NIGERIA-CHINA ECONOMIC AND TRADE RELATIONS: TRENDS, PROBLEMS AND

PROSPECTS. (1999-2015)

BY

YAKUBU ADAMU HARUNA

BU/12A/BS/0264

A PROJECT SUBMITTED TO THE DEPARTMENT OF INTERNATIONAL RELATIONS

AND DIPLOMACY BAZE UNIVERSITY ABUJA IN PARTIAL FULFILMENT OF THE
REQUIREMENT FOR THE AWARD OF DEGREE IN INTERNATIONAL RELATIONS AND
DIPLOMACY

OCTOBER/12TH 2017

APPROVAL PAGE

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This project has been read and approved as meeting the required standard for the
award of degree in international relations and diplomacy (IRD)

-----------------------
----------

Dr Sadeeq Abubakar date

Supervisor

--------------------- ----------

Dr Dele Babalola date

H.O.D International relations and diplomacy

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External Supervisor date

DEDICATION

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This research work is dedicated to Almighty Allah for His guidance, protection, and for
seeing me through all the struggles of life. And also to my parents who have supported
me mentally, physically, morally and financially.

ACKNOWLEGEMENT

All themes and praises are due to Almighty Allah for the guidance and protection He has
given me throughout my life and on the successful completion of my course.
I would like to thank my supervisor Dr. Sadeeq Abubakar for his invaluable help, skillful
guidance and continual dedication during my research year. Without whom this would
not have been what it is today. I will ever remain grateful to him.
I would also like to acknowledge the effort of my H.O.D Dr Dele Babalola for his own
part in seeing me through, and all my lecturers in the course work aspect of the
programme. I have enjoyed every bit of my academic work with you all. And I also

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extend special thanks to the members of the administrative staff of the Department of
international relations and diplomacy Baze University Abuja.
I am grateful to my parents especially my Mum Hajia Zainab Yakubu Muhammed, for
their unreserved support over the years.

TABLE OF CONTENTS
TITLE PAGE……………………………………………………………………1
APPROVAL PAGE…………………………………………………………….2
DEDICATION………………………………………………………………….3
ACKNOWLEGEMENT………………………………………………………4
TABLE OF CONTENTS………………………………………………………5

CHAPTER ONE

1.1 Background of the Study…………………………………………………7

1.2 Statement of the Research Problem……………………………………11

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1.3 Research Question…………………………………………………………14
1.4 Objectives of the Study…………………………………………………….15
1.5 Assumptions………………………………………………………………..16
1.6 Scope and limitation………………………………………………………17
1.7 Significance of the Study………………………………………………….18
1.8 Research Methodology……………………………………………………….19
1.9 Theoretical Frame Work……………………………………………………20
1.10 Definition of Terms/Concept……………………………………………...22
1.11 Chapterisation………………………………………………………………23

CHAPTER TWO: Literature Review

2.0 Introduction………………………………………………………………24
CHAPTER THREE:
3.0 China-Nigeria Relations in Historical Perspective……………………….36
CHAPTER FOUR:
4.0 Findings, Presentation and Analysis of Data…………………………….48
CHAPTER FIVE: Summary, Recommendation and Conclusion
5.0 Summary …………………………………………………………………49
5.1 Recomendation …………………………………………………………………51
5.2 Conclusion ………………………………………………………….53
Reference……………………………………………………………….54

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BACKGROUND OF THE STUDY
The Peoples’ Republic of China is sometimes referred to as a modern day miracle and
continues to draw the attention of the entire world for the remarkable progress it has
made in economic development. The first contact with the People’s Republic of China
(PRC) was in 1960, when she was invited to Nigeria’s independence celebrations. This
first contact with China was
designated as “the era of informal ties, 1960-1971” (Owoeye 1986:297).
In 1980, China joined the World Bank and the International Monetary FUND, since
then more foreign investment came in.

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China’s foreign policy stressed the development of friendly relations with other nations
paying little regard to their social systems or ideological orientation. The principle of
peaceful co-existence was reiterated as the basis for its foreign relations (Muekalia
2004:2).
With Deng Xiaping’s reform policies of the 1970s and 1980s, China’s dramatic
growth and modernization and attendant industrial, energy and market expansion needs
brought it into greater contact with Africa (Utomi 2009:2). This new expanded presence
offered a partnership seen by Nigeria as an alternative model to Western relationships
mainly from Europe, America and Canada. This resulted in the establishment of
diplomatic relations at ambassadorial level in 1971 (Utomi 2009:2),

The bilateral relations progressed from political engagements to intense

economic penetration of the Nigerian economy. China seemed to be driving the relations
because there had been the issue of excessive trade imbalance in favour of China, poor
infrastructural development of facilities in Nigeria which have hampered it from
competing favorably with China. Nigeria has long pro-west tradition due to its colonial
past, which only sees a short break during the of military rule of Sani Abacha. Following
the economic sanctions against the Abacha‘s regime led by the United States and
Britain, the Nigeria government in 1994 decided to shift her trade relations towards the
east particularly China. The shift of trade relations from Nigeria‘s traditional allies to
Asia is caused by the strained relationship between Nigeria and west which borders on
the dictatorship of General Sani Abacha and his unwillingness to hand over power to
democratic government.

Since the country needed trade partners, and assistance from other developed
countries, efforts were made by the government to establish better relations with other
powerful countries. China was therefore chosen by the Abacha‘s administration.
With the death of General Abacha in 1998, and the inauguration of the former President
Chief Olusegun Obasanjo in 1999, under a democratically elected government, and the
resumption of aid from the west, it is not surprising that the country re-appeared a
strong tendency to return to that pro-west tradition partly because Nigeria wants the
west to cancel its 30 Billion US dollar external debts and former President Obasanjo in
power then was more pro-west but notwithstanding Nigeria-Chinese relations deepen.

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 The first Ministerial conference of the forum on China-Africa cooperation was
held in Beijing, China in October, 2000 Since then, the relationship between the two
countries has achieved a smooth and steady development. President Obasanjo visited
China twice in 2001 and 2005 respectively with his Chinese counterpart reciprocating
both visits. China and Nigeria have also signed a number of agreements on trade,
economic and technological cooperation as well as on investment protection (Nuhu
2012:8).

In 2004, the volume of trade grew by 17.6 percent, with Nigeria’s exports to
China registering a growth of 330 percent. China’s main exports to Nigeria are light
industrial, mechanical and electrical products. China’s main imports from Nigeria are
petroleum, timber and cotton (Akongbowa 2009:9).

Now most African Countries became interested to export primary products to, and
import consumer and capital goods from China. Although there had been differences by
country and time, this pattern didn’t change until recently. Nigeria, for example,
exported cocoa beans, rubber, cashew nuts, hide and skin, and some other agricultural
products and oil. China tends to export large amounts of low-cost manufactures
meeting with Nigeria local demands that reflected declining economy. This also resulted
in serious trade imbalances between both sides. Trade imbalance with china has been a
structural problem common to most African countries. For compensation, china utilized
her economic assistance programs.
According to the China Customs, the bilateral trade volume between China and
Nigeria in 2006 reached US$3.13 billion, up by 10.6, from 2000 to 2006, among which
China’s export to Nigeria was US$2.85 billion, up by 23.9, while China’s import from
Nigeria was US$280 million, down by 47.3. China had a surplus of US$2.57 billion.
China mainly exported motorcycles, machinery equipment, auto parts, rubber tires,
chemical products, textiles and garments, footwear, cement…
China’s increasing presence in Nigeria, and elsewhere in Africa, has spurred much
speculation about the nature of the emerging partnership model. A national debate
across sectors on this partnership will be a healthy exercise and may drive more
rigorous analysis of what best serves African countries’ quest for human material
advance; friendly, mutually beneficial relations in trade and politics; and stewardship of
the shared heritage of the planet. As a resource rich country, Nigeria’s economic
performance has been driven by the oil and gas sector (Ogunkola 2008:7).

