30
Jul
Nowadays Chinese stock markets are persistently going downhill just because profits in China’s industrial production are plummeting. This is already an expected development since China has been preparing to abandon its low-wage based and export-oriented growth model for a long time. It is pushing up wages and precipitating global infrastructural investments inside the country.
China’s foreign trade surplus was $420 billion in 2008, but this figure had dropped down to $182 billion by 2013. China is the most important actor in global trade not only in the Far East, but around the world. The domination of increasing infrastructural investments has shifted away from Japan to China in the Far East. Bothered by the fact that the U.S. and Japan were dominant players in the Asian Development Bank (ADB), which was founded in 1966, China proposed an initiative along with 21 countries in the region in 2014 with the objective of restructuring infrastructure responsibilities in its region and establishing a new bank named the Asian Infrastructure Investment Bank (AIIB). (Japan, the U.S., China, India and Australia hold 15.67 percent, 15.56 percent, 6.47 percent, 6.36 percent and 5.81 percent of share, respectively in the ADB.)
The U.S. strongly objected to this initiative and prevented Japan and Canada from taking part in this mechanism. However, the U.K.’s Chancellor of the Exchequer, George Osborne, announced in March 2015 that the U.K. would support the project. Then, despite all the U.S.’s warnings and fierce objections, Australia and South Korea declared in late March that they would join the project as founding members. Soon after, Germany, France and Italy also agreed to be partners in the bank. The AIIB’s initial capital was $50 billion, which rose to $100 billion after the new members’ accession over time, and the founding process is about to be completed. Along with other European countries in addition to the U.K., Turkey applied for non-region prospective founding membership. At present, the establishment of a new investment bank, which will challenge the World Bank with its 37 members from the region and 20 members outside of the region, is about to be completed. China is the principal partner of the bank with a 30.34-percent share, while India, Russia, Germany, South Korea, Australia, France, Indonesia, Brazil, the U.K., and Turkey hold 8.52 percent, 6.66 percent, 4.57 percent, 3.81 percent 3.76 percent, 3.44 percent, 3.42 percent, 3.24 percent, 3.11 percent and 2.66 percent respectively.)
Immediately after the U.K. decided to become a member of the AIIB, Osborne announced that the U.K. would support China’s investments in new-generation nuclear power plants and, even more importantly, that they would establish the first yuan clearing house outside of Asia in London. On Jan. 15, 2015, the BRICS states – Brazil, Russia, India, China and South Africa – announced that they would establish a new development bank with a $100 billion capital. China participates in the bank with an investment of $41 billion, while Russia, India and Brazil will participate with an investment of $18 billion each, and South Africa participates with $5 billion.
All these developments indicate that the economy is moving away from a unipolar world, where the dollar is gradually ceasing to be a unique global reserve currency, and switching to a bipolar world where China will be the new dominant power. The U.K. stealthily supports the rise of China in order to balance the monetary system that is based on the dollar and the euro. A major part of these developments that shakes the dollar’s throne, is bilateral trade agreements that are based on countries’ national currencies, where China takes the lead.
However, the fact that China’s rise meets with that of Turkey in the Middle East and Eastern Europe falls foul of the U.K.’s and Germany’s interests. That is why there are attempts to destabilize Turkey and Turkey is being threatened with the PKK and Islamic State of Iraq and al-Sham (ISIS) terror nowadays.
The developments that started with the Suruç massacre and continue with Turkey’s cross-border operations indicate the start of a new era for Turkey. It is possible to argue that developments that have taken place after the parliamentary elections tell us of a new era. However, this never means a regression and no one should hope that Turkey economically and politically will go back to the 1990s. Conditions in Turkey, in the region and in the world are not conducive for such a reactionary restoration and those days are gone. Undoubtedly, there are some sections that yearn for the dark period that followed the postmodern coup of Feb. 28, 1997 and prevailed in the 1990s. Turkey’s economy alone indicates that this is impossible.
Turkey and many other developing countries practice a floating exchange rate regime instead of a monetary board or fixed exchange rate regimes that are colonial practices. Therefore, they have market mechanism arguments in the face of the rapid appreciation of the dollar. Furthermore, they developed as a strong banking system like that of developed countries during the whole process. From this point of view, no one should expect a new financial crisis in Turkey depending on domestic political developments and global dynamics. Quite the contrary, Turkey’s new quests in Syria and Iraq will lead to a leap in the Turkish economy in the medium and long term. New energy lines, ports that open up to the Mediterranean, logistics networks and new trade routes originating from China (the New Silk Road and the middle and south corridors) require that Turkey should be economically present in the Syria and Iraq regions.
These economic realities are what lie behind the fact that Turkey is being threatened with terror and being left vulnerable to terror. This is also a humanitarian tragedy.
Source: http://www.dailysabah.com/columns/cemil-ertem/2015/07/29/war-and-crisis-the-chinese-and-turkish-realities