Turkish businesses say they are keen on further tapping into China’s market, with an eye on ramping up their position as a midpoint for Chinese investment amid rising geopolitical tensions with the West.
A business delegation of around 50 representatives from Turkey visited Beijing for a bilateral business forum on the sidelines of China’s inaugural International Supply Chain Expo – designed to show China’s resilience as many foreign companies have begun “de-risking” by shifting investments away from China.
“From digital platforms to telecommunications, renewable energy to electric vehicles, cloud technology to the defence industry, we are building a strong and wide range of cooperation with China,” Ismail Hak Musa, Turkish ambassador to China, said at the second Turkey-China Business Conference on Wednesday. The first was in July in Istanbul.
“The political stability that China and Turkey both enjoy is an important foundation for prosperity and development,” he added, noting that the trade delegation was expecting to find new trade opportunities with China.
China had been trying to woo and charm foreign investment to bring their money back after three years of stringent Covid policies, but leaders have been struggling to restore business confidence, especially among Western companies, as geopolitical wrangling with the United States has grown more hostile.
The Turkish ambassador said that his country, in a position that connects Asia, Europe and Africa, sees itself as being the ideal location for China’s business.
“Turkey would make a very important strategic partner for China’s trade with the world,” the ambassador said, noting how Turkey enjoys certain free-trade terms with the European Union (EU).
China and the European Union have failed to proceed with their Comprehensive Agreement on Investment after seven years of negotiations stalled in early 2021 after Beijing imposed sanctions on Europeans and entities in retaliation for similar EU actions over alleged human rights abuses in Xinjiang, accusations that Beijing denies.
Musa said he expects China to increase its foreign direct investment to Turkey, as investment in the country accounts for less than 1 per cent of China’s overseas investment portfolio.
The two countries’ bilateral trade rose 12.8 per cent to US$38.5 billion in 2022, but the trade was almost one-way, with Turkey’s trade deficit with China being around US$38 billion, according to China’s official figures.
Turkey in March imposed an additional 40 per cent customs duty on imports of electric vehicles from China – a decision that the presidential office said was to protect Turkey’s domestic industry.
“We are not afraid of an imbalance in trade and economic relations, but to have a sustainable relationship, it is better to balance them in an acceptable way,” Musa said, clarifying that he does not expect them to be perfectly on par.
A representative from a Chinese state-owned company, who asked to remain anonymous as he was not authorised to talk to the media, said that after being focused on investing in the semiconductor sector in Turkey for more than three years, they have now decided to broaden investment in Turkey’s energy sector.
“We have been growing increasingly interested in Turkey’s energy market. This has especially been the case because of the two ongoing wars,” he said, referring to Russia’s invasion of Ukraine and the more recent Israel-Gaza conflict.
A North Atlantic Treaty Organisation (Nato) member, Turkey’s already-volatile relations with the West have worsened following its condemnation of Western sanctions against Russia.
Beijing has also refrained from condemning Moscow. And while ramping up oil imports from Russia, as Russian oil exports face sanctions from Europe, China has also been looking for new energy sources from the Middle East region.
Turkey has also been an investment destination for Chinese tech companies, which are facing more scrutiny in Western countries.
Chinese tech giants Huawei and ZTE, both on a US sanctions list and under scrutiny by a number of European Union members, have continued with expansion efforts in recent years. Huawei’s largest research and development (R&D) centre abroad is in Turkey.