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 The agricultural sector has been neglected leading to food imports. The decline in
the performance of the agricultural sector has been dramatic since the discovery of oil.
The manufacturing sector has not performed even better. It has been recognized that
sustainable development of the Nigerian economy rests on the diversification of the
economy away from oil and gas to non- oil sector and this should be based on the
country’s abundant resources and comparative advantage (Ogunkola et al 2010:68).

1.2 Statement of Research Study

This research examines the Nigeria – Chinese economic and trade relations; trends,
problems, and prospects from 1999– 2015. It is baffling that the economic engagement
of Nigeria with the
Chinese has exponentially deepened that the nation Nigeria has not been able to pause
and think
Out of proper framework for engagement, this rapid growth in trade relations between
the two
Nation-states have been largely to the advantage of china (Ogunkola, 2008).

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Researchers have contributed on the aforementioned topic with fundamental
interest in the volume of trade, foreign aids, foreign direct investment (FDI), and trade
and
investment policies between the two countries. Most of them anchored their explanation
on
Centre – Periphery and dependency analysis from the Marxian political economy
approach. They
also concentrated energy in their scholarships to unravel the adverse effects and
negative
implications arising from the ongoing Nigeria-China relations. Principal among these
scholars is
Odeh (2007:113); he succinctly noted that “the economic relation between China and
Nigeria is
premised on moral imperfection and economic imbalance”. The opportunities on the part
of the
Chinese are higher than that of the Nigerians in terms of benefit (Anozie, 2013).
however, Okolie (2009:97) remarked that “the balance of trade has continued to be in
favour of
China”. Ogunsanwo (2007) rightly pointed out that Nigeria has remained a good market
for
Chinese goods, and emphasized on the accusations leveled against the Chinese
companies for
Dumping cheap and substandard goods produced by cheap labour in China on the
Nigeria
market, thus helping to kill nascent industries in the country. This obviously pictures on
the
negative influence of Nigeria-China trade relations on Nigeria’s economy. Owoeye
(1986) and
Chibundu (2000) variously highlighted that during the Nigerian civil war period (1967-
1970),
the country continued to be a good market for Chinese goods. For instance, Okolie
(2009:95)
pointed out that “China’s export to Nigeria stood at £5.4m in 1969, as against £3.72m in
1968. In

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1970, the figure rose to £7.03m rising again to £10m in 1971”. After this period
however,
subsequent years experienced a progressive decline in trade volume. For instance,
while the
volume of trade was put at N35.7m in 1981, it declined to N17.8m in 1982. It plunged
further to
N8.0m and N2.6m in 1983 and 1984 respectively (Okolie, 2009). The falling trend was
attributed
to the austerity measure of the Nigerian government that brought about exchange
stricture and
import restriction. The problem of trade imbalance between Nigeria and China had
attracted
concern as far back as 1974 during Brigadier Shehu Yar Adua’s visit to Beijing.
According to
the note of understanding subsequent released on the issue, “China pledged to
purchase, in
addition to cocoa and cashew nuts, substantial quantities of cotton and palm kernel as a
step
towards bridging the trade gap”. Nonetheless, the trade imbalance has persisted
(Owoeye, 1986;
Chibundu, 2000 as cited in Okolie, 2009:95).

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1.3 RESEARCH QUESTIONS

Having the above information from scholar’s point of view, this research seeks to
provide answers to such fundamental questions as:
1. Is trade imbalance between Nigeria and China intensifying and what measures can
be taken to balance the situation?

2. What factors and forces determine the nature of the economic and trade
relationship between Nigeria and China and what opportunities are available for
economic development of Nigeria?

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1.4 Objectives of the Study

Opinions are diverse on reasons for the inability of Nigeria to make progress in her
Developmental quest in her ongoing relations with China. Again, failure of various
economic
Measures adopted by different governments has attracted intellectual discourse
amongst political
and economic scholars. While some blame it on the foreign policy thrust of Nigeria
state, others
hinge it on domestic political environment.
This paper examines the growing economic relations between Nigeria and China with
the aim of providing more information on the following areas:
(a) Evaluate the impacts of Sino-Nigeria relationship on the Nigerian economy both
at the domestic level and international level through the lenses of various
literature revised
(b) The history of Chinese penetration of the Nigerian market with its various
companies in comparism to other western investors.
(c) Evaluate current trade statistics between both countries to ascertain the so
called “win win” slogan of the Chinese to Sino-Nigeria friendship.
(d) To offer possible solution in the grey areas identified.

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1.5 Assumption

This research would be guided by the assumption that China is trying to condition
Nigeria development through the following or not?
(a) Imbalance trade deficit
(b) Seemingly harmless loans
(c) Poor manufactured imitated goods saturating Nigerian domestic market
(d) Loop sided labour relations

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1.6 Scope and limitation

This Research would cover the period from 1999 to 2016 of Nigeria and China trade
relations with emphasis on investigating the problems and prospect of their relationship
This study was constrained by a number of factors just like any other research, ranging
from unavailability of needed accurate materials on the topic under study, inability to
get data on the progress made so far on trade form both countries, and inaccessibility
to cooperate bodies engaged actively in the trade. However, efforts were made to
overcome some of these shortcomings through adequate use of secondary sources of
data collection

1.7 Significance of the Study

(a) The significance of this study cannot be underestimated. This study will enhance
our existing knowledge of the bilateral relations between Nigeria and China

15
 especially in the area of distress like the growing gap between what we export to
china and what china export to Nigeria.

(b) The findings of the research will provide us with information like the status of
current trade relations with china, weather the trade is balanced or not.

(c) Since international trade is a vehicle of Change and transformation on one hand
and tool of exploitation on the other, the importance of this study to the field of
international relations is that this study relates the importance of bilateral trade
relations as a means of change and development.

1.8 Research Methodology

In order to carry out this research work, data are collected through secondary sources
inluding books, journals TV interviews publication on newspaper, internet, online
sources and other related materials on the topic under study. Data collected are
analyzed to examine problems, trends or prospects of the economic and trade
relationship with regards to Nigeria and China.

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1.9 Theoretical Framework

Dependency is a situation in which a certain group of countries have their economy

conditioned by the development and expansion of another in which the former is subject
(Daniel: 1980). The main proponents of this theory are Santos, Walter Rodney, Samir
Amir, and Claude Ake. Following
The trend of relations between China and Nigeria, China is trying to condition Nigeria’s
development through imbalance trade, seemingly harmless loans, poor quality
manufactured goods, and lopsided labour relations (Daniel 1980).
Dependency theory is a social science tool of explanation that was predicated on the

17
notion that resources flow from a “periphery” of poor and underdeveloped states to a
“core” wealthy states enriching the latter at the expense of the former. Here Nigeria is
the former and China is the latter.
Dependency theory originates with two papers published in 1949, One by Hans Singer,
and the other by Raul Prebisch- in which the authors observe that the terms of trade
for underdeveloped countries relative to the developed countries had deteriorated
overtime because of the exploitative nature of the relationship between the two worlds.
It is a central contention of dependency theory that poor states are impoverished and
rich ones enriched by the way poor states are integrated into the world system.
Nye Joseph and Robert Keohane (1994) have tried hard to establish that international
relations are characterized by cooperation and interdependence with win-win, mutually
benefiting outcomes. What this means is that both weak and strong economies have
something to gain in a relationship, no
Matter the proportion. Yet the dynamics of unequal relations in international division of
labour cannot be ignored. The content of imperialism applies so long as China’s
economic exploits are domineering by the propensity of unprecedented capital and
productivity.
The theory arose as a reaction to modernization theory, an earlier theory of
development which held that all societies progress through similar stages of
development, that today’s underdeveloped areas are thus in a similar situation to that of
today’s developed areas at sometimes in the past,
and that therefore the task in helping the underdeveloped areas out of poverty is to
accelerate them along this supposed common path of development, by various means
such as investment, technology transfer, and closer integration into the world market.
Dependency theorists vehemently, rejected this view but rather opined that what is
causing the under development in poor countries is the exploitative relationship that
have characterized the interactions between the poor nations and the developed ones
right from the
Colonial times till date. Though China is still regarded as a third world country, but it is
also a known fact that China is the second biggest economy in the world. Sequence to
that is the issue of trade imbalance and huge loans from China that is gradually sinking
Nigeria into an abyss of debt.
This precarious trend if not speedily checked will eventually make China to condition
the development of Nigeria.

