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Old Silk Road Traders Must Resolve Dispute

"Did you come to Turkey to buy marble?" That's the question, both in Chinese and in English, that appears on a number of billboards at Istanbul International Airport.

Given China's growing demand for construction materials to fuel fast economic growth, Turkey has been exporting more and more quality marble to the Chinese market. Meanwhile, a wide variety of goods labelled "Made in China," ranging from shoes and toys to T-shirts, can be found in almost every shop in Istanbul, Turkey's largest city and economic hub.

These are some of the signs of booming economic and trade relations between China and Turkey. Bilateral trade volume jumped to US$3.41 billion by 2004 from US$1.2 billion in 2000. During the first seven months of this year, the figure increased year-on-year by 33.6 percent to reach US$2.64 billion.

But the rosy outlook cannot hide a long-standing problem that has hampered Sino-Turkish economic ties. Turkey has constantly complained about its large trade deficit with China, which stood at US$2.23 billion in 2004 and US$1.94 billion at the end of July this year. Turkey claims its deficit with China is its largest with any single country and may reach a record high this year.

If the trade deficit, as an abstract economic index, is something that has mostly concerned trade insiders and officials in the past, the influx of China's inexpensive but highly-competitive textile goods has really shocked the whole nation. Turkish officials in both trade and foreign affairs departments, industrialists, traders and ordinary people are blaming China's textile exports for job losses in Turkey.

The Chinese Government has showed its determination to resolve the trade dispute through concrete steps.

In 2004, the Panel for Promoting Chinese-Turkish Economic and Trade Development was established. A purchase delegation headed by Gao Hucheng, vice-minister of commerce, was recently sent to Turkey with a view to balancing bilateral trade.

Encouragingly, both governments have begun to address the friction over trade in a rational and proactive way.

It is no surprise that Turkey has paid great attention to the problem because the textile industry is as important to Turkey as it is to any other developing country.

As one of Turkey's pillar industries, the textile and clothes manufacturing sector accounts for nearly 10 percent of the country's gross domestic product and creates 21 percent of its job opportunities, according to statistics from the Turkish Undersecretariat for Foreign Trade.

Despite its good management, industrial maturity and high technical standard, Turkey's textile sector is disadvantaged by labour and production costs, compared to its Chinese counterpart. That demonstrates why many Turkish exporters that come to China to sell their goods end up becoming importers of competitively-priced Chinese textiles and end up helping widen the Turkish trade deficit with China.

Under great pressure from domestic industrialists, the Turkish Government has imposed quotas on 42 types of Chinese textile exports since global quotas were scrapped on January 1.

"Such a grave situation should not be allowed to go on," Mehmet Kabasakal, secretary-general of the Istanbul Chamber of Industry, said. "Only a trade balance is beneficial to both sides."

Fugen Camlidere, deputy secretary-general of the Istanbul Chamber of Commerce, even expressed her concern about the potential impact of a growing Turkey-China trade deficit on bilateral political relations.

"I really worry that the deficit problem may sour our political ties," she said, "which in turn will affect bilateral economic cooperation and finally lead to a vicious cycle."

"We do hope that it should not affect our relations," said Osman Bekaroglu, deputy head of the General Directorate of Agreements under the Undersecretariat for Foreign Tradehe, adding that Ankara seeks to find a solution to the problem through consultation and talks with Beijing.

Of course, greater efforts must be made by both countries if a trade balance is to be achieved. China can encourage more domestic enterprises to invest in Turkey - taking advantage of Turkey's geographical location intersecting Asia, Europe and Africa as well as its wider access to the European Union market. China's contract investment in Turkey currently amounts to just US$11.18 million.

On the other hand, Chinese tourists, well-known for their spending abroad, may help cut China's surplus by visiting Turkey, which was listed as a tourism destination for Chinese travellers in 2002.

Due to a lack of flights and high air ticket prices, the number of Chinese visiting Turkey every year has averaged only 35,000 over the past few years.

Turkey needs to strengthen its ability to tap the huge Chinese market through more extensive market studies and publicity campaigns. The Chinese market will not open to Turkish goods just because of complaints from Turkish businessmen. They must try to sell their own goods while taking on competitors from all other countries.

One symbol of their poor sales skills is the miserably small market share held by Turkish olive oil in China. Although Turkey boasts high quality olive oil and ranks fifth in the world in terms of production, Chinese consumers know little about Turkish products and the best-sellers in Chinese supermarkets are Italian and Greek brands.

China and Turkey, at either end of the ancient Silk Road, share a long history of close trade and cultural exchanges.

The two peoples also aspire to greater understanding on the basis of sound political relations. This should help prompt both sides to make sincere and strenuous efforts to achieve sustainable and steady development of economic and trade ties.

(China Daily October 18, 2005)

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