Saturday, October 09, 2010

China secures ‘strategic partnership’ with Turkey building the New Silk Road

You should have witnessed the tone of the press conference by two prime ministers – Turkish Prime Minister Erdogan hosting the Chinese Premier Minister Wen – yesterday.
There was also another briefing for prominent Turkish business leaders today in Istanbul.

China and Turkey signed eight pacts on cooperation in areas that included trade, railway construction, infrastructure, communications and cultural exchanges before the press conference.  "China and Turkey have a long history of friendship. Our relations are now entering a new stage of development," Erdogan told reporters.

The tone of the meeting was quite confident and upbeat: Turkey and China want to increase bilateral trade to $50 billion within five years. China is already second richest economy in the world soon to take on the US. Turkey is bolder politically and stronger than most European Union nations economically.
Both nations aim to strengthen political and business ties between two of the fastest
growing economies in the Group of 20. Turkey looks set to rival China as the
fastest expanding big economy in 2010, with IMF now forecasting growth of about 8%.
The Chinese premier inked a new “strategic partnership” and said he recognised Turkey’s “power and influence in the international community and its region”, sealing agreements to co-operate in energy, transport and infrastructure.
Like China, Turkey is now seeking a more active part on the global stage, and extending its economic reach into sub-Saharan Africa, the Middle East, Balkans and former Soviet Union. But annual bilateral trade of around $17 billion is at present skewed heavily in China’s favour.
Ankara now wants to rebalance and strengthen the economic relationship by winning more Chinese investment, presenting Turkey as a base to do business in Europe and the Middle East. There are multiple fields where Turkey and China could further cooperate, such as energy, air transport, culture and tourism.
Turkish prime minister Erdogan, told Friday’s news conference that “with suitable financing”, the two countries could build a “modern silk road” with Chinese involvement in a new rail network stretching more than 4,500km.
The China Railway Construction Corporation, with a loan backed by Beijing, is already building a section of a new Ankara-Istanbul high-speed rail link. Chinese companies are likely to compete in future tenders, especially to supply rolling stock.
Mr Erdogan said trade would in future be conducted in lira and renminbi, rather than in
dollars. The leaders also discussed “close co-operation” in energy, where Turkey is privatizing state assets and rapidly expanding renewable and thermal generation. 
Turkey wanted closer cooperation with China in international organizations, Erdogan said.
The agreements signed by ministers covered co-operation on infrastructure in third
countries – suggesting Turkish and Chinese contractors could collaborate on
projects in Africa and the Middle East, where they now compete fiercely.
It will be a kind of “co-opetition” initially; The New Silk Road countries need to learn how to collaborate among themselves rather than competing fiercely. China and Turkey for example are competitors in textiles, electronics and automotive but China needs transportation hubs in the region where Turkey lies right in Europe’s backyard.
Political and economic alliances will need to be immediately followed by tighter business
cooperation arrangements sponsored by governments. Having lived and done deals in
both China and Turkey, it is fair to say that conducting business in the New Silk Road
nations is drastically challenging and different than in the Western world.
However, a Turkish businessman for example is much better equipped - culturally, socially, experiencewise - to do business in China than lets say a French or American business owner. At the end of the day, it is not enterprises that do business but people.
Yesterday’s “emerging nations” in the words of developped countries have in fact emerged.
The future of global trade and business has shifted to the New Silk Road …Bilateral trade among the New Silk Road economies will account more than half of global trade by the end of the next decade. The key strategic questions remains as to how the developped world coud respond…
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