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1.10 Definition of Terms/concepts

Trade Imbalance- also referred to as ‘trade deficit’, it’s to a situation where one takes
advantage of it strong nature to dominate the weaker country or state in their
relationship.
Sino-Nigeria- the international economic and political relations between Nigeria and
China
Economic Relations- the trade and other economic relations between two different
independent state or countries. (Wikipedia 2017)
Bilateral Relations- it consist of the political, economic, or cultural relations between
two independent states or countries. (Wikipedia 2017)
BIT- bilateral investment treaty
Foreign policy- implies aggregation or a system of actions designed by a state to
promote, protect and defend her vital interests in her relations with other states within
the international system (Varma, 1982)
FDI- Foreign Direct Investment

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1.11 Chapterisation

This research has been divided into four chapters.

Chapter one introduces the main topic, statement of the problem, objectives and
significance of the study. Thus, some research works were drawn in order to answer
the research questions.
Chapter two consists of theoretical framework and reviews literatures related to the
topic under study with the view to identifying the loopholes in the literature that need to
be filled.
Chapter three gives the general background…..
Chapter Four contains the findings of the research, presentation and analysis of data
while,
Chapter Five consist of Summary, Conclusion and Recommendation.

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 Chapter two
2.0 Literature review

In this Chapter, we review number literatures on the topic and relevant works done by
other people which would directly or indirectly enhance our knowledge of the economic
and trade relations, trend, problems and prospects of China and Nigeria trade relations.
The main objective therefore is to appreciate works done already, identify gabs in the
literature so as to fill those gabs.
This research will adopt the thematic style of organizing reviews, under which reviews
will be done. Under various themes related to the topic considered as variables.
Consequently, this review of literatures was done under the following themes:
(a) International trade
(b) Nigeria‘s relations with China and it lopsided trade relations
(c) Trade imbalance between Nigeria and China
(d) International Trade

A bilateral trade is the exchange of goods between two countries that facilitates trade
and investment by reducing or eliminating tariffs, import quotas, export restraints and
other trade barriers. In the United States, the Office of Bilateral Trade Affairs helps
minimize trade deficits through negotiating free trade agreements with new countries,
supporting and improving existing trade agreements, promoting economic development
abroad and more. (http://www.investopedia.com/terms/b/bilateral-
trade.asp 2017)

International trade is subject to political considerations which results to restrictions

example tariffs which is a schedule of duties or taxes imposed by governments on
imports of particular goods into a country. Another type of restriction on trade is
embargoes which is complete prohibition of entry of particular foreign goods. There is
21
also quota, which are limits on quantity of imports. Monroe argued that those restriction
in international trade made it imperative for regulatory bodies, hence the creation of the
international monetary system after World War II in Bretton Woods and World Trade
Organization. But even with regulatory mechanism in place, states still strive to utilize
every opportunity to take comparative advantage over other trade partners. This in fact
is achieved through well thought out trade policies.

Also, writing on the necessity of international trade, Robert and Lutz (1978) noted that
for state to survive in the present international system, they must engage in one form of
trade or the other to promote the development of their economies for the well-being of
their citizen. This position was also emphasized by Antell (1989) when 19

22
he stated that international trade involves exporting, importing, licensing, joint ventures,
direct investment, overseas and barter and counters trade which is carried out between
or among states, individuals and corporate entities within specific terms. Since the
concept – international trade is not central to the topic under study; there is no need to
further review literatures on the concept, having clarified its basis and objectives. Sino-
Nigeria relations have developed rather slowly over the years. It
is now gathering momentum. It was General Gowon who as military head of state, first
paid an official visit to China in 1972 shortly after the Nigerian civil war. When his
brutal military regime faced international criticism and isolation, General Abacha also
decided to go to China for support. This was
in the wake of the crackdown in Tiananmen Square in Beijing that led to China’s
international isolation as well. In 1977, the Chinese premier, Li Peng visited Nigeria too
to boost China’s renewed interest in Africa, aimed at reversing the decline in China’s
trade with Africa. Nigeria’s trade with China actually fell from 53 million US dollars in
1980 to only 7 million US dollars in 1985, recovering somewhat to 35 million US dollars
in 1989. Thereafter Nigeria-China trade grew from 35 million to 97 million US dollars in
1993 and reached 327 million US dollars by 1997. It is currently estimated at 13 billion
US dollars (Richard: 2013). In fact non-financial direct investments in
Nigeria by China stood at $1.79 billion (about 293.5 billion Naira) in 2013 (Nigeria
Tribune March, 2014). President Jonathan has just concluded a five day official visit to
China. The highlight of his visit was the signing of a Chinese loan of 1.5 billion US
dollars for the development of infrastructure in Nigeria, including the expansion of four
airports at Lagos, Kano, Abuja and Port Harcourt. The official visit was reportedly
marked by a lot of conviviality and cordiality on both sides with the large Nigerian
official delegation been treated to the fabled Chinese hospitality and excellent cuisine.
President Jonathan’s visit to China is significant as it undermines Nigeria’s growing
economic relation
with China. From the Nigerian perspectives, closer economic ties with China have
become imperative. The new Chinese loan of 1.5 billion US dollars brings to a total of
nearly 15 billion China’s investments and loans to Nigeria in recent years, including the
2.5 billion US dollars investment in the newly
refurbished Lagos-Kano rail line. Nigeria’s share of Chinese investment in Africa has
increased to over 30%. In contrast total US FDI in Nigeria was 8 billion US dollars

23
(John: 2012). Financial commitments by the World Bank and the IMF are far less than
Chinese loan to Nigeria. African countries are
turning increasingly to China as an alternative source for infrastructure loans badly
needed.
Both countries now realise the importance of economic cooperation between them.
China, the most populous country in the world, with, the fastest global economic growth
in the last three decades, averaging 10% annually, has emerged a leading player in the
global economy. Its national
economy is now bigger than that of Japan, or the EU countries combined.
Within a few decades, China has lifted some 300 million of its people from abject
poverty
(Daniels: 2013), a feat without any precedent in the annals of economic development.
Nigeria, the most populous country in Africa, with vast reserves of oil and gas, needs
China’s financial and technical assistance in the development of its decaying
infrastructure. China too needs Nigeria’s oil and gas to fuel its growing industry. In
addition, Nigeria is potentially, the largest market for
China’s industrial products in Africa. Nigeria’s imports from China account for over a
third of its total trade with West Africa. As President Jonathan was reported as saying
in Beijing, that the
Increasing exploitation of shale gas and other energy alternatives by the US and other
western states has made the need for the diversification of the Nigerian economy away
from oil more urgent. Increasing Chinese oil imports will make up for the slack in oil
exports to the US. In 2005, China
accounted for 40% of the global demand for oil. Over 30% of China’s oil supply is
imported (Daniels: 2013), with the country becoming the world’s second largest
consumer of oil after the US.
therefore, closer economic cooperation is in the mutual interest of both countries. What
this research is concern about is that this relationship should not be a win-lose
situation rhetorically and diplomatically encapsulated under the paraphernalia of win-
win umbrella. But there is a pitfall here which Nigeria has to watch very closely in this
seemingly win-win relationship with China. There is a chronic and growing trade
imbalance between the two countries in favour of China. Nigeria should seek to reduce
this vast trade imbalance by increasing its non oil exports to China. China’s exports to

