Do US-China tensions present an opportunity for Turkey?

The coronavirus pandemic has brought life to a halt in many parts of the world and has simultaneously increased tensions between the US and China.

The Trump administration has severely criticised China, as China did not warn the world in time about the Covid-19 outbreak and hid the facts.

Then, the World Health Organization’s (WHO) China-oriented management plans angered President Trump as the US gives the WHO nearly $500 million annually while China only contributes $42 million.

The US has sent a message to China by putting a hold on funding to the WHO and many resolutions against China have been proposed in the US Congress.

While China constantly comes to the fore at President Trump’s press conferences, Trump stated there should have been more deaths as a result of the coronavirus pandemic in China than in his country. He clearly meant to say that China has been fooling the world.

Not only the federal government but state-level authorities have waged war against China. For example, the state of Missouri announced it has filed a lawsuit against China, the Chinese Communist Party, and some Chinese officials on the grounds that “they misused the information about coronavirus, deceived other administrations, and caused the Covid-19 epidemic to turn into a pandemic worldwide.”

The Chinese economy, which has experienced high growth rates for a very long time, has been on a downward trend recently. It was announced that the Chinese economy, with a GDP of $14.4 trillion in 2019, has experienced a 6.8 percent shrinkage in the first half of 2020. 

The economic rivalry between the US and China was also on the agenda, especially trade wars. Although a new trade agreement was signed with the US in January, China has been negatively affected by recent trade wars: foreign trade volumes have fallen, and growth rates have slowed.

We know that many American companies we have spoken to have ended their contracts with their manufacturing partners in China and have started looking for partners in other countries. 

It is predicted that China will be the most affected by the trust deficit in the medium and long terms. With the Covid-19 outbreak, companies in many countries have experienced disruptions in the supply chain connected to China and are considering diversifying their supply resources.  

Currently, China faces an economic contraction that it has not experienced in 40 years. It is said that 8 million people have lost their jobs in China during the period of fighting the virus.

Enter Turkey?

Turkey has grabbed attention with its potential as a destination for a US market shift. After President Trump and President Erdogan's phone call, the US has received the 500,000 surgical masks, 40,000 hazmat suits, 2,000 litres of disinfectants,1,500 goggles, 400 N95 masks and 500 face shields via Turkish Military transport aircraft.

It is clear that the leaders of both countries, who have agreed in principle on increasing the volume of trade between Turkey and the US from $20 billion to $100 billion, have found an opportunity to cooperate in the fight against the Covid-19 pandemic.

It is considered that the short-term negative effects of Covid-19 on companies may turn into an opportunity in the medium-term for Turkey. 

In this period, when the importance of domestic production shows itself, Turkey stands out with its industrial capacity. Among other G20 countries, the country that first comes to mind is Turkey, where production might shift as a result of supply and demand-oriented negativity against China.

With its flexible production capacity, cheap labour and connection to major markets, Turkey is a candidate for being the production base for neighbouring countries. Smaller, but high-quality, reliable production and distribution channels are expected to stand out as opposed to China’s large-scale production.

In addition to its strategic and geopolitical position, Turkey is also a leading country in terms of international logistics. It is predicted that companies in Turkey will be profitable due to the trade deflection caused by China and the Far East.

With that said, we should bear in mind that unfair competition and increasing tensions between the US and China might pose an opportunity for Turkey.

Around 1,700 American companies operate in Turkey, provide employment to 90,000 people, and have a total worth of $31 billion. These American companies had a revenue of $35.4 billion last year, a total that corresponds to 3.5 percent of the GDP of Turkey. In the same vein, we see that many Turkish companies have entered the US market very quickly over the last three years.

Though it is in need of capital, with its flexible, powerful production and labour force, Turkey could be a serious and trustworthy partner for the US.

It’s in our hands to turn a crisis into an opportunity. I hope that Turkish and American businesses will not forego this opportunity.