Most Turkish and foreign lenders have been deterred from this project due to Turkey's tensions with the European Union and the United States and its record high levels of foreign debt. Despite these concerns and challenges, China has emerged as the sole major foreign investor willing to invest in the canal.
One of the indirect benefits for China will be the ability for Chinese firms to participate in more profitable real estate investment opportunities in the new urban and commercial zones surrounding the canal.
Turkey's geographic location is critical for China's Belt and Road connectivity to Europe. As a result, it is unsurprising that the mega-projects improve rail and highway transportation between Asia and Europe via Turkey, which serves as the middle corridor for land connectivity between the two regions.
China will strengthen its diplomatic and economic ties with the Turkish government by playing an important role in the Istanbul Canal project.
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