24
Nigeria are currently estimated at 101billion US dollars, while Nigeria’s exports are
estimated at only 1 billion US
dollars, a trade gap of 2 billion US dollars (Peter: 2013). More recent data revealed
thatThis trade deficit, a concern to Nigerian leaders and its private sector, is being
discussed by the Nigeria-China Joint Planning Commission. Nigeria should be wary of
being used by China as a dumping ground for cheap Chinese exports, particularly
textiles, as this will increase the existing trade imbalance between the two countries in
favour of China and lead to more job losses for Nigeria. Nigeria trade Unions have been
reported as blaming Chinese imports for the loss of 350,000 Nigerian manufacturing
jobs, chiefly in the textile sector (John:2012). For instance, in 2006, South Africa
imposed two-year import restrictions on some Chinese textiles. In this regard, the
Nigerian authorities are beginning to take some limited action against cheap and fake
Chinese exports. In 2006, NAFDAC banned pharmaceutical imports from some Chinese
and Indian companies (Idris:2007).
It is true that China’s relationship with Nigeria has helped the country infrastructure-
wise, but it is clearly evident that the relationship has been purely and majorly a
mercantile transaction between business elites and politicians. There is no doubt that
the terms of trade still unfortunately favoured China, whose exports represented 73% of
the bilateral trade total in 1995 and 68% of the total in 2000. In 2008 it was 93%. The
table below shows information on the two countries trade from 2001 to 2008

Nigeria-China bilateral trade, 2001-2008(US dollars)

Year Nigeria export China’s Export Bilateral trade China’s export

to China to Nigeria value total in
percentage
2001 227.4 917.2 1,144.6 80.1
2002 121.3 1047.1 1,168.4 89.6
2003 71.7 1787.5 1,859.2 96.1
2004 462.6 1719.3 2,1832.4 78.8
2005 527.1 2305.3 2,832.4 81.4
2006 272.8 2855.7 3,133.5 91.1
2007 537.5 3800.2 4,337.7 87.6
2008 509.9 6758.1 7,268.0 93.0
Source: South African Institute of International Affairs (SAIIA).

25
From the above table one can notice clearly how the trade imbalance between the two
countries has favored China in increasing proportion. Annoyingly, this ugly hydra-
headed octopus trade imbalance has persisted to a more heinous level at present.
In much of Nigeria, likewise Africa in general, the Chinese have set up huge operations.
They have also built infrastructure. But, with exceptions, they have done so using
equipment and labour imported from their own home (China), without transferring skills
to local communities. So China takes our primary goods and sells us manufactured
ones, which means that this relationship equips the Chinese with more technological
skills and left us with none. In this regard however, we are and remain perfect
consumers thanks to the Chinese. This was also the essence of colonialism. The British
came to Nigeria to secure
raw materials and markets. Nigeria is now willingly opening itself up to a new form of
imperialism (Sino-imperialism). The days of the Non-Aligned Movement that united us
after colonialism are over and gone. China is no longer a fellow underdeveloped
economy-let us not deceive ourselves-it is the world’s second biggest economy
capable of the same forms of exploitation as the West. With the trend of relationship
between the two countries at present, we can confidently say that China is rather a
significant contributor to Nigeria’s deindustrialization and underdevelopment.
This Nigeria’s love of China is founded on a vision of seeing the country as a saviour, a
partner, a fellow third non-aligned member and a model. We cannot blame the Chinese,
or any other foreign power for our
country’s problems. We must blame ourselves for our fuel subsidy scams, for oil theft in
the Niger Delta, for our neglect of agriculture and education, and for our limitless
tolerance of incompetence. That said, it is a critical precondition for development in
Nigeria and the rest of Africa that we remove the rose-tinted glasses through which we
view China. Chinese companies are known for being “closed” that is they hardly employ
local experts and the conditions of employment of Nigerians in Chinese firms do not
seem to conform to either the Nigerian Labour Law or the International Labour
Organization (Olawale:2010). As a corollary, Chinese firms have a knack of maltreating
their workers, which would work
against the capacity building of employees. China is involved in Human rights violation
against Nigeria, a situation Nigerians cannot reciprocate in China. Many Nigerians are in
Chinese prisons or

26
detention camps charged with offences like drug and fraud as well as “minor”
immigration breaches.
In July 2010, a group of Africans demonstrated in Guanzhou against the killing of a
Nigerian who died from the assault of Chinese law enforcement officers (Iortin:2011).
Worried Nigerians have consistently called on the UN and G20 countries to force China
to comply with international protocols on the protection of human Rights.
The issue of the huge Chinese loan and investment (18 billion US Dollars (Daily Trust,
2013)) which Nigeria owes mean that the country has precariously mortgaged both her
present and future into the clutch of the China. the recent trade deal signed between
Nigeria and China during the visit of President Buhari to Beijing in early April has been
making news headlines, for very obvious reasons. In this period of economic crunch
most Nigerians of all shades are patient and keenly awaiting a new lease of life or
economic miracle from the “Change” promised during the electioneering campaign of
2015. Since then living conditions have been worsened by the precipitous decline in
crude oil prices over the last year, engendering a steep fall in the value of the local
currency in the parallel market.

Recent inflation figures show a rise to over 12.8% that is the highest level since the last
four years. Business sentiment and manufacturing capacity remain at the lowest ebb in
over 12 months as foreign investors in the capital market have fled for fund
preservation.Recent data from the Nigerian Stock Exchange (NSE) put the monthly
foreign portfolio outflows at N314.84 Billion in February 2016, more than 20.79%
increase from N26.36 Billion outflows in the previous month. Meanwhile, foreign
portfolio inflows continued to wane, plunging 35.68% in February this year from N17.01
Billion in January. That’s just the prevailing circumstances that cannot be denied,
neither is it fair to blame the current administration for this turn of events. Where the
focus should be is in what the President and his team ought to do in other to ameliorate
the conditions then set the country on a non-natural resource-based growth trajectory.

Nigeria faces a myriad of challenges on many fronts. Its predicament, including the
wobbly Naira exchange rate cannot be easily wished away. All this have brought to the
fore the urgency and imperative of seeking non-conventional measures, not simple and
temporary exit strategies, but more fundamental and lasting solutions. Whether the
latest trade deal with China could be one of those enduring master strokes by this
government remains to be seen.

27
In my basic understanding of the trade agreement signed, there are two key elements;
the first is attracting over $6 billion additional investment from China through the trade
pact and the second being the currency swap deal with the Industrial and Commercial
Bank of China (ICBC). Hence in course of Nigeria-China engaging in bilateral
commercial and economic relations, transactions can be settled in either the Chinese
currency the Renminbi or Naira, therefore bypassing the almighty US dollar. Right off
the bat, this arrangement can ease, albeit temporarily, the pressure on the Naira by
creating a balance of payment buffer for the country and less demand for USD to fund
much needed imports from China. But to expect that such an option will strengthen the
Naira over the long term and provide the kind of fiscal relief that could boost the
currency without further structural reforms will be too much to ask.

Nigeria is not the first country to engage in such a direct currency swap arrangement
with China, neither is bilateral trade agreements or currency swaps new in the global
arena. There have been a handful of other countries, including the UK, South Africa and
a few others that have similar engagements with China over the last decade. Whilst the
verdict is still pending on the long-term direct impact on the affected currencies, it is
safe to say that bilateral trade agreements and direct settlements via currency swaps
can actually help to lift the volume of commercial activities and deepen economic
relations between the countries involved. This emerging scenario doesn’t necessarily
mean that the US dollar will disappear anytime soon as a unit of account or means of
settlement in international commerce.

In the case of United Kingdom, the bilateral local currency swap agreement with China
was recently extended to 2018 and the swap line was increased from 200 billion yuan
(£20.41 billion) to 350 billion yuan (£35.72 billion).In October 2015, almost £40 billion
worth of trade and investment deals between the two countries were agreed and now
China represents the UK’s sixth-biggest export market, taking 3.6% of its goods and
services. South Africa currently has a trade volume of over $10 billion annually with
China and is poised to benefit from increased exports and easier trade settlements with
China. For the records, that relationship is potentially being fostered by Industrial and
Commercial Bank of China that owns about 20% stake in South African-based Standard
Chartered Bank (Stanbic), which in turn operates in Nigeria under the Stanbic IBTC
Bank brand. According to available data, Nigeria’s export to China amounts to only 1.6%
of total volume as opposed to 22.3% of its total imports originating from China. The

28
following table shed some lights on the statistics of Sino Nigeria imports and export
from 2013 to 2015 (sources are from the Nigeria Bureau of Statistics NBS).

