On February 24, 2023, Professor Ding Long of the Middle East Studies Institute of Shanghai International Studies University gave an interview to the Global Times on the post-earthquake reconstruction of Turkey (see Global Times, February 24, 2023, page 11), the full text of which follows.

Turkey's post-quake reconstruction, Chinese companies start preparing

Turkish President Recep Tayyip Erdogan signed a decree on Wednesday that workplaces that suffered moderate or severe damage in the earthquake will receive support to ease the economic hardship caused by the Feb. 6 quake, the Financial Times reported on Feb. 23. The ‘deadliest natural disaster in the country's modern history’ in southern Turkey has dealt a heavy blow to the local economy and social development, and Erdogan has announced that he will start reconstruction work in the quake zone in March, promising to complete housing reconstruction within a year while preparing a plan to ‘make the country stand on its feet again’. After the Turkish government announced the shift from rescue to reconstruction work, the United States, South Korea and other countries acted quickly to join the competition for post-quake reconstruction. Do Chinese companies have the opportunity to participate in the earthquake reconstruction? What are the advantages and shortcomings of Chinese companies in competing with foreign companies? The reporter of Global Times investigated this issue.

Where will the 840 billion reconstruction funds come from?

According to Reuters, the February 6 earthquake in Turkey and Syria has killed more than 47,000 people, destroyed hundreds of thousands of buildings and left millions of people homeless. It is reported that 11 provinces, including Kahlamanmaraş, Adana, Hatay and Shangle Ulfa, were the hardest hit by the earthquake, and their total economy accounts for 1/10 of Turkey's total economy with a population of 13.5 million. The main industries in the areas concerned are the textile, garment, steel, cement, energy, food and agricultural industries.

‘Almost all the buildings and other structures around the area collapsed, and it was really devastating and heartbreaking. Although our factory building was not collapsed by the earthquake, the walls broke in many places and became dangerous, and now no one dares to go near it, and the factory has not been able to resume work.’ Ms. Zhou, who is engaged in solar panel manufacturing in Turkey's southern province of Kahramanmaras, said in an interview with the Global Times.

Like Ms. Zhou's factory, the earthquake brought economic activities in these areas to a near abrupt halt. Turkey is currently cleaning up the debris of collapsed buildings, so no reconstruction work has been opened yet, Falluk, coordinator of the Asia-Pacific region of the Turkish Council on Foreign Economic Relations, told the Global Times on 22.

Reuters said U.S. bank JPMorgan Chase expects that the direct damage to physical buildings in Turkey due to the earthquake could reach 2.5 percent of gross domestic product (GDP), or $25 billion. And in its disaster assessment report, the Turkish Federation of Enterprises and Businesses estimated that the quake caused total losses of nearly $84.1 billion to the Turkish economy.

For post-disaster reconstruction, Turkey's Economic News magazine commented on the 20th that nearly 130,000 new or reconstructed residential buildings and other buildings were needed after the earthquake, plus repair and reconstruction of related roads, water supply, electricity and sewage systems, at an estimated cost of 843 billion Turkish liras (about 307.5 billion yuan).

After the earthquake, the World Bank pledged $1.78 billion in assistance to Turkey. Subsequently, major countries in the world, including China, have provided aid funds to Turkey for disaster relief and post-quake reconstruction, but there is still a large gap in the funds needed for the country's reconstruction.

The reporter noted that although the Turkish economy has faced currency devaluation and inflation in recent years, the country's sovereign debt level is relatively low, which means the government still has some wiggle room to issue long-term debt for post-earthquake reconstruction.

However, local economists said that the cost of reconstruction may reach tens of billions or even hundreds of billions of dollars, and the Turkish government may find it difficult to raise sufficient funds from domestic sources, relying to a large extent on foreign aid or investment.

