UPDATE 3-Turkey, China eye more trade in "strategic partnership"

Fri Oct 8, 2010 12:50pm EDT

Related Topics

* Two countries want to treble trade by 2015

* Lira and yuan to be used in bilateral trade, not dollars

* China "appreciates" Turkey's efforts over Iran

(Adds details)

By Selcuk Golokuk and Tulay Karadeniz

ANKARA, Oct 8 (Reuters) - Turkey and China aim to treble bilateral trade to $50 billion a year by 2015 and to $100 billion by 2020 under a new "strategic partnership", the prime ministers of the two countries said on Friday.

Their joint news conference came after Beijing slammed as "an obscenity" the Nobel Committee's awarding of its peace prize to jailed Chinese activist Liu Xiaobo. Chinese Premier Wen Jiabao made no mention of the prize and took no questions.

Members of the G20 group of rich and developing countries, Turkey and China have two of the fastest growing economies in the world and are looking to boost their global influence.

"We have decided bilaterally to establish a strategic partnership in our relations," Wen told the news conference with Prime Minister Tayyip Erdogan.

Erdogan said the two sides had agreed to use the lira and the yuan, rather than dollars, in bilateral trade and singled out nuclear energy cooperation as a promising driver of trade.

The two leaders signed eight deals in areas including trade, infrastructure, energy and railway networks that would help connect Istanbul to Beijing through a "modern silk road".

Turkey's ties with China have been complicated at times because of Beijing's tough approach to unrest in Xinjiang, home to China's Muslim Turkic minority of Uighurs.

IRAN FACTOR

Both Ankara and Beijing have increased commercial ties with Iran, signing deals on oil and gas fields to the frustration of Western powers, who suspect Iran of a secret nuclear weapons programme, an allegation that Iran denies.

China reluctantly backed the last round of U.N. sanctions on Tehran while Muslim Turkey, along with Brazil, opposed them.

Big powers hope the imposition since June of tougher U.N., U.S. and European sanctions on Iran will persuade it to enter good-faith negotiations and agree to curb nuclear activities.

"China recognises the power and influence of Turkey in the international community and in its region and appreciates its efforts over Iran," Wen said.

China and Turkey say their trade with Iran is legitimate, and high-level contacts should be maintained with Iran in order to find a diplomatic solution.

Currently, bilateral trade of about $17 billion is made up mostly of Chinese exports to Turkey.

In 2009, a year when global trade slumped because of the economic crisis, Turkish exports to China rose 11 percent to $1.6 billion, while imports fell 20 percent to $12.7 billion.

Turkey wants to rebalance trade with China through more Chinese investments in Turkey, Chinese tourists, joint ventures in third countries and more access for Turkish goods in China.

Like China, Turkey is seeking to extend its economic reach into Africa, the Middle East and and the former Soviet Union. Turkey signed a similar strategic deal with Russia this year.

Turkish media said last week Chinese warplanes had taken part in a training exercise in central Turkey. It would be the first military exercise between China and NATO member Turkey.

"While the two sides have strong common strategic interests, the two sides are very much competitors in many spheres of trade these days," Royal Bank of Scotland analyst Timothy Ash said in a note, citing textiles and electronics as areas of competition.

"Perhaps the most interesting area of cooperation between the two is transport, as China has recently been looking to invest in transport hubs in the region," he said, noting Turkey could face competition from Greece, where China has expressed interest in making direct investments in port facilities. (Writing by Ibon Villelabeitia; editing by Andrew Roche)

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