Turkey

Turkey

Sino-Turkish economic ties started to flourish following China’s Reform and Opening Up after 1978. However, the continuing significance of the United States and Europe in Turkish foreign policy prevented the formation of a coherent China policy, and the Uyghur question has remained a critical issue.

Turkey

Background

Sino-Turkish relations were highly strained between 1949 and 1971 because China and Turkey were on opposite sides of the Cold War. As part of the US-led military coalition, Turkish troops fought against the People’s Volunteer Army deployed by the People’s Republic of China (PRC) during the Korean War (1950–53). Participation in the Korean War facilitated Turkey’s membership of the North Atlantic Treaty Organization (NATO) in 1952. As part of the PRC’s ‘people’s diplomacy’, Radio Peking’s Turkish-language section, founded in 1957, aired daily broadcasts to Turkish-speaking people about Maoist ideology, China’s socioeconomic transformation, and China’s official policy towards its Muslim minorities. Following the Sino-American rapprochement (based on their shared hostility to the Soviet Union), Sino-Turkish relations began to normalise and the two countries established diplomatic relations in 1971. Despite diplomatic ties, the two countries’ economic relationship remained extremely limited during the 1970s.

Sino-Turkish economic ties started to flourish following China’s Reform and Opening Up after 1978. Since the 1980s, the Turkish Government has encouraged Turkish capital to invest in China to profit off its large domestic market. However, the continuing significance of the United States and Europe in Turkish foreign policy prevented the formation of a coherent regional policy towards Asia. Moreover, compared with firms from the Global North and East Asia, Turkish firms’ penetration of the Chinese market has been limited. Similarly, Chinese companies have not gained a strong foothold in Turkey compared with Western companies. Turkey currently imports more diversified, higher value-added products from China, whereas Turkey’s exports to China are overwhelmingly primary low value-added commodities. China is one of the biggest contributors to Turkey’s current account deficit.

Since 1949, the Uyghur question has remained a critical issue, periodically straining bilateral relations. Given the long-lasting cultural and historical bonds between Turks and Uyghurs, the Chinese Government’s policies in the Xinjiang Uyghur Autonomous Region have considerably shaped public perceptions of China in Turkey. Moreover, a considerable Uyghur population emigrated from China to Turkey after 1949, and this diaspora is an important factor shaping the countries’ diplomatic relationship. As of 2020, more than 50,000 Uyghurs lived in Turkey—the third-largest Uyghur population globally after China and Kazakhstan.

This has considerably shaped the Turkish Government’s policies towards China. At the end of the 1990s, the Turkish Government’s support for Uyghur nationalism became more reserved. Despite hosting Uyghur nationalists and denouncing the PRC’s actions in Xinjiang, developing economic relations with China came to be prioritised. Overall, both highly critical (and sometimes openly confrontational) public opinions in Turkey towards China’s Uyghur policy and Turkish businesses’ desire to have warm relations with China have influenced the Turkish Government, occasionally leading to significant vacillations in the country’s China policy. For example, following the Ürümqi riots of 2009, then Turkish Prime Minister Recep Tayyip Erdoğan labelled the event ‘almost a genocide’ against the Uyghurs, and declared Turkey would grant a visa to the then president of the World Uyghur Congress Rebiya Kadeer. Only a year later, in September 2010, the Chinese and Turkish governments issued a Joint Declaration on the Establishment and Development of a Strategic Relationship of Cooperation. While criticisms of the PRC’s treatment of Uyghurs remain strong in Turkey, the effect on Turkish policymaking has considerably weakened during the past decade primarily because of the Turkish Government’s increased expectations that China will help diversify Turkey’s economic relations and reduce its (still significant) economic dependence on the West.

BRI Status

After mutual declarations of the importance of economic integration and the signing of the strategic cooperation agreement in 2010, Turkey officially joined the Belt and Road Initiative (BRI) in 2015. Owing to the rising trade volume between China and Eurasian countries, its logistical proximity to the European Union, and the importance of Central Asia and the Caucasus for contemporary Chinese investment, Turkey came to be hailed as an important member of the West Asia corridor of the BRI. Turkey’s location is particularly significant for the transportation projects facilitated by the BRI—informally called the ‘Iron Silk Road’—which aim to establish uninterrupted transport links between Beijing and London through investment in projects such as the Transport Corridor Europe Caucasus Asia and the Baku–Tbilisi–Akhalkalaki–Kars railway. To this end, a memorandum of understanding was signed between the two countries in 2016 to harmonise the BRI and Turkey’s Middle Corridor initiative and to cooperate on key projects.

With the Middle Corridor initiative, Turkey aims to establish a regionwide railway network originating in Turkey and reaching Central Asia (Kazakhstan, Turkmenistan, and others) via Transcaucasia (Georgia and Azerbaijan). To date, the Baku–Tbilisi–Akhalkalaki–Kars railway, Marmaray (the world’s first undersea railway), and the Yavuz Sultan Selim Bridge are the most prominent cases of Sino-Turkish cooperation under the BRI. Turkey has not been among China’s top investment destinations: according to the American Enterprise Institute’s China Global Investment Tracker, which keeps track of China’s announced overseas investment projects worth more than 100 million USD, between 2013 and 2020, Turkey ranked twenty-third in terms of total Chinese announced investment among the 80 BRI member countries included.

