The Effect of China's Belt and Road Initiative on Turkey

China’s Belt and Road Initiative has been a popular topic of discussion in global trade. With new projects and investments taking place, the Belt and Road Initiative seems to be going strong. While BRI offers a completely new look to global trade by allowing new routes and changing the industry norms, it also reshapes the countries’ position in the global arena when it comes to trade. 

Turkey is one of the focal countries that contribute to the project. With its strategic location and collaboration with China, Turkey is attracting attention. The strengthening relations between Turkey and China highlight the importance of the Belt and Road Initiative and Turkey’s position within the project. In this article, we are exploring the effect of China’s Belt and Road Initiative on Turkey. Read on to understand BRI as well as its importance for China, Turkey and global trade. 

What is Belt and Road Initiative?

China’s Belt and Road Initiative is essentially an infrastructure project that was launched in 2013 by the president of the People’s Republic of China, Xi Jinping. The project’s aim is to connect Asia and Europe. This connection will increase trade activities and exhilarate economic growth by improving the regional alliance. It will also broaden China’s influence and power in the world. 

Inspired by the Silk Road

Belt and Road Initiative was inspired by the Silk Road. The Silk Road is a name given to a network of routes that were used during the ruling of the Han Dynasty of China. The route is given such a name due to the silk that was being carried and traded. At the time, silk was exclusively produced in China. These roads were used by traders for a long period of time, approximately more than 1500 years. The trade route was in use from 130 BCE till 1453. 

The Silk Road was an important trade route, reaching 6,400 kilometers between East and West. When examined in detail, these trade routes connected Europe, East Africa, Middle East, Central Asia, Indian subcontinent, Southeast Asia and East. After the rise of the Ottoman Empire, especially with the conquest of Constantinople in 1453, the trade route between East and West was ruptured. Thus, traders started to seek new routes to continue trade relations.

Basic Principles of Belt and Road Initiative

Belt and Road Initiative follows basic principles. These principles are fundamental in defining and understanding the project’s scope as well as what it aims to achieve. These basic principles can be listed under five headings.

• Mutual respect for territorial integrity and sovereignty
• Mutual non-aggression
• Peaceful coexistence
• Mutual non-interference in internal affairs
• Mutual benefit and equality

Based on these principles, Belt and Road Initiative aims for cooperation while building a community that shares similar interests and principles. When these principles are considered, there are certain expectations from countries that are involved in the project. These countries are expected to:

• promote actions that will create mutual benefit and security
• work on improving the infrastructure in their region
• work on building an efficient and safe network across land, sea and air
• improve economic ties and deepen political trust 
• establish free trade areas that are of high standards
• improve investment and trade facilitation
• encourage mutual understanding and peace between countries

The Scope of Belt and Road Initiative

Belt and Road Initiative has two stages or corridors at its basis. One of them is referred to as the overland “Silk Road Economic Belt” and the other as the “Maritime Silk Road.” These two distinctive routes are collectively regarded as the “Belt and Road Initiative.” At its core, the project’s plan encapsulated a network of highways, railways, streamlined border crossings as well as energy pipelines. 

However, this is only the physical infrastructure that was planned to be established within the scope of the project. In addition to the infrastructural improvements, the project aims to establish fifty special economic zones. The project also foresees the improvement of ports along the route to expand maritime trade traffic.  

Currently, more than 60 countries have either joined the projects or showed interest in the projects within the scope of BRI. The largest project within the BRI seems to be China-Pakistan Economic Corridor which connects Pakistan’s Gwadar Port to China. This project is estimated to cost $60 billion. China is known to have already spent approximately $200 billion for the BRI. Overall expenses for the BRI are estimated to reach $1.2-$1.3 trillion by 2027. 

What Will China Achieve with BRI?

China’s main motivation behind the Belt and Road Initiative seems to be economic as well as geopolitical. President Xi is known for his vision to make China a more assertive country. However, that is not the only motivation behind the idea. In recent years, China and the United States’ relations have not been as stable as they used to be. This instability between the two countries negatively affected trade relations and slowed growth. After facing such a situation, China had to find alternative ways to grow, maintain and even improve its trade. This led the country to open new markets. 

Considering the motivation behind BRI, it is safe to say that China is creating new export markets while also creating investment opportunities. This will in turn improve China’s economy by positively affecting the incomes as well as domestic consumption. On a larger scale, China seeks to dominate the global trade arena by shaping international standards. 

What is Turkey’s Role in Belt and Road Initiative?

One of the routes within the Belt and Road Initiative, which is referred to as the “Silk Road Economic Belt,” follows the route that is historically known as the Silk Road. This road follows the route through Central Asia, Iran, Turkey and Europe. While the other route named the “Maritime Silk Road” follows the South China Sea, Malacca Strait, Indian Ocean, Red Sea and the Mediterranean Sea. There is one country both roads have in common and that is Turkey. This assigns Turkey a fundamental role in the project. 

Being aware of its position within the Belt and Road Initiative Turkey also established a new initiative called the “Middle Corridor.” Middle Corridor essentially encompasses establishing a railroad network throughout the region. The network follows the route from Turkey to Central Asia. Baku-Tbilisi-Kars Railway is a part of this project and the completion of the BTK railway as well as the improvements made on other railway systems is seen as a prerequisite for the completion of the overall project. Thus, the railway systems in Turkey will ensure high-speed transportation.

By establishing this railroad network, Turkey aims to create prosperity, strengthen its position in the region and create a connection between Europe and Asia. This route will help expand the trade markets which will improve the economy further and allow Turkey to contribute to the regional cooperation in Eurasia. 

Cooperation Between Turkey and China

As a part of the Belt and Road Initiative, China has been increasing its investments in Turkey, especially in the areas of energy and mining. Since BRI places importance on the joint effort of countries on improving infrastructures and creating mutual benefit, investing to improve the infrastructure in the fundamental regions is expected. In light of this information, China has been cooperating with Turkey in terms of finances since 2015. In fact, there is a special agreement made between Turkish and Chinese central banks. According to this agreement, Turkish lira and Chinese yuan are used in transactions instead of dollars and euros.

The Future of Global Trade

As new projects take place within the scope of the Belt and Road Initiatives, international trade principles and practices will transform. Turkey plays an important role in this transformation due to its strategic location that connects Asia and Europe by air, sea and land. Having such a crucial geographical location and establishing new projects as a part of the BRI, Turkey’s role in international trade will become stronger.

With BRI, trade processes will become much easier and faster by giving the exporters and importers alternative routes. Improvements such as tariff reductions, deeper trade agreements, border efficiency and better market access will increase trade further. 

Additionally, research on the subject reveals that the Belt and Road Initiative will affect international trade by significantly reducing the shipment time as well as the costs of trade. The shipment time is expected to reduce by 1.2%-2.5% while trade costs are expected to decrease by 1.1%-2.2%.