Chinese companies send representatives to disaster areas to discuss

After the Turkish government announced its reconstruction efforts, the United States, South Korea and other countries acted quickly. South Korea's foreign ministry said last week that helping Turkey rebuild has become a new priority for the country, and that assisting with relief efforts in Turkey has shifted to helping Ankara set long-term recovery goals. Foreign ministry officials said such efforts will begin in Adana, Turkey, near the Mediterranean Sea, because the area offers a favorable location for reconstruction efforts. During a visit to Turkey, U.S. Secretary of State John Blinken announced further assistance to Turkey and said the help Washington would provide to Ankara would be ‘longer-term’.

Similarly, Chinese companies in Turkey are also seeking to participate in Turkey's reconstruction, said Fang Yanshui, general manager of China Machinery Engineering Group, at a ceremony to donate supplies to the earthquake-stricken areas in Turkey on Feb. 13, adding that Guoji Engineering Group has undertaken several large-scale projects in Turkey, totaling more than $3.5 billion. These projects are of excellent quality and have withstood the test of this earthquake, and are all in stable operation now. The Global Times reporter also learned that several Chinese enterprises engaged in real estate development in Turkey have sent representatives to the disaster area to discuss with the local government about participation in reconstruction.

As for the participation of Chinese enterprises in post-quake reconstruction, a Turkish real estate developer, who wished to remain anonymous, told the reporter that the earthquake had a certain impact on the reputation of Turkey's construction industry, but the country does have a group of high-quality construction teams, who will be the main force in post-disaster reconstruction. At the same time, the government will pull a number of companies with construction quality problems in the earthquake into the ‘blacklist’, which will expand the gap in the Turkish post-disaster reconstruction construction force, objectively provide more opportunities for foreign construction companies, including China, to participate.

Jia Qingwang, a representative of a Chinese company in Turkey, who has been working in the country for many years, told the Global Times, ‘There are more Chinese companies involved in the local economy in Turkey, and many of them are large infrastructure companies with strong financial and technical advantages, which have strong competitiveness in the reconstruction.’ He said, for example, according to the preliminary reconstruction plan revealed by local media, the Turkish government intends to adopt international green standards to build energy-efficient houses in the disaster area, and Chinese enterprises have been working on the construction of energy-efficient houses for many years, with rich experience and advanced technology, Chinese enterprises can do a lot in this field.

What are the advantages of Chinese companies?

While Erdogan has vowed to rebuild the southern disaster zone within a year, Reuters quoted architects and engineers as saying that careful consideration must be given to urban planning and building safety, otherwise plans for rapid reconstruction could trigger another disaster.

Ding Long, a professor at the Middle East Research Institute of Shanghai Foreign Studies University, told the Global Times on 22 June that Turkey's reconstruction efforts face two major difficulties: first, the 11 provinces affected by the earthquake in Turkey are relatively economically backward areas of the country, plus the entry of a large number of Syrian refugees in the past 10 years, the reconstruction work also needs to bear the burden of revitalizing the regional economy; second, Turkey's high inflation and currency in the past year Second, Turkey has faced a huge funding gap due to high inflation and currency devaluation over the past year, making it difficult for the country to complete post-disaster reconstruction work on its own.

However, there is optimism in Turkey's post-disaster reconstruction task, as the local construction capacity is strong, and the reconstruction can also pull the Turkish economy to recover and even achieve growth. Ding Long said that Turkey will probably use this reconstruction opportunity to attract foreign investment, and inviting foreign companies to build with capital will become a mainstream mode.

Ding Long told the Global Times that Turkey's construction capacity is world-class, but its construction capacity in water conservancy, hydropower and communication industries is not enough, which happens to be the strength of Chinese enterprises, so many Chinese enterprises should appear in Turkey's reconstruction team.

Ding Long believes that in this earthquake, the three hydroelectric power stations in Adana province and the only IAN high-speed railway line in Turkey built by Chinese enterprises have withstood the test and won the reputation for Chinese enterprises. In the face of competition from European and American companies, Ding Long said that the advantages of Chinese enterprises are good construction quality, fast speed and cheap cost. He predicted that the reconstruction work in Turkey would take at least five years or even longer.

Source: Global Times

(The views in this article are only the personal views of the author or the interviewee, and do not represent the position of this research institute)