Current Economic Relations

Trade: Trade volume between China and Turkey was more than 22 billion USD in 2019, with a 20-billion-USD trade deficit on the Turkish side. Turkey’s imports from China were worth almost 113 billion USD between 2014 and 2019. In contrast, its exports to China amounted to 13 billion USD during the same period, making China one of the most significant contributors to Turkey’s current account deficit. In 2019, Turkey’s imports from China and exports to China accounted for 9.29% and 1.74% of its total imports and exports, respectively. During this period, Turkey’s main imports from China included electrical machinery and devices (5.23 billion USD), as well as machines, mechanical devices, and tools (3.89 billion USD). Mineral products were Turkey’s primary export product to China, worth a total of 1.3 billion USD. As of 2020, Turkey had become a leading supplier of marble to China.

Investment: The Central Bank of the Republic of Turkey (TCMB) reports that Turkish foreign direct investment (FDI) stock in China totalled more than 66 million USD in 2019. Turkish expert Altay Atlı reports that since the TCMB only records capital officially registered as crossing the border from Turkey to mainland China, Turkish FDI in China is significantly undercounted, and the real figure is likely to be closer to 1 billion USD. Nevertheless, even this upper-bound estimate falls well below Turkish FDI in Western countries. In 2019, Turkish FDI stocks in Austria, the United States, the United Kingdom, and the Netherlands were around 2 billion, 3.2 billion, 3.8 billion, and 17.5 billion USD, respectively. The TCMB reported that Chinese FDI stock in Turkey amounted to 1.18 billion USD in 2019; according to the Ministry of Industry and Technology in Turkey, as of January 2021, this remained virtually unchanged at just over 1 billion USD. Official sources rank China twenty-first among the highest investors in Turkey, contributing only 0.6% of total FDI stock in 2019. Turkey’s formal entrance to the BRI and the subsequent initiation of highly publicised BRI-affiliated projects, such as Kumport Terminal (a modern container facility in Turkey’s Ambarli Port Complex), have resulted in an unprecedented increase in the flow of Chinese FDI to Turkey, from 30 million USD in 2014 to its historical peak of 451 million USD in 2015. However, when Chinese FDI in Turkey is situated within the larger picture, even at its highest point it was dwarfed by investments from other countries and even that volume of investment thus far has not been sustained. Chinese official data differ in some regards from those of Turkey but tell a similar story of fairly erratic investment flows, which are much lower than those of other major investing countries (see chart below).

(Source: Chinese Ministry of Commerce)

Still, in recent years, Chinese investments in Turkey have received wide attention in the media. Examples include investments by Huawei, OPPO, and Haier in production facilities and research and development institutes, Xiaomi’s opening of a factory in Istanbul in 2021 through a partnership with the Finland-based Salcomp company, Ali Baba’s acquisition of the Turkish retail company Trendyol, and Turkish Tekstilbank’s acquisition by the Industrial and Commercial Bank of China (ICBC). Yet, investments in the transportation and energy sectors have suffered significant setbacks. For instance, Chinese firms were set to become majority shareholders in the Yavuz Sultan Selim Bridge and the North Marmara Highway (both major transportation projects). However, the acquisition of the company ICA that operates these projects was cancelled in March 2022.

Some Chinese investments have triggered labour and environmental protests. For example, the largest Chinese investment in Turkey recorded by the American Enterprise Institute dataset to date is Harbin Electric’s partnership with Turkey’s Hattat Holding for the construction of a coal-fired power plant in the western Black Sea region in 2013 (the total planned investment was 2.4 billion USD). The project met strong resistance from the local population over its negative environmental consequences, its licence has been cancelled by state councils multiple times, and construction is at a standstill at the time of writing in April 2022. In another instance, 170 workers of the Xiaomi–Salcomp factory in Istanbul were laid off in September 2021 as part of the management’s effort to prevent unionisation. In March 2022, another 110 workers were laid off. While the management says recent layoffs are due to its plans to downsize production, workers say they were fired for demanding better living and working conditions. 

Most of the Chinese investment in Turkey occurs in low-productivity and low-skill sectors and reflects the demands made by China’s domestic import interests in Turkey. In 2019, 1,075 Chinese-invested firms were operating in Turkey, according to data collected by the Union of Chambers and Commodity Exchanges of Turkey (Türkiye Odalar ve Borsalar Birliği). In terms of the number of firms, the top sectors were wholesale and retail trade, light manufacturing, and mining, with 32.37%, 11.25%, and 10.96%, respectively.

Aid and Other Finance: There is no official source tracking Chinese aid and financing in the form of export credits and loans to Turkey. According to AidData, various Chinese institutions financed 59 projects in Turkey between 2002 and 2019. Four Confucius Institutes have been opened in Turkish universities (two in public universities and two in private ones), and some other minor educational assistance activities are provided to Turkish schools. The ICBC, the China Development Bank (CDB) and the Bank of China have been the major actors in the Turkish economy in terms of the number of financial deals. Finally, AidData records seven export credit entries between 2002 and 2014 in the energy, communications, and transport sectors. The two biggest export credits, which totalled 1.3 billion USD, were used for the construction of Turkey’s Ankara–Istanbul High-Speed Railway and product purchasing and services from Huawei Technologies by Turk Telecom.