Nigeria Trade with China on (IMPORTS) from 2013 to 2015

Year (N million) (N million) Total exports

2013 14,245,271,60 170,736,40 1.20 %
2014 16,304,041,20 264,610,40 1.62 %
2015 9,728,797,70 157,485,10 1.62 %

To fully appreciate the essence of this new agreement, one must view it from two
angles; what will be the impact on the Nigerian currency and how can this boost trade
volume between both countries? Thankfully, China and Nigeria have quite a bit in
common and do need each other in many ways. Clearly these are two leading economic
giants in their respective regions with large domestic market. China can truly teach
Nigeria few lessons on economic transformation. As China radically reformed to
become the world’s manufacturing powerhouse, Nigeria remains predominantly an
agrarian and raw materials exporter.

The rising profile of China and its investments in Africa and particularly in Nigeria has
been the subject of wide debate in recent years. China has demonstrated to the world
how drastic and consistent economic reforms, outside the context of western-style
democracy and political systems, have lifted the populace out of excruciating poverty
and backwardness – and some African countries might be watching. Where the western
countries have been reluctant to step up, China has often filled the void in several
African countries by providing not only cheap and affordable infrastructure and
technology but also issuing soft long-term loans to bankroll projects.

As an illustration, Ethiopia successfully built and recently launched its intra-city light
rail system in the capital city of Addis Ababa, just as the Nigeria railway system and
airports are currently being revamped by the Chinese company (China Civil Engineering
Construction Corporation - CCECC) with loan facilities from the Export-Import Bank of
China. This makes you wonder which western country, including the United States has
the financial wherewithal and appetite to embark on such ambitious projects in Africa
today, beyond the extractive industries. Even in the global economic stage, China’s
currency was recently admitted into the club of reserve currencies by the International
Monetary Fund (IMF).
29
China’s ability to quickly ramp up its infrastructural capacity and log in consistent
double-digit growth for over two decades now is truly a road map for Nigeria to follow.
More than anything else Nigeria needs the help of China to continue expanding and
modernizing the decayed railway network, plus the transportation and electricity
infrastructure. Consequently, Nigeria stands to gain from these investments funded
through long-term soft loans from China with which settlement can actually be
executed via direct currency swaps between the Naira and Renminbi (RMB). Based on
some analysis, given the current exchange rate of N30 to 1RMB, and 1USD exchanging
for N198.50 at the interbank window, there seem to be a near parity of the both
currency exchange rates against the Naira. I have also read an opinion recently that
illustrated a 9% advantage of the Naira/RMB versus the Naira/USD. With a mere 1.6%
of Nigeria’s export going to China the immediate forex arbitrage gain could be quite
insignificant.

…A case for a balance trade.

On the second front, with a higher export volume of goods coming from China into
Nigeria (about 22.3% of the total Nigeria’s imports in 2015), the margin of bilateral
trade (imports versus exports) between the both countries remains quite high. In the
short-run that remains disadvantageous to Nigeria, though over the longer-term
horizon, the disparity could actually prove to be legroom for growth and signpost the
prospects for increased trade flow from Nigeria.

As it is today the bulk of imports from China to Nigeria are manufactured consumer
goods, equipment/machineries and other intermediate goods that feed the processing
industries in Nigeria. On the flip side, the main export to China from Nigeria is crude oil
and to a lesser extent agricultural raw materials. Therein lays the inherent opportunity
for both countries. India in recent years has emerged a leading importer of Nigeria’s
crude oil by overtaking the United States. For this new trade deal to make sense for
Nigeria and China, it could be leveraged as launch-pad to boost crude oil and value-
added agricultural product exports to China, thereby feeding its growing appetite for
energy and massive population. Just as in return, Nigeria can import more equipment
and machineries to grow its local manufacturing base and revamp its decrepit
infrastructure.

30
The potential sore point of this deal and where it could hurt Nigeria the most is if China
sees Nigeria as a dumping ground for its finished goods, rather than a growing
industrial hub and destination for manufacturing equipment. We must bear in mind that
China has a huge existing capacity and factories that churn out all manner of cheap
commodities, which could flood the Nigerian market and continue to stifle domestic
industries - case in point is US and China trade relations that is lopsided and dominated
by exports of finished goods at the great expense of US companies, while China
amasses colossal trade surplus and foreign reserves that is reinvested in US treasury
bonds. Nigeria will be worse off in the long run, if this were to be the case.

CHAPTER THREE

3.0 Sino-Nigeria Relations in Historical Perspective

Sino-Nigeria relations have developed rather slowly over the years. It is now gathering
momentum. General Gowon as military head of state, first paid an official visit to China
in 1972 shortly after the Nigerian civil war. When his brutal military regime faced
international criticism and isolation, General Abacha also decided to go to China for
support. This was in the wake of the crackdown in Tiananmen Square in Beijing that led
to China’s international isolation as well. In 1977, the Chinese premier, Li Peng

31
visited Nigeria too to boost China’s renewed interest in Africa, aimed at reversing the
decline in China’s trade with Africa. Nigeria’s trade with China actually fell from 53
million US dollars in 1980 to only 7 million US dollars in 1985, recovering somewhat to
35 million US dollars in 1989. Thereafter
Nigeria-China trade grew from 35 million to 97 million US dollars in 1993 and reached
327 million US dollars by 1997. It is currently estimated at 13 billion US dollars
(Richard: 2013). In fact non-financial direct investments in Nigeria by China stood at
$1.79 billion (about 293.5 billion Naira) in 2013
(Nigeria Tribune March, 2014).
During his tenure, President Jonathan in his visit to China among highlight of his
visit was the signing of a Chinese loan of 1.5 billion US dollars for the development of
infrastructure in Nigeria, including the expansion of four airports although they are the
major airports and includes the Lagos, Kano, Abuja and Port Harcourt. The official visit
was reportedly marked by a lot of conviviality and cordiality on both sides with the
large Nigerian official delegation been treated to the fabled Chinese hospitality and
excellent cuisine. President Jonathan’s visit to China is significant as it undermines
Nigeria’s growing economic relation with China. From the Nigerian perspectives, closer
economic ties with China have become imperative. The new Chinese loan of 1.5 billion
US dollars brings to a total of nearly 15 billion China’s investments and loans to Nigeria
in recent years, including the 2.5 billion US dollars investment in the newly refurbished
Lagos-Kano rail line. Nigeria’s share of Chinese investment in Africa has increased to
over 30%. In contrast total US FDI in Nigeria was 8 billion US dollars (John: 2012).
Financial commitments by the World Bank and the IMF are far less than Chinese loan to
Nigeria. African countries are turning increasingly to China as an alternative source for
infrastructure loans
badly needed.
Both countries now realise the importance of economic cooperation between
them. China, the most populous country in the world, with, the fastest global economic
growth in the last three decades, averaging 10% annually, has emerged a leading player
in the global economy. Its national
economy is now bigger than that of Japan, or the EU countries combined.
Within a few decades, China has lifted some 300 million of its people from abject
poverty (Daniels:2013), a feat without any precedent in the annals of economic
development.

