Lessons to take from China for '2023' - KEREM ALKIN

Lessons to take from China for '2023'

It may have passed unnoticed amid Turkey's and the region's “staggering” political agenda; Turkey still awaits a comprehensive, exciting, proactive new growth model from the 64th government and the economy administration. It is predicted that Turkey's gross domestic product (GDP), which reached $823 billion in 2014, may have regressed to $750 billion to $760 billion in 2015 with the Turkish lira's loss of value. This shows that the per capita income, which should continue to rise to a range between $11,000 to $13,000, has currently dropped under $10,000. In other words, the “middle-income trap” for the Turkish economy has increased once again. The business world is currently struggling, within the context of escalating terror pressure and a search for a new market and corridor to activate shrinking exports with extended payment terms in the real sector, the banking sector that has limited loans and the extremely fragile consumption tendency of the Turkish public. And in the face of this, the economic administration is not coming up with applicable measures and steps that will work fast in increasing trust in the economy, relieve the cash rolling in the market, reduce the number of news of bankruptcies and encourage the real sector.

The signals regarding the global economy in this picture are not very bright, either. Hence, proactive countries like the US and China are constantly trying to come up with new measures to eliminate the possible effects of the world economy – which seems like will take even longer to recover – on their own economies. The US Federal Reserve Bank (Fed) softened its discourse by taking into account the impact of increasing global risks aimed at the US's economy. As for Turkey, because it is increasingly getting stuck in terms of producing added value and in export volume, it is trying to include subject lines such as innovation, advanced technology and Industry 4.0 on its agenda. “LTE Advanced” which we know as “4.5G” will be launching on April 1. It is a step aimed at making Turkey's added value production jump. However, we have an important issue: The infrastructure of this technology is starting off quite weak, because Turkey has not yet formed the “national broadband strategy” it needs to determine before switching to 4.5G.

'Highway first' step from China

Imagine: Turkey has Ferraris lined up in front of homes, but there are no roads, highways or transport networks for these cars to drive on. An Izmir-based company that sells state-of-the-art technology machinery and needs to be applauded sold an ultra-technology machine to Brazil. The device that was mounted in Brazil requires a software installation, and due to the low-quality Internet connection in Izmir, the company is unable to send the software to Brazil. Turkey is readying for its “2023 goals,” but its “virtual highways” are not ready yet and its technological infrastructure is inadequate. So what is China doing? With its recently completed 13.5-year development plan works set to be implemented until 2020, China is preparing to play an active role in the technology and Internet fields. The 13th Development Plan, called “Internet Plus,” proposes investments in many fields such as chip materials, robotics, aviation equipment and satellites. As part of Internet Plus, China plans to transfer 2.5 percent of its GDP to these investments. This rate was 2.1 percent in the previous five-year plan.

In other words, China is getting ready to make a $275-billion investment move, with which it will reduce outside dependency and support local technology companies. This move by China did not please technology exporter countries like the US. While metropolitan cities are expected to enjoy an Internet speed of 100 Mbps with Internet Plus, 98 percent of the total population will have Internet access. When I finish this article and try to send it to the newspaper so it can reach you, my download speed is 3.5 Mpbs and upload speed is 1.0 Mbps. So in Turkey, we are using an airliner to reach Mars. Innovation, producing high added value and research and development supports are all the talk in Turkey. But we do not have the IT infrastructure necessary to take all these strategic steps. Ask those around you: How many of the most central districts in Istanbul, Ankara and Izmir have fiber optic cable. And I turn to the 64th government, relevant ministers and institutions and ask them: “Are you determined to leave Turkey's 2023 goals to the mercy of local administrations? How will Turkey achieve these goals before laying four-five layers of fiber optic cables and without having a national broadband strategy?”

'Surplus capacity' is the real problem

Another issue is that market economy is not keeping silent in the face of those who want to invest in a sector that already has a surplus capacity risk. Many sectors warned the economic administration of a surplus capacity in basic production industry sectors such as food and construction materials. However, we have yet to make a plan aimed at directing investments to other sectors. We now have a surplus capacity problem in many sectors. China is also entering a new period in which it will focus on infrastructure and environment investments to shrink the surplus capacity in its iron-steel, concrete and chemical industries. In order to restructure public companies and prevent redundancies within this scope, they are going to turn to merge with successful groups in the same sector rather than closing down companies. While configuring its future, similar to China, Turkey too needs to consolidate many sectors. It is now time to put in sincere effort for the real sector.


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