AN ANALYSIS OF HOW CHINA IS EMERGING AS THE CHAMPION OF FREE TRADE WITH A LONG-TERM GLOBAL STRATEGY

Year 2022, Volume: 6 Issue: 1, 20 - 44, 30.03.2022

Soner Kıstak

Abstract

With the United States (US) distancing itself from free trade during the Trump administration, China has been successfully positioning itself as the new free trade champion. During its disengagement process, the US has also been perceived to have snubbed some of its traditional partners like Turkey in terms of trade policies. These traditional allies have since been wooed by the Chinese through attractive commercial deals. China’s Belt and Road Initiative (BRI) is a comprehensive set of infrastructure projects which aim to stimulate trade in Eurasia. With its immense financial resources, China has been investing in logistics and infrastructure projects in more than 72 countries. While criticisms
and concerns have been raised, of Chinese state mercantilism, for instance, countries interested in diversifying their trade relationships like Turkey have welcomed the free trade approach.
The paper aims to disprove the hypothesis that China’s international investments are solely short-term, profit-oriented, and transactional in nature. Instead, the paper argues that these investments should be seen as a part of the long-term strategy of a country that aims to be both a political and economic world power. Moreover, this paper sees China’s overall trade contribution positively and argues that its strong position as a trading partner can help strengthen smaller economies’ negotiation positions. Hence, countries like Turkey can negotiate and choose the best deals offered by different trading centers. In the post-Covid context, the world economy cannot afford to exclude any major economies. The US and China are encouraged to settle their differences in the context of global rule-based systems.

Keywords

Free Trade, China, Belt and Road Initiative (Silk Road), WTO, Turkey, United States