32
 Nigeria, the most populous country in Africa, with vast reserves of oil and gas,
needs China’s financial and technical assistance in the development of its decaying
infrastructure. China too needs Nigeria’s oil and gas to fuel its growing industry. In
addition, Nigeria is potentially, the largest market for
China’s industrial products in Africa. Nigeria’s imports from China account for over a
third of its total trade with West Africa.
As president Jonathan was reported as saying in Beijing, that the increasing
exploitation of shale gas and other energy alternatives by the US and other western
states has made the need for the diversification of the Nigerian economy away from oil
more urgent. Increasing Chinese oil
imports will make up for the slack in oil exports to the US. In 2005, China accounted for
40% of the global demand for oil. Over 30% of China’s oil supply is imported (Daniels:
2013), with the country becoming the world’s second largest consumer of oil after the
US. So, closer economic cooperation
is in the mutual interest of both countries. What we are saying is that this relationship
should not be a win-lose situation rhetorically and diplomatically encapsulated under
the paraphernalia of win-win umbrella.
But there is a pitfall here which Nigeria has to watch very closely in this
seemingly win-win relationship with China. There is a chronic and growing trade
imbalance between the two countries in favour of China. Nigeria should seek to reduce
this vast trade imbalance by increasing its nonoil
exports to China. China’s exports to Nigeria are currently estimated at 3 billion US
dollars, while Nigeria’s exports are estimated at only 1 billion US dollars, a trade gap of
2 billion US dollars (Peter:2013).
This trade deficit, a concern to Nigerian leaders and its private sector, is being
discussed by the
Nigeria-China Joint Planning Commission.
Nigeria should be wary of being used by China as a dumping ground for cheap
Chinese exports, particularly textiles, as this will increase the existing trade imbalance
between the two countries in favour of China and lead to more job losses for Nigeria.
Nigeria trade Unions have been reported
as blaming Chinese imports for the loss of 350,000 Nigerian manufacturing jobs, chiefly
in the textile sector (John:2012). For instance, in 2006, South Africa imposed two-year

33
import restrictions on some Chinese textiles. In this regard, the Nigerian authorities are
beginning to take some limited action
against cheap and fake Chinese exports. In 2006, NAFDAC banned pharmaceutical
imports from some Chinese and Indian companies (Idris: 2007).
It is true that China’s relationship with Nigeria has helped the country
infrastructure-wise, but it is clearly evident that the relationship has been purely and
majorly a mercantile transaction between business elites and politicians. There is no
doubt that the terms of trade still unfortunately favoured China, whose exports
represented 73% of the bilateral trade total in 1995 and 68% of the total in 2000. In
2008 it was 93%. The table below shows more information.

Nigeria-China bilateral trade,2001-2008(US dollar)

Year Nigeria export China’s Export Bilateral trade China’s export

to China to Nigeria value total in
percentage
2001 227.4 917.2 1,144.6 80.1
2002 121.3 1047.1 1,168.4 89.6
2003 71.7 1787.5 1,859.2 96.1
2004 462.6 1719.3 2,1832.4 78.8
2005 527.1 2305.3 2,832.4 81.4
2006 272.8 2855.7 3,133.5 91.1
2007 537.5 3800.2 4,337.7 87.6
2008 509.9 6758.1 7,268.0 93.0
Source: South African Institute of International Affairs (SAIIA).

From the above table one can notice clearly how the trade imbalance between
the two countries has favoured China in increasing proportion. Annoyingly, this ugly
hydra-headed octopus trade imbalance has persisted toa more heinous level at present.
In much of Nigeria, likewise Africa in general, the Chinese have set up huge
operations. They have also built infrastructure. But, with exceptions, they have done so
using equipment and labour imported from home (China), without transferring skills to
local communities. So China takes our primary
goods and sells us manufactured ones, which means that this relationship equips the
Chinese with more technological skills and left us with none. This was also the essence
of colonialism. The British came to Nigeria to secure raw materials and markets.
Nigeria is now willingly opening itself up to a new form of imperialism (Sino-
imperialism).

34
 The days of the Non-Aligned Movement that united us after colonialism are
over and gone. China is no longer a fellow underdeveloped economy-let us not deceive
ourselves-it is the world’s second biggest economy capable of the same forms of
exploitation as the West. With the trend of relationship between the two countries at
present, we can confidently say that China is rather a significant contributor to Nigeria’s
de-industrialization and underdevelopment.
This Nigeria’s love of China is founded on a vision of seeing the country as a
saviour, a partner, a fellow third non-aligned member and a model. We cannot blame
the Chinese, or any other foreign power for our country’s problems. We must blame
ourselves for our fuel subsidy scams, for oil theft in the Niger Delta, for our neglect of
agriculture and education, and for our limitless tolerance of incompetence. That said, it
is a critical precondition for development in Nigeria and the rest of Africa that we
remove the rose-tinted glasses through which we view China.
Chinese companies are known for being “closed” that is they hardly employ local
experts and the conditions of employment of Nigerians in Chinese firms do not seem to
conform to either the Nigerian Labour Law or the International Labour Organization
(Olawale:2010). As a corollary,
Chinese firms have a knack of maltreating their workers, which would work against the
capacity building of employees. China is involved in Human rights violation against
Nigeria. Many Nigerians are in Chinese prisons or detention camps charged with
offences like drug and fraud as well as “minor” immigration breaches. In July 2010, a
group of Africans demonstrated in Guanzhou against the killing of a Nigerian who died
from the assault of Chinese law enforcement officers (Iortin:2011). Worried
Nigerians have consistently called on the UN and G20 countries to force China to
comply with international protocols on the protection of human rights.
Finally, the issue of the huge Chinese loan and investment (18 billion US Dollars
(Daily Trust, 2013)) which Nigeria owes mean that the country has precariously
mortgaged both her present and future into the clutch of the Chinese.

In the same direction, there is no doubt that Nigeria and China bilateral
relationship will be
of immense benefit to both countries if well pursued. Using the dependency theory we
have argued that the imbalances in Nigeria-China relation especially in the area of trade

35
(which we graphically showed) must be corrected so as to match the rhetoric win-win
situation by which the contact
between the countries are being described.
As the China-driven bilateral relations cannot be reversed just for the asking,
Nigeria needs to confront the indigenous technology capacity
building gap as this is the only way by which Nigeria will avoid Sino imperialism in their
relations with China. Nigeria must be technologically relevant to explore and exploit
gains in its relations with China.
Fundamentally, the Nigerian leadership must demonstrate the political will to
manage Nigeria’s pluralism for peace, security and sustainable economic
transformation.

Bilateral Relations, 1999 to 2016.

Historically, the agreement for diplomatic relations between China and Nigeria was
struck on the 10th of February, 1971 and has been growing rapidly over the years
(Utomi, 2012). Nigeria exports mostly crude oil to China and imports a large number of
consumer goods such as electronics, clothes, textile materials etc.
In August 2001, Nigeria and China signed an agreement on investment promotion and
protection. In April 2002, they signed another agreement for the avoidance of double
taxation and the prevention of fiscal evasion as regards taxes on incomes (Gbadamosi
and Ayodele), 2009). Drawing from the content of these

36
agreements, Gbadamosi and Ayodele assert that the relationship between Nigeria and
China is largely meant for China to source raw materials for her bourgeoning economy.
They went further to say that this development was geared towards the win-win
principle in FOCAC (Forum on China and Africa cooperation).
China has become the second largest oil importer, behind the USA. Thus accounting for
about 40% of the world’s oil demands (Utomi, 2012). Being the 6th largest oil exporter
in the world, Nigeria becomes a fertile ground on which to satisfy her vociferous oil
demand. While some scholars admit that both countries depend on each other for the
achievement of their goals at the international arena (Ekedegwa, 2010; Utomi, 2012).
Others believe that it is triggering dependency for the Nigerian economy (Adekola,
2013); a position which informed this study as it is carefully analysed in the subsequent
section. China needs the support of Nigeria in the United Nations and Nigeria has
supported the return of Hong Kong to the People’s Republic of China (Ekedegwa, 2010).
Equally, China supports Nigeria in her quest to secure a permanent seat in an expanded
Security Council of the United Nations.
This article does not propose as one of its goals, to portray China in a bad light. Neither
can it deny that Nigeria has benefited from its relations with China. But the task taken
up here is a wakeup call to acknowledge the prominence of trade as the chief reason for
the penetration of Nigerian economy by China and to as well ring the danger bell that
the overwhelmingly unequal commercial diplomacy between Nigeria and China does not
prognosticate good for the transformation especially of the manufacturing sector of the
Nigeria economy. China was involved in the launch of Nicomsat-1 which was later
deorbited without any explanation. The China Nexim Bank was involved in the funding
of five thermal stations in Nigeria: Ugheli, Geregu, papalanto, Aloiji and Omotosho
Power plants (Tell, 2006). In the last visit of President Gooddluck Jonathan to China,
Chinese government agreed to fund the 700mh and the 3050mh power plants in Mambila
as well a promise to undertake the construction of a 7000mh in Nigeria (Radio Nigeria,
16/09/2013). China has been involved in the reconstruction and rehabilitation of Nigeria
rail tract authority, Nigeria Railway Engineering Plc. and the Nigeria Railway integrated
Plc. This saw the arrival of the Chinese Civil Engineering Construction Company in
Nigeria (CCECC) (Tell, 2006). In october 2006, Nigeria signed a 2.5 billion dollar loan
with China a substantial part of which was to be used in the refurbishment of the
railway system. CCECC won the contract for the construction of the Abuja All-Africa
games village in 2000 (Utomi, 2012).

