OCTOBER 9, 2010 By JOE PARKINSON
ISTANBUL—Turkey's Prime Minister Recep Tayyip Erdogan and China Premier Wen Jiabao said Friday their two countries would from now on trade using their own currencies, effectively excluding the U.S. dollar.
The announcement, at a joint news conference in Ankara, came on the final stop of Mr. Wen's European tour. Mr. Erdogan announced eight trade agreements between the two countries, whose leaders also pledged to triple trade between China and Turkey to $50 billion within five years, and to $100 billion by 2020.
"We are forming an economic strategic partnership," Mr. Erdogan said. "In all of our relations, we have agreed to use the lira and yuan."
Beijing has steadily been trying to raise the profile of the yuan, perhaps hoping it will someday play a bigger role in the world economy. In late September, China supported a Russian proposal to start direct trading between the yuan and the ruble. It has brokered a similar deal with Brazil.
But the U.S. dollar overwhelmingly remains the currency of choice in most international trade, and the currency in which the Chinese have socked trillions in reserves. The yuan isn't yet widely used by other countries, nor is the market for yuan-denominated assets anywhere close to the size of the markets in dollar-, euro- or yen-denominated assets, which limits its usefulness.
Mr. Wen's trip to Europe has been dominated by a dispute over the yuan's valuation. The U.S. and European Union—China's two biggest trading partners—have warned that keeping the yuan low to boost Chinese exports could hamper the fragile global economic recovery.
Mr. Erdogan made no comments about the value of the yuan Friday, despite the fact that Turkey ran an $11.1 billion trade deficit with China in 2009. That contributes to a ballooning current-account deficit widely seen as the weakest point in Turkey's strong recovery from the global financial crisis. The Turkish lira has been rising strongly against the dollar, as well as against the yuan.
Mr. Wen also made no reference Friday to Western pressure to revalue the yuan. Instead he pledged to develop "sustainable" trade relations with Turkey. China and Turkey were the fastest growing G-20 economies in the second quarter—each grew by 10.3% compared with a year earlier.
The two countries saw their trade surge from around $1 billion in 2000, to $12.6 billion in 2009, down from $17.1 billion as a result of the global recession, according to figures from Turkstat, the Turkish statistics agency.
Mr. Erdogan said the eight new trade agreements included deals on energy and infrastructure, including Chinese investment in two high-speed rail networks, one of which would run between the capital Ankara and Istanbul.
Mr. Wen, for his part, said he "appreciated" Ankara's policy toward Iran, although he gave no details. Both China and Turkey are major importers of Iranian energy and have been reluctant to support a U.S.-led policy to secure tough international sanctions against Iran.
The sanctions, the most intrusive of which have been imposed unilaterally by Washington and the European Union, aim to persuade Tehran to suspend development of a nuclear-fuel program that can be used to produce either civilian or weapons-grade fuel. Turkey voted against a new round of limited sanctions in the United Nations Security Council earlier this year.
Chinese warplanes last month took part in a military-training exercise at an airbase in central Turkey, a spokesman for Turkey's chief of the general staff confirmed Friday, marking a rare bilateral exercise between China and a North Atlantic Treaty Organization member. Turkey recently discontinued similar exercises with Israel.
wall street journal
http://online.wsj.com/article/SB10001424052748704657304575539592036945472.html
ISTANBUL—Turkey's Prime Minister Recep Tayyip Erdogan and China Premier Wen Jiabao said Friday their two countries would from now on trade using their own currencies, effectively excluding the U.S. dollar.
The announcement, at a joint news conference in Ankara, came on the final stop of Mr. Wen's European tour. Mr. Erdogan announced eight trade agreements between the two countries, whose leaders also pledged to triple trade between China and Turkey to $50 billion within five years, and to $100 billion by 2020.
"We are forming an economic strategic partnership," Mr. Erdogan said. "In all of our relations, we have agreed to use the lira and yuan."
Beijing has steadily been trying to raise the profile of the yuan, perhaps hoping it will someday play a bigger role in the world economy. In late September, China supported a Russian proposal to start direct trading between the yuan and the ruble. It has brokered a similar deal with Brazil.
But the U.S. dollar overwhelmingly remains the currency of choice in most international trade, and the currency in which the Chinese have socked trillions in reserves. The yuan isn't yet widely used by other countries, nor is the market for yuan-denominated assets anywhere close to the size of the markets in dollar-, euro- or yen-denominated assets, which limits its usefulness.
Mr. Wen's trip to Europe has been dominated by a dispute over the yuan's valuation. The U.S. and European Union—China's two biggest trading partners—have warned that keeping the yuan low to boost Chinese exports could hamper the fragile global economic recovery.
Mr. Erdogan made no comments about the value of the yuan Friday, despite the fact that Turkey ran an $11.1 billion trade deficit with China in 2009. That contributes to a ballooning current-account deficit widely seen as the weakest point in Turkey's strong recovery from the global financial crisis. The Turkish lira has been rising strongly against the dollar, as well as against the yuan.
Mr. Wen also made no reference Friday to Western pressure to revalue the yuan. Instead he pledged to develop "sustainable" trade relations with Turkey. China and Turkey were the fastest growing G-20 economies in the second quarter—each grew by 10.3% compared with a year earlier.
The two countries saw their trade surge from around $1 billion in 2000, to $12.6 billion in 2009, down from $17.1 billion as a result of the global recession, according to figures from Turkstat, the Turkish statistics agency.
Mr. Erdogan said the eight new trade agreements included deals on energy and infrastructure, including Chinese investment in two high-speed rail networks, one of which would run between the capital Ankara and Istanbul.
Mr. Wen, for his part, said he "appreciated" Ankara's policy toward Iran, although he gave no details. Both China and Turkey are major importers of Iranian energy and have been reluctant to support a U.S.-led policy to secure tough international sanctions against Iran.
The sanctions, the most intrusive of which have been imposed unilaterally by Washington and the European Union, aim to persuade Tehran to suspend development of a nuclear-fuel program that can be used to produce either civilian or weapons-grade fuel. Turkey voted against a new round of limited sanctions in the United Nations Security Council earlier this year.
Chinese warplanes last month took part in a military-training exercise at an airbase in central Turkey, a spokesman for Turkey's chief of the general staff confirmed Friday, marking a rare bilateral exercise between China and a North Atlantic Treaty Organization member. Turkey recently discontinued similar exercises with Israel.
wall street journal
http://online.wsj.com/article/SB10001424052748704657304575539592036945472.html
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