References

• Alemdaroglu, A., & Tepe, S. (2020). Erdogan is turning Turkey into a Chinese client state. Foreign Policy. https://foreignpolicy.com/2020/09/16/erdogan-is-turning-turkey-into-a-chinese-client-state/
• Arbay, D. (2020). Stiftung Wissenschaft und Politik: The modernization of the European Union’s Custom Union with Turkey. Turkey’s pro-customs union rhetoric and recent approach of Turkish political and business decision-makers. Centre for Applied Turkey Studies (CATS). German Institute for International and Security Affairs. https://doi.org/10.18449/2020WP09
• Bailey, T. (2016). Once the champion of free trade, the US is now taking a protectionist stance. World Finance. https://www.worldfinance.com/strategy/government-policy/once-the-champion-of-freetrade- the-us-is-now-taking-a-protectionist-stance
• Bhattacharjee, D. (2015). China Pakistan Economic Corridor (CPEC). Indian Council of World Affairs. http://dx.doi.org/10.2139/ssrn.2608927
• Bilgener, M. (2019). Turkey as middle corridor in one belt, one road. Turkish Economy and Business Life. https://doingbusinessinturkey.com/turkey-as-middle-corridor-in-one-belt-one-road/
• Bindi, F. (2019). Why did Italy embrace the belt and road initiative? Carnegie Endowment for International Peace. https://carnegieendowment.org/2019/05/20/why-did-italy-embrace-belt-and-roadinitiative- pub-79149
• Bosetti, R. (2020). The digital Silk Road: Towards a China-centered Eurasian tech ecosystem? The Global Policy Institute. https://gpilondon.com/publications/policy-papers/the-digital-silk-road-towards-achina- centred-Eurasian-tech-ecosystem
• Brautigam, D., & Rithmire, M. (2021). The Chinese ‘debt trap’ is a myth. The Atlantic. https://www. theatlantic.com/international/archive/2021/02/china-debt-trap-diplomacy/617953/
• Britannica, The Editors of Encyclopaedia, (2020). Silk Road. Encyclopedia Britannica, https://www. britannica.com/topic/Silk-Road-trade-route
• Chatzky, A., & McBride, J. (2020). China’s massive belt and road initiative. Council on Foreign Relations. https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative
• Central Bank of the Republic of Turkey (2017). Special Topics section, Financial Stability Report (Ed.), May 2017 http://www.tcmb.gov.tr/wps/wcm/connect/bbbd4e14-cd19-4d10-9f3e-36bc4744db1a/ sectionIV-24.pdf?MOD=AJPERES&CACHEID=ROOTWORKSPACE-bbbd4e14-cd19-4d10-9f3e-36bc4744db1a-lQcz9iM
• Demir, A., Ozmen, O. & Rashid, A. (2014). An estimation of Turkey’s export loss to Iraq. Procedia – Social and Behavioral Sciences, 150: 1240-1247. https://doi.org/10.1016/j.sbspro.2014.09.140
• Duran, A. (2018). US sanctions on Iran raise concern in Turkey. Deutsche Welle. https://www.dw.com/en/ us-sanctions-on-Iran-raise-concern-in-turkey/a-46217697
• Ebbighausen, R. (2017). China’s Silk Road: a lucrative opportunity for Germany? German Asia-Pacific Business Association. https://www.oav.de/en/about-us/oav-press-review/read-pressreview/chinassilk- road-a-lucrative-opportunity-for-germany.html
• Ellyatt, H. (2019). Is Italy playing with fire when it comes to China? CNBC. https://www.cnbc. com/2019/03/27/italys-joins-chinas-belt-and-road-initiative.html
• Erie, M., & Streinz, T. (2021). The Beijing Effect: China’s ‘Digital Silk Road’ as Transnational Data Governance. New York University Journal of International Law and Politics, Forthcoming. https:// ssrn.com/abstract=3810256
• Escaith, H. (2021). Withering Globalization? The Global Value Chain Effects of Trade Decoupling. MPRA Munich Personal RePEc Archive https://dx.doi.org/10.2139/ssrn.3853645
• Fardella, E., & Prodi, G. (2017). The Belt and Road Initiative Impact on Europe: An Italian Perspective. China & World Economy, 25(5), 125-138.
• Gaspers, J. (2016). Germany wants Europe to help shape China’s belt and road initiative. The Diplomat. https://thediplomat.com/2016/12/germany-wants-europe-to-help-shape-chinas-belt-and-roadinitiative/
• Góralczyk, B. (2019). Poland on the route of the Chinese Silk Road: A chance for development or just a challenge? China Observers in Central and Eastern Europe. https://chinaobservers.eu/poland-routeof- the-chinese-silk-road-a-chance-for-development-or-just-a-challenge/
• Holland, S., & Faulconbridge, G. (2021). G7 rivals China with grand infrastructure plan. Reuters. https://ww.reuters.com/world/g7-counter-chinas-belt-road-with-infrastructure-project-senior-usofficial-2021-06-12/
• Hong Kong Trade Development Council (2018). Poland Designated as Home to BRI East European Logistics Hub https://beltandroad.hktdc.com/en/insights/poland-designated-home-new-bri-east-european-logistics-hub
• Honoré, J. (2018). Erdogan may have freed pastor Brunson, but Turkey’s economy is still trapped. Foreign Policy. https://foreignpolicy.com/2018/10/16/erdogan-may-have-freed-pastor-brunson-butturkeys- economy-is-still-trapped/
