That the new Secretary General of the Chinese Communist Party chose to include a visit to Turkey in his first trip abroad is significant. Yesterday, China was a global power due to the size of its population; now, it is a global power due to its economic growth. Close relations between China and Turkey would be beneficial to both countries for political and economic reasons, although perhaps more so for Turkey.
China today has the second-largest economy in the world. It will soon surpass the US in this category as well. Although China still has many poor people, but it is a country that is rapidly growing more affluent and it is therefore natural for its consumption expenditures to skyrocket. It is already the production center of the world.
In 2011, China was the third-largest importer of goods into Turkey, with $21.5 billion’s worth of Chinese-made products finding their way into Anatolia. Turkey imports the most from Russia — mainly energy inputs — and Germany. These two countries export nearly $24 billion a year to Turkey. The gap between Chinese imports and these leaders is not so significant, and it is clear that in a couple of years China will be the number-one importer of goods into Turkey.
However, China does not even make the first ten countries on our list of export destinations. In 2011 we exported a total of $2.5 billion to China; even our exports to Egypt were higher. Our highest foreign-trade deficit is with China.
For years China has been accused of undervaluing its currency, and most these accusations are justified. But by exporting cheap goods, China helps importing countries to keep their inflation rates down to reasonable levels.
Monetary authorities in importing countries were thus able to boost their economic growth as their price increases were kept low by Chinese competition. One country that benefited from this the most was the US — the country now most critical of the yuan’s value.
China is one the best countries at attracting foreign fixed-capital investments. It is also one of the top fixed-capital investors in other countries. China is thus both the top exporter and importer of fixed-capital investments. Despite its growing consumption trends, we should not see China only as a good market for Turkish exports. It is also a significant source of foreign investments.
In coming years, China will have to revalue its currency. Wages are already on the rise and they will see further increases. As domestic demand expands, China will become more flexible in terms of its currency valuation and wages. So far, it seems to be unlikely that growth will fall below 7 percent annually in the near future. These trends will allow Turkish products to be competitive on the Chinese market.
The potential for growth in developing countries, including Turkey, is promising as trade and economic cooperation between those countries are on the rise. China is thus a very important partner for Turkey.