The past weekend posed an important albeit a little confusing turn with respect to the relations between Turkey and China.

Turkish President Recep Tayyip Erdogan (R) and Chinese President Xi Jinping greet at G20 in Turkey

Turkey’s president Recep Tayyip Erdoğan met with his Chinese counterpart Xi Jinping on the sidelines of the G20 summit in the Mediterranean town of Antalya, where the two leaders agreed to “strengthen strategic communication to dock each other’s development strategy.”

On a more concrete note, the two sides concluded a number of intergovernmental agreements, including a memorandum of understanding for the “harmonization of the Silk Road Economic Belt and the 21st Century Maritime Silk Road with the Middle Corridor Initiative” and a “railroad cooperation agreement.”

At around the same time when these agreements were being signed in Antalya, the Turkish media reported that after two years of negotiations, the government has finally decided to cancel the plan to purchase a long-range missile defense system from China.

The two agreements signed during the G20 summit practically make Turkey a part of China’s One Belt, One Road (OBOR) initiative.

While the technical details of the agreements are yet to be disclosed, linking OBOR with the Middle Corridor Initiative, which is Turkey’s own project for the modern revival of the ancient Silk Road, is likely to add fresh impetus to the efforts of connecting Turkey to Central Asia via the Southern Caucasus, most crucially through the Chinese funding to be made available.

This connection, in turn, will form a vital segment of the OBOR, hence Beijing’s interest in the project.

At the heart of Turkey’s Middle Corridor initiative lies the Baku-Tbilisi-Kars railroad, which is expected to be completed in 2016. Construction on this line had started back in 2007, however several delays and postponements due to financial issues and conflicts between the involved governments and contactor firms have slowed down progress of this project.

The idea is that once this project is completed, a ferry link will connect the line to Kazakhstan’s Caspian port of Aktau from where the railroad will extend towards China, while towards the opposite direction the line will connect with Turkey’s domestic network, pass underneath the Bosphorus through the Marmaray tube which is also under construction, and reach Turkey’s border with the European Union.

At this point, the second agreement signed in Antalya enters the scene.

The Railroad Cooperation Agreement between Turkey and China, which is actually a renewal and extension of a framework agreement reached five years ago, is exclusively about building a high-speed railway link between Kars and Edirne, in other words between the easternmost and westernmost points of Turkey, with Chinese funding and Chinese technology.

Turkey’s aims are twofold: first, to modernize its domestic rail network through new high speed rail lines, and second, to improve its ability to reach export markets in Central Asia and beyond, which is crucial at a time when the country’s export routes to the Middle East are largely blocked due to war and instability in Syria and Iraq, disagreements over road transportation with Iran, and political problems with Egypt.

Taken together, the two agreements signed with China will help Turkey to accelerate progress with both of these objectives, whereas from China’s point of view it makes sense to invest in Turkey’s railroad projects as the Turkish route offers a relatively safe and stable option for the Europe-Asia connection of OBOR.

Suffering from a large and increasing trade deficit with China ($2.9 billion of exports against a massive $24.9 billion of imports in 2014), Turkey aims to balance its relationship by getting more investment from this country, and Ankara sees in China a partner that can also help to close Turkey’s infrastructure and technology gaps.

In fact, this was precisely the rationale behind the decision to negotiate the procurement of a long-range missile defense system with China.

Turkey was interested not only in the final product but also in the technology, and while the American and European bidders were refusing access to technology, the Chinese company was the one promising technology transfer and joint production.

Turkey wants to increase its home grown technological capabilities, especially in areas of strategic importance such as the defense industry, and Ankara’s decision made sense in this respect. Why cancelling it now?

Reason for the cancellation of the long-range missile defense system bid has not been made public yet, and the only piece of information that appeared in Turkish media was that Prime Minister Ahmet Davutoğlu had made this decision in consultation with the new chief of the armed forces, Hulusi Akar, two days before the G20 summit.

It is also announced that the tender was annulled in toto, there won’t be deal with the American and European bidders either, and Turkey is going to produce its own missile defense system.

While it is not really clear how and with which technology this is going to be accomplished, it is certain that it was not missile economics but missile politics that made Turkey give up the deal with China.

Although the rationale behind the decision to negotiate with the Chinese was purely economic, it had political consequences in the sense that Turkey’s move has drawn strong criticism from its NATO allies.

Ankara has tried to find a compromise by repeatedly extending the deadline and inviting the bidders to revise their proposals, but it did not work out. Although it might seem otherwise on the surface from time to time and politicians’ rhetoric may differ, Turkey values its partnership with NATO, which is especially important at the current moment when security cooperation in the face of developments in Syria and Iraq is becoming vitally crucial.

This is why at the end of the day, Turkey has decided to adopt a policy that would alienate neither side, and go its own way for the missile defense system.

Turkey is currently in the process of calibrating its China policy. Conducting trade with and receiving investment from China brings gains mutually and this is more than welcome.

However at the same time Turkey sees, at least for the moment, no benefit in shifting its alliances towards the East.

A greater business focus, therefore, can be expected in the way Turkey develops its relations with China, and there is no better way for doing this than actively taking part in the OBOR.

Dr. Altay Atlı is a lecturer at the Asian studies program of Boğaziçi University in Istanbul and a senior associate at Turkey’s International Strategic Research Organization.

(Copyright 2015 Asia Times Holdings Limited, a duly registered Hong Kong company. All rights reserved. Please contact us about sales, syndication and republishing.)

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