37
It built some 5000 housing units for international Athletes participating in the eighth
annual All-Africa games in Nigeria. China operates over 30 solely owned companies or
joint ventures in Nigeria and is actively involved in construction, oil and gas,
technology, services and education sectors of the Nigerian economy. In sum, there has
been an all-inclusive, rapidly growing diplomatic relations between Nigeria and China.
But again, has this been a win-win situation? This task and others will be taken up in
the next section.
An Evaluation of Nigeria-China Commercial Diplomacy

Since 1971 when the two countries signed the Joint Communiqué on the Establishment
of Diplomatic Relations, trade relations between Nigeria and China have grown in the
last decade from the limited and intermittent contact to an increasingly complex and
expensive business engagement. The volume of trade between Nigeria and China grew
at low levels until rapid growth turned China in 1993 from a net exporter of crude oil to
the second-largest importer of crude oil in the world. The trade volume between the
two countries grew by nearly 300 percent since 2004 and reached the peak of $7.2
billion in 2008. The trade volume between the two countries in 2009 reached $ 7.3
billion and $7.7 billion in 2010 respectively. With that level of trade, Nigeria is now the
second biggest China trade partner in Africa, after South Africa (Ayoola, 2013).

A flood in Nigeria by imports of Chinese goods in comparison with Nigeria’s exports to

China has resulted in a trade deficit with China and this is growing significantly in view
of Nigeria’s inability to offer the manufacturing sector a conducive environment to
produce home grown alternatives to the China made goods. Nigerian markets are target
for substandard products and because of stiff competition from these products; local
manufacturing firms have withered away.
In an interview with trader in some part of Lagos by financial Vanguard, it was revealed
that Chinese goods are highly subsidized for export which makes it possible for them to
be sold at very cheap prices in Nigeria than similar products produced locally (Financial
Vanguard, 2014). And because Nigerian consumers are highly sensitive to prices, they
easily go for Chinese products as against the locally manufactured ones.

38
The main outlet through which China made goods flood Nigerian markets is the popular
China town market in Lagos from where other major markets in Lagos are penetrated
and then to other parts of the country. Worse still, the dumping goods are also coming
into the country through unapproved borders. Importers connive with Custom officials
and other security agents to smuggle even contraband goods into the country. The
Menace is so alarming and will continue to be if concerted efforts are not made to
curtail the situation. Financial analysts have argued that the recent rebasing of the
Nigerian Gross Domestic Product (GDP) which now puts the nation’s economy at 26th in
the world and first in Africa, bypassed the normal growth channel.

39
Even more controversial is the fact that this momentous growth happened in the face of
dwindling competitiveness rating of the country’s economy by the World Economic
Forum.
Further, there are complaints of cases of breach in signed Contractual Agreements, a
good example is Everglades Agencies Ltd (a Nigerian Company) wrote to the Federal
Ministry of Trade, Investment and Industry that Yanfeng Plastics Machinery co Ltd. (a
Chinese company) has not complied with the contract Agreement signed by both parties
in 2008 for installation, training of staff and supply of spare parts for machineries
bought from the Chinese company. Secondly, the issue of Counterfeit products by
Chinese companies of Nigerian products has become a serious menace. A case in point
is the Products of Lee Group Nigeria Ltd (a footwear manufacturing company in Nigeria.

From the year 2000 to 2012 Nigeria has constantly experienced negative trade balance
in her transactions with China. The most debilitating perhaps, is the fact that despite the
relative increase of Nigeria’s export to China, the negative trade balance continuous to
surge on as the trade volume increases. While Nigeria’s export increased from-
N106,733,131,758 in 2009 to N216,506,104,707 in 2010, the negative trade balances
sky rocketed from in the following year. Between year 2000 and 2008 Nigeria lost a
total of 18262.1 million dollars to trade deficit in a total transaction of 24785.7 million
dollars (see table 3). Nigeria’s imports from China rose by 10% to N1.21trn in 2012
from N1.1trn in 2010. However, exports to that country increased more than four times
to N933.31bn in 2012 from the N216.51bn recorded in 2010. Though these figures
show that Nigeria’s exports to China are gradually stepping up with its imports level,
one might argue that the increase in exports to China was as a result of the decline in
oil exports to other countries such as the U.S. Thus, more oil was available to be
exported to China. Therefore, the manufacturing sector is not responsible for this
relative leap forward.

Trade liberalization facilitated by the current wave of globalization has increasingly and
inescapably integrated the economies of the world to the benefit of the developed
world. The present competitiveness indicators of the Nigerian economy apparently
exhibit acute inability to accommodate the pressure of globalization and trade
liberalization being exploited by China (see Ayoola, 2013).

40
The two countries are on different rums of the development ladder. Thus it is not
unexpected that they relate at an unequally mutually beneficial level. Though the first
world through the instrument of the World Bank and the International Monetary Fund
(IMF) has weightily liberalized the economies of the world this has not denigrated the
potency of diplomacy as an instrument of negotiations. Nigeria must employ this to
shield her market from being a dumping centre for cheap and in some cases
substandard Chinese goods.

Nigeria and China have signed a number of bilateral trade agreements and
Memorandums of Understanding (MoUs). This has facilitated trade relations between
the two countries over the years. But The Bilateral Trade Agreement (BTA) signed by
both countries has lapsed and the Nigeria Federal Ministry of Trade, Investment and
Industry is in the process of reviewing and forwarding a new BTA through diplomatic
channel to China for negotiation. The MoU signed on Economic Cooperation Agreement
between Nigeria and Guandong Xinguang International Group of China is still valid and
remains valid, unless either Party gives written notice to terminate the MoU. But
instruments of ratification were not exchanged by both countries so that the Agreement
can come into effect. Therefore, it is subject to renegotiation. This is a window of
opportunity and Nigeria has to maximally utilize this to renegotiates the terms of
agreement for the benefit of its domestic economy. Exports to China include bituminous
minerals, Sesame seeds, rubber, oil and natural Gas, dry cassava chips, liquefied and
polyethylene.

While the imports from China include unglazed ceramics, vans wall tiles, motorcycles,
machinery equipment, auto parts, tyres, chemical products, textiles and garments
footwear, cement, and oil.

Bilateral Trade Agreements and MoUs with China

In order to build investors’ confidence, the two countries signed the following
Agreement and MoUs. These are:
i) The Bilateral Trade Agreement signed on 27th August, 2001;
ii) Memorandum of Understanding on Investment Cooperation between the Ministry of
Commerce of both Countries signed on 28th February, 2006; and

41
iii) Memorandum of Understanding on Economic Cooperation Agreement between
Nigeria and Guandong Xinguang International Group of China on 15th March, 2006.
iv) Nigeria and China signed Investment Promotion and Protection Agreement (IPPA) in
2001. It was ratified on 31st December, 2002.
v) Memorandum of Understanding between Federal Ministry of Industry Trade and
Investment of the Federal Republic of Nigeria and Asia and Africa International
Investment Company on Investment in Automobile, Exhibition Centres, Construction of
Industrial Zone and Eco- Agriculture Zone signed on 11th July, 2013.
(Source: Federal Ministry of Industry, Trade and Investment, Nigeria, 2014.)

