbilisi-Ceyhan pipeline, would not only provide Turkey with natural gas, but also allow for future exports to Greece and Italy (The New Anatolian, November 21, 2006).
China, however, has made significant inroads in Kazakhstan. Last month Kazakh President Nursultan Nazarbayev made a three-day state visit to Beijing, where he signed 10 bilateral agreements with Chinese President Hu Jintao. In November 2005, a $700 million, 600 mile-long Kazakhstan-China pipeline with an annual capacity of 20 million barrels became operational—oil that otherwise might have flowed westwards (Xinhua, May 25, 2006). China has similarly trumped Turkey in Turkmenistan. When Turkmen President Saparmarat Niyazov visited China in 2005, he initialed an agreement permitting China’s participation in gas prospecting and production in Turkmenistan. Since Niyazov’s death on December 21, 2006, Ashgabat has assured China that it would receive up to 30 billion cubic meters of natural gas annually from the still undeveloped Yuzhny Iolotan field via a pipeline to be constructed across Kazakhstan (Nezavisimaya Gazeta, December 26, 2006).
Despite these disagreements over energy resources, all indications suggest that Sino-Turkish relations are only likely to deepen. During a recent visit to Beijing, Justice and Development Party Vice Chairman Sukru Ayalan told reporters, during a press conference with Chinese Communist Party (CCP) Standing Committee member Wu Guanzheng, that Turkey was committed to cooperation based on the one-China policy. Sino-Turkish rivalry has moved from the military to the economic sphere and as both countries are increasingly in competition with one another for the same markets, formal but distant relations seem to be the near-term model for the relationship between the two nations.
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