• International Monetary Fund , Asia and Pacific Dept (2018) People’s Republic of China : 2018 Article IV Consultation-Press Release; Staff Report; Staff Statement and Statement by the Executive Director for the People’s Republic of China. IMF. (2018, July 26). Retrieved March 15, 2022, from https:// www.imf.org/en/Publications/CR/Issues/2018/07/25/Peoples-Republic-of-China-2018-Article-IVConsultation-Press-Release-Staff-Report-Staff-46121
• Jones, L., & Hameiri, S. (2020). Debunking the myth of ‘debt-trap diplomacy’: How recipient countries shape China’s Belt and Road Initiative. London: Chatham House.
• Khan, H. (2021). BRI and EU Global Gateway Strategy: Pakistan Observer. https://pakobserver.net/bri-and-eu-global-gateway-strategy-by-dr-mehmood-ul-hassan-khan/
• Klement, J. (2021). The Rivalry between the United States and China. In CFA Institute Research Foundation Books (Ed.), Geo-Economics: The Interplay between Geopolitics, Economics, and Investments. http:// dx.doi.org/10.2139/ssrn.3792545
• Lee, Y.S. (2019). Three Wrongs Do Not Make a Right: The Conundrum of the U.S. Steel and Aluminum Tariffs. World Trade Review, 18(3). https://ssrn.com/abstract=3362771
• Lipton, E. (2019). The U.S. Indicts Turkish bank on charges of evading Iran sanctions. New York Times. https:// www.nytimes.com/2019/10/15/us/politics/halkbank-turkey-iran-indictment.html Menaldo, V. A., & Wittstock, N. (2021). Bidenism as Trumpism 2.0: America’s Bipartisan Embrace of Neo-Mercantilist Policies and What this Entails. Social Science Research Network. http://dx.doi. org/10.2139/ssrn.3830957
• Oberdorfer, D. (1979). Trade Benefits for China Are Approved by Carter. The Washington Post. https:// www.washingtonpost.com/archive/politics/1979/10/24/trade-benefits-for-china-are-approved-bycarter/ febc46f2-2d39-430b-975f-6c121bf4fb42/
• OECD (2018). China’s belt and road initiative in the global trade, investment, and finance landscape. In OECD (Ed.), OECD Business and Finance Outlook. OECD Publishing, Paris, pp.61-101. https://doi. org/10.1787/978.926.4298828-en
• Oropeza García, A (2020). China. The Belt and Road Initiative. A Global Transformation. (1st ed.). Ciudad Universitaria, México.
• Pradhan, R. (2019). China’s Silk Road Strategy and India’s Apprehension. The IUP Journal of International Relations, 13(4), 69-78. https://ssrn.com/abstract=3795171
• Reuters (2021). Erdogan says Turkey has raised FX swap deal with China to $6 bln. Reuters. https://www. reuters.com/article/turkey-cenbank-erdogan-idUSL2N2NV098
• Reynolds, K. M. (2021). Costs of Trade Wars: The Distributional Consequences of US Section 301 Tariffs Against China. Social Science Research Network. http://dx.doi.org/10.2139/ssrn.3862764
• Sahin, H. (2000). Türkiye Ekonomisi, Tarihsel Gelisimi, Bugünkü Durumu.(5th ed.)., Bursa, Turkey: EzgiKitapevi Yayinlari
• Santander International Research Desk (2019). Turkish foreign trade in figures. Santander Trade. https:// santandertrade.com/en/portal/analyse-markets/turkey/foreign-trade-in-figures
• Shepard, W. (2017). These 8 companies are bringing the ‘New Silk Road’ to life. Forbes. https://www. forbes.com/sites/wadeshepard/2017/03/12/8-new-silk-road-companies-that-you-can-investin/? sh=540351424db9
• Siemens Corporate Communications Department (2018). Siemens embraces Belt and Road Initiative. Siemens. https://press.siemens.com/global/en/pressrelease/siemens-embraces-belt-and-roadinitiative
• Silk Road Briefing (2019). First Baltic direct belt & road train reaches Poland’s Gdansk port. Silk Road Briefing. https://www.silkroadbriefing.com/news/2019/11/26/first-baltic-direct-belt-road-trainreaches- polands-gdansk-port/
• Song, C. (2021). The history of the Silk Road in China. China Highlights. https://www.chinahighlights.com/ silkroad/history.htm
• Svaluto, C. (2019). China: Befriending the dragon. IPE magazine June 2021. https://www.ipe.com/chinabefriending- the-dragon/10031427.article
• Tavsan, S. (2021). Turkey’s company to acquire Hitachi, as it plans to enter Silk Road markets. Belt and Road News. https://www.beltandroad.news/2020/12/18/turkeys-company-to-acquire-hitachi-as-it-plansto- enter-silk-road-markets/
• Vlasenko, L. and Gneusheva, V. & Bublei, H., Ukraine-China Bilateral Trade (2008-2018): Threats and Opportunities (November 01, 2019). Vision 2025: Education Excellence and Management of Innovations Through Sustainable Economic Competitive Advantage. Proceedings of the International Business Information Management Association Conference (IBIMA), pp. 5665-5674 (978-0-9998551- 3-3)., https://ssrn.com/abstract=3825066
• Wei, S. (2017). Rising Renminbi and the Neo-Global Financial Governance in the Context of ‘One Belt One Road’ Initiative: A Changing Game or Minor Supplement? Journal of International Banking Law and Regulation, 31(1), 10-21. https://ssrn.com/abstract=2879248