CHAPTER FOUR

Findings, presentation and analysis of data

3.0 Historical background of Nigeria-China Relations

For centuries, Africa was treated like a chess board by competing global powers, but
for the moment about half a century ago its seems there is silver of hope, as suddenly
everything changed, suddenly Africa is a place to be and foreign investment are
flooding in, and foreign powers are coming back. When the global business media is
suddenly interested, when even the economist (a news media giant in the world), the
neo-liberal bible of free trade and free market changes there forecast of Africa from
‘hopeless’ to hopeful, the question hopeful for whom”? should be asked. Because the

42
advanced super powers of the world including the new super power called “China” has
taken over the region while expanding and competing amongst themselves and
squeezing the continents. (HOWARD FRENCH. Author of ‘CHINA’S SECOND
CONTINENTS’
Africa’s desperate needs for infrastructure have created an excuse for the super
powers to continue to have influence and China becomes the best source from the
traditional source ie. Western countries. China becomes there sources of loan as well as
foreign direct investment for African countries. But most of the bilateral investment
treaties signed by china are mostly to secure supply of resources for a piece of
infrastructure, African market share amongst others. china is also creating a very
powerful feedback loops for it own victory or it own win that really exclude African
countries out of the equation in terms of the benefit(. (HOWARD FRENCH)

CHARTER FIVE

Summary, Conclusion and Recommendation.

5.0 SUMMARY

43
In much of Nigeria, likewise Africa in general, the Chinese have set
up huge operations. They have also built infrastructure. But, with exceptions,
they have done so using equipment and labour imported from home (China),
without transferring skills to local communities.(African portal 2010). So China takes
our primary goods and sells us manufactured ones, which means that this relationship
equips the Chinese with more technological skills and left us with none. This
was also the essence of colonialism. The British came to Nigeria to secure
raw materials and markets. Nigeria is now willingly opening itself up to a
new form of imperialism (Sino-imperialism).
The days of the Non-Aligned Movement that united us after
colonialism are over and gone. China is no longer a fellow underdeveloped
economy-let us not deceive ourselves-it is the world’s second biggest
economy capable of the same forms of exploitation as the West. With the
trend of relationship between the two countries at present, we can
confidently say that China is rather a significant contributor to Nigeria’s
deindustrialization
and underdevelopment.
This Nigeria’s love of China is founded on a vision of seeing the
country as a saviour, a partner, a fellow third non-aligned member and a
model. We cannot blame the Chinese, or any other foreign power for our
country’s problems. We must blame ourselves for our fuel subsidy scams,
for oil theft in the Niger Delta, for our neglect of agriculture and education,
and for our limitless tolerance of incompetence. That said, it is a critical
precondition for development in Nigeria and the rest of Africa that we
remove the rose-tinted glasses through which we view China.
Chinese companies are known for being “closed” that is they hardly
employ local experts and the conditions of employment of Nigerians in

Chinese firms do not seem to conform to either the Nigerian Labour Law or
the International Labour Organization (Olawale:2010). As a corollary,
Chinese firms have a knack of maltreating their workers, which would work
against the capacity building of employees. China is involved in Human
rights violation against Nigeria. Many Nigerians are in Chinese prisons or
detention camps charged with offences like drug and fraud as well as
“minor” immigration breaches. In July 2010, a group of Africans
demonstrated in Guangzhou against the killing of a Nigerian who died from
the assault of Chinese law enforcement officers (Iortin:2011). Worried
Nigerians have consistently called on the UN and G20 countries to force
China to comply with international protocols on the protection of human
rights.
Finally, the issue of the huge Chinese loan and investment (18 billion
US Dollars (Daily Trust, 2013)) which Nigeria owes mean that the country
has precariously mortgaged both her present and future into the clutch of the
Chinese

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5.1 RECOMMENDATION

Nigeria’s first priority lies in developing the capacity to better manage its own policies
toward China’s engagement. Nigeria needs to realize that China’s engagement gives it a
unique opportunity to significantly expand its development and articulate a
comprehensive strategy that addresses its long-term needs. The Nigerian government
should avoid short-term fixes and front-loaded deals with the Chinese and move
beyond arrangements that focus solely on the petroleum sector. High commodity prices
are only a temporary vehicle that can be utilized to drive Nigeria’s economy into a more
economically diversified state, the true mechanism for sustained growth.
Nigeria should focus on how China’s engagement in Africa fits into the broader picture
of international engagement. In particular, Nigeria has an opportunity to diversify its
development by balancing Western assistance with that of China but needs to better
understand how each type of aid can be beneficial, and to what sectors, in order to
implement a successful strategy.
For instance, China’s experience as a more disciplined society has the potential to curb
corruption in Nigeria, while the United States’ commitment to human rights and
transparency restrain an abuse of power.

45
Nigerians should learn from the successes and failures of other states’ relations with
China and their policies toward development, while also learning from their own
experiences. Nigeria should undertake a thorough review to investigate what policies
have been beneficial for Nigeria’s long-term development and what areas need
improvement. Nigeria should also more closely examine the United States’ relationship
with China and replicate successful policies. The United States has a long history of
trade disputes with China, challenging it in such multilateral institutions as the World
Trade Organization. Nigeria appeared successful in its ability to confront
China when it was being inundated with inferior goods by threatening a WTO complaint.
Whether they learned anything from the U.S. experience is unclear, but Nigerians could
certainly tap into the vast array of Western expertise on how to better manage a
difficult economic relationship and how to protect important sectors of the economy
against foreign competition
Nigerians should be pragmatic as they strive to “build institutions.” Past attempts to
build institutions in Nigeria particular and other African countries have shown that just
uprooting and transplanting institutions does not work. The process is evolutionary in
nature and dependent on political will and strong leadership to make the necessary
changes. Most importantly, there needs to be transparent oversight, largely monitored
by a large middle class. Since a large middle class is dependent on sustained economic
growth, it will take time to build credible institutions, but small steps can be taken. One
of the most critical elements in institution building is support for civil society
organizations and social enterprises that enable the emergence of market institutions,
transparent and accountable governance, and budget-monitoring mechanisms. Nigerian
civil society organizations should press the Nigerian government to make their
processes more transparent and to join such programs as the Extractive Industries
Transparency Initiative (EITI).
Greater emphasis should be placed on building human capital and overcoming language
and cultural barriers to facilitate the transfer of business knowledge and technology to a
wider array of the Nigerian population. Exchanges between Chinese and Nigerian
businessmen in the manufacturing sector seem to be a first step, but Nigerian
businessmen need to develop the capacity to become leading entrepreneurs
independent of the Chinese. World class business schools and public administration
institutes focusing on building competences, leadership skills, and values need to be
more greatly supported in Nigeria.
Advances in entrepreneurial skills need to be accompanied by similar advances in
building a culture of leadership that is not only concerned about enriching themselves
but about enriching their country as well. The fact that Nigerian businessmen have been
accused of ordering the same inferior products that Nigerian citizens have complained
about demonstrates that stronger values are needed. Nigeria needs business leaders
who are willing to press for reform and advocate the added value of transparent
business practices. The limited success of the Lagos
Business School in its passionate emphasis on business ethics shows the possibilities
for considerable support of such initiatives.
Lastly, in order to meet all of these important needs, Nigerians should utilize their own
talent by pooling together leading officials, scholars, businessmen, and civil society
representatives to form a committee dedicated to prescribing ideas on how to optimize
Western and Chinese engagement. At the same time, an inter-ministerial
implementation committee drawn from the ministries of foreign affairs, industry, trade,
agriculture, and investment promotion, should be set up to reduce all the protocols,
using a critical path analysis of action plans, with civil society as monitors. On specific
“accelerator” infrastructure interventions, like energy and transport, a project team

46
with people seconded from the private sector, diaspora experts, and key government
technocrats will be required to drive some key timelines. (African Trade Policy Journal,
Djeri-wake Nabine 2009)

5.2 Conclusion
However, there is no doubt that Nigeria and China bilateral relationship will be of
immense benefit to both countries if well pursued. Using the dependency theory we
have argued that the imbalances in Nigeria-China relation especially in the area of trade
(which we graphically showed) must be
Corrected so as to match the rhetoric win-win situation by which the contact between
the countries is being described. As the China-driven bilateral relations cannot be
reversed just for the
Asking, Nigeria needs to confront the indigenous technology capacity building gap as
this is the only way by which Nigeria will avoid Sino imperialism in their relations with
China. Nigeria must be technologically
Relevant to explore and exploit gains in its relations with China. Fundamentally, the
Nigerian leadership must demonstrate the political will to manage Nigeria’s pluralism for
peace, security and sustainable economic transformation.

47
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