China’s Alibaba to invest $2 billion in Turkey

The Chinese e-commerce giant Alibaba plans to invest $2 billion in Turkey, according to multiple reports on Monday, in latest sign of strengthening economic ties between Turkey and China.

Michael Evans, the president of Alibaba Group Holding Limited, announced the investment following a meeting with Turkish President Recep Tayyip Erdogan in Istanbul on Friday. Evans said the company has “confidence in Turkey’s sound economic fundamentals” and has already invested $1.4 billion in Turkey through its Turkish unit Trendyol, Turkish media outlets reported, citing a Trendyol statement.

Trendyol did not respond to Al-Monitor’s request for information on the timing of the investment.

Alibaba acquired a majority stake in Trendyol in 2018. The company reached a $16.5 billion valuation in 2021, raising money from the United Arab Emirates’ sovereign wealth fund ADQ, the Qatar Investment Authority and others.

Alibaba is a multinational technology company based in Hangzhou, China, that specializes in e-commerce.

Why it matters: The investment news is the latest sign of improving ties between Turkey and China. Turkey is nearing a deal with an unspecified Chinese company to build a nuclear power plant in Turkey, Energy Minister Alparslan Bayraktar said last week.

In July, Chinese Foreign Minister Wang Yi visited Ankara in late July and discussed economic ties with Erdogan.

Erdogan also criticized the India-Middle East-Europe Economic Corridor project earlier this month. The US-backed rail and shipping project aims to counter China’s Belt and Road Initiative, but bypasses Turkey.

Evans’ mention of “Turkey’s sound economic fundamentals” follows notable changes in Turkey’s economic policies following Erdogan’s reelection in May. The central bank, under the leadership of new Governor Hafize Gaye Erkan, raised interest rates in June, July and August. For years, the bank declined to raise rates, despite sky-high inflation, under Erdogan's guidance.

The government also raised several taxes in July in response to the massive budget deficit, and in August began phasing out a lira protection scheme. The value of the lira has plummeted in recent years.

The World Bank praised Turkey’s economic policies earlier this month and said it would add another $18 billion to its exposure in the country.

Know more: Turkey’s central bank is considering a massive rate hike of up to 10 percentage points to combat continued inflation, Mustafa Sonmez reported in an exclusive for Al-Monitor on Saturday.