Chinese Accounting and Türkiye

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Since we will be hearing about China in different ways more frequently in the future, I wanted to share some of my notes and observations to help us get to know China more closely. Although the conclusions here may seem straightforward, they actually include insights I gathered from around 10 round-table meetings I attended at various think tanks, both in the UK and other locations in recent months. ...

Since we will be hearing about China in different ways more frequently in the future, I wanted to share some of my notes and observations to help us get to know China more closely. Although the conclusions here may seem straightforward, they actually include insights I gathered from around 10 round-table meetings I attended at various think tanks, both in the UK and other locations in recent months. Therefore, I would like to note that my conclusions are not solely based on the points discussed here, as there are many other, longer discussions happening in the background.
Since I will be touching on various topics throughout the text, I hope that by paying attention both to the overall picture and to the details between the lines, you may notice additional insights. Even though I sometimes say "I think" or "I foresee," these thoughts are based not on mere intuition but on extensive analysis and data in the background.
As far as I can observe, regardless of their position, many people have a limited perspective or resources to understand what is happening globally and within the Republic of Turkey (TR). Therefore, under the pretext of discussing China, I will share some of my predictions below about what is actually happening in TR and the world, and what can be expected in the near future.
First, let’s take a look at some figures to understand the current situation:

GENERAL ECONOMIC OVERVIEW IN CHINA

China’s Gross Domestic Product (GDP) in 2023 is approximately $18.5 trillion, making it the second-largest economy in the world. As you might expect, the United States ranks first with a GDP of $28.7 trillion. To understand the gap, we can look at Germany, which ranks third with a GDP of $4.6 trillion. In another perspective, when comparing China’s economic size to the next five largest economies (Germany, Japan, India, the UK, and France), we see that China’s economy is equal to the combined size of these five economies. By 2035, China is expected to surpass the US and become the world’s largest economy.
In 2023, China’s total exports amounted to approximately $3.4 trillion, meaning China exports about $300 billion every month. For example, in April 2024, the figure was $292.4 billion. This implies that one-third of the world's goods are produced in China.
On the import side, China recorded $220.1 billion. Looking at the broader picture, China had a current account surplus of $39.2 billion in the first quarter of 2024. However, this number reflects the net figure because while China reports a surplus from goods sales, it runs a current account deficit due to high service purchases.
When examining China’s trade relationship with the United States, we see that in the first quarter of 2024, the US had a trade deficit of $60.7 billion in favor of China, which means the US runs a monthly trade deficit of about $20 billion with China.
Of course, this is not the whole story. China also plays a dominant role in global raw materials. For example, according to a 2023 report by the German Institute for Economic Research (DIW), the European Union (EU) is 100% dependent on China for 14 of the 27 critical raw materials. Additionally, for three other materials, the dependency level is 95%. For instance, the EU currently sources 93% of its magnesium and 86% of its rare earth elements from China.
On the consumption side, more than 80% of the raw materials used in renewable energy tools worldwide are consumed by China. The rest of the world consumes the remaining 20%. These points indicate that there is a serious struggle and competition in the background regarding the production, consumption, and distribution of raw materials globally. To keep the topic concise, I’ll refrain from going into further details.
In short, China’s first wave of rise was an economic growth boom. What China is now preparing for is the second wave, which will move beyond just economic growth into a new phase.

FROM TURKEYS PERSPECTIVE

When we look at these figures from Turkey’s perspective, for example, we see that Turkey’s total exports in 2023 amounted to $256 billion. Compared to China, even China's monthly export figure exceeds Turkey’s annual total. In 2023, Turkey’s total imports from China were $45 billion, while its exports to China were around $3.3 billion. This means that Turkey ran a trade deficit of approximately $42 billion with China in a single year. Given that Turkey’s total trade deficit in 2023 was $106.3 billion, we see that $45 billion of this, or 42%, came from China alone.
When we include Russia in the picture, with $45.6 billion in imports and $11 billion in exports in 2023, Turkey ran a trade deficit of about $34.6 billion with Russia, accounting for 32.6% of the total trade deficit.
In summary, 74.6% of Turkey’s total foreign trade deficit in 2023 came from China and Russia. To finance this deficit, Turkey relies on its trade with Western countries. But is this situation sustainable? It doesn’t seem likely. Therefore, this picture also indicates that Turkey is moving closer to the BRICS group, from an economic perspective. Is this happening by coincidence? People may have different answers, but in my opinion, the answer is no.
Turkey’s strategy here seems to be aimed at reducing its trade deficit in US dollars. Therefore, it is clear that Turkey will want to increase trade with BRICS countries using local currencies to cover its dollar-based deficit and finance this gap. Accordingly, Turkey is working to create a strategy in this direction. In other words, even from this rough picture, we can see that Turkey is striving to use the global trend of "de-dollarization." For example, since 2016, and more concretely since 2020, Turkey has been working to establish a trade equation with Russia using rubles and Turkish lira.

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