Key Controversies

Two contradictory and highly controversial political forces have been driving Sino-Turkish relations in the past decade. First, the Uyghur question continues to raise tensions and fuel anti-PRC sentiment among the Turkish public. The Uyghur issue has become a focal point over which the opposition has come to question the Islamist and nationalist credentials of the ruling Justice and Development Party (Adalet ve Kalkınma Partisi, AKP). Many opposition parties have harshly criticised now-President Erdoğan for not taking an openly confrontational stance towards China in recent years, especially the Future Party (Gelecek Partisi), which was founded by splinters from the ruling AKP and is currently led by Ahmet Davutoğlu (Prime Minister of Turkey between 2014 and 2016 and Minister for Foreign Affairs between 2009 and 2014), and the Good Party (İyi Parti), which was founded by splinters from the ultranationalist Nationalist Action Party and is currently led by Meral Akşener (Minister for Internal Affairs in 1996 and 1997).

On the other hand, many pro-Western Turkish politicians and commentators have interpreted Erdoğan’s occasional use of anti-Western rhetoric, especially after the failed coup attempt on 15 July 2016, as evidence of Turkey’s split from the West and reorientation towards China (and Russia) (for a critical analysis of the Turkish Government’s changing geopolitical quests and anti-Western rhetoric, see this article and this article). In December 2021, President Erdoğan suggested the ongoing devaluation of the Turkish lira would offer the country an opportunity to pursue the ‘Chinese model’ of economic growth based on labour-intensive manufacturing. However, Erdoğan rapidly abandoned this rhetoric. The depth of Turkey’s ongoing economic integration with the European Union and the United States has put material limits on the AKP’s quest for geopolitical reorientation. Moreover, President Erdoğan and other high-level officials repeatedly stressed their commitment to NATO and other key Western institutions, and did not raise concerns regarding NATO’s 2021 declaration that ‘China’s stated ambitions and assertive behaviour present systemic challenges to the rules-based international order and to areas relevant to Alliance security’.

Finally, there have been rumours that Chinese banks, companies, and officials are actively pursuing involvement in the politically controversial Istanbul Canal project—an artificial sea-level waterway connecting the Black and Mediterranean seas. The project has been criticised by environmentalists because of its potentially devastating effects on Istanbul’s water supply and the surrounding ecosystem, while the political opposition maintains it is a rent-seeking project to attract international capital. While talk of Chinese financing for the project had subsided in the first few months of 2022, if this project was implemented in the future with Chinese investment, it would have a considerable effect on the political debates in Turkey regarding China.

Key Sources

Scholarly Publications and In-Depth Reports:

Bakır, Caner and Mustafa Yağcı (eds). 2020. Çin Bilmecesi: Çin’in Ekonomik Yükselişi, Uluslararası İlişkilerde Dönüşüm ve Türkiye [The China Puzzle: China’s Economic Rise, Transformation in International Relations and Turkey]. Istanbul: Koç Üniversitesi Yayınları.

Çolakoğlu, Selçuk. 2019. ‘China’s Belt and Road Initiative and Turkey’s Middle Corridor: A Question of Compatibility.’ 29 January. Washington, DC: Middle East Institute. Link.

Çolakoğlu, Selçuk. 2021. Turkey and China: Political, Economic, and Strategic Aspects of the Relationship. Singapore: World Scientific Publishing.

Ergenc, Ceren. 2015. ‘Can Two Ends of Asia Meet? An Overview of Contemporary Turkey–China Relations.’ East Asia 32(3): 289–308.

Gürel, Burak and Mina Kozluca. 2022. ‘Chinese Investment in Turkey: The Belt and Road Initiative, Rising Expectations and Ground Realities.’ European Review (Online first): 1–29.

Öniş, Ziya and Malimati Yalikun. 2021. ‘Emerging Partnership in a Post-Western World? The Political Economy of China–Turkey Relations.’ Southeast European and Black Sea Studies 21(4): 507–29.

Cover Photo: Istanbul, Turkey. Credit: @pedrosz (CC), Flickr.com.

Updated on 17 April 2022.


Burak Gürel is an Assistant Professor of Sociology and Co-Director of the Centre for Asian Studies at Koç University in Istanbul. Gürel earned his PhD in Sociology from Johns Hopkins University in 2015. He has been published in The Journal of Peasant Studies, Journal of Agrarian Change, Rural China, Review of Radical Political Economics, European Review, New Perspectives on Turkey, and several edited volumes.

Mina Kozluca is a PhD student in the Department of International Development at the London School of Economics and Political Science (LSE). Before joining the LSE, she was a visiting researcher at Koç University Centre for Asian Studies. She continues to act as a supervisor researcher at the Koç University Belt and Road Initiative Lab.