The economic Relations between China and Nigeria


Master's Thesis, 2012
129 Pages, Grade: None

Excerpt

TABLE OF CONTENTS

List of Tables

List of Figures

List of Graph

List of Acronyms

Chapter 1 Introduction
1.1 Objective of the study
1.2 Research Methodology
1.3 Literature Review
1.4 Research Questions
1.5 Significance of the Study
1.6 Structure of the Thesis

Chapter 2 The Development of Sino-Nigerian Political Relations
2.1 Introduction
2.2 Sino-Nigerian Relations before the Open Door Policy
2.3 Sino-Nigerian Political Relations
2.4 The FOCAC Meetings
2.5 Summary

Chapter 3 China’s Trade and Investment in Africa: A Case Study of Nigeria
3.1 Introduction
3.2 China’s Trade and Investment in Africa
3.3 China’s Trade and Investment in Nigeria
3.4 Articles of Trade between China and Nigeria
3.5 Challenges Facing China-Nigeria Trade Relations
3.6 Summary

Chapter 4 The Economic Impacts of China on Nigeria
4.1 Introduction
4.2 The Situation of Nigeria’s Economy before the FOCAC Meetings
4.3 The Implication of China’s FDI on Nigeria’s Economic Development
4.4 Global Financial Crises and China-Nigeria Economic Growth
4.5 Summary

Chapter 5: The Significance of China’s Foreign Aid on Nigeria
5.1 Introduction
5.2 Loans and Debt Management
5.3 Infrastructural Development
5.4 Human Development
5.5 Opportunities and Challenges Stemming from Chinese Aid
5.6 Summary

Chapter 6 .1- Conclusion and Recommendations

Recommendations

Bibliography

Acknowledgment

Tables

Table 2.1 Selected Agreements between Nigeria and China (2001 to 2010)

Table 3.1 China’s Top 10 African Trading Partners between 2004 to2007

Table 3.2 China’s Top African Trading Partners, 2010

Table 3.3 Some Characteristic of Chinese Companies Listed in 2005

Table 3.4 Top 10 Export Commodities, 2005

Table 3.5 Top 10 Import Commodities, 2005

Table 4.1 Nigeria Economic Performance Indicators, 2001-2006

Table 4.2 Top 20 Destination for Chinese ODI in 2009

Table 4.3 China-Nigeria Oil projects, 2004 to 2010

Figures

Figure 3.1 China’s Trade with Africa (1996 to 2007)

Figure 3.2 Africa’s Trade with China (1990 to 1996)

Figure 3.3 China’s FDI Outflows to Africa, 1999-2006

Figure 3.4 Trades between China and Nigeria, 2000-2010

Graphs

Graph 3.1 Sub-Saharan Africa’s Trading Global Trade Partners, 2009

Acronyms

illustration not visible in this excerpt

Chapter 1: Introduction

Since the founding of People`s Republic of China in 1949, China has made tremendous efforts to explore a development road designed for her own needs and suitable to her own national conditions, which was finally summed up by Deng Xiaoping, the architect of the opening-up in 1978. The past three decades have been a critical period for Chinese people to seek harmonious scientific and sustainable development at national and international level to strengthen cooperation and embrace globalization with the world. In its quest to be part of globalization, China- Nigeria established diplomatic relations on February 10, 1971. But the internal crises faced by both countries reduced the pace of economic integration like Nigeria, the trade policy since 1960 witnessed extreme swings from high protectionism from the West in the first few decades after independence and also placed high restrictions on the importation of capital goods that could have enhanced local industries like machineries to boost agricultural production and other sector of the economy[1]. The relation of the two countries grows closer as a result of international isolation and condemnation of Nigeria’s military regimes 1970-1998. While on the other hand, the Chinese open door policy embarked by the communist party in 1978 led by Deng Xiaoping which gives equal commercial and industrial rights to all the nationals also precipitated the economic relations between the two. These cooperative relations which seem to be enjoying a rapid progress are based on the principles of equality respect and mutual benefit, with the friendship and exchanges of visits between the two countries consolidated with the time. Under the framework of the forum on China-Africa cooperation, known as FOCAC which started in 2000, more importantly, with the follow-up actions of the distinction Beijing summit of the FOCAC in 2006, the bilateral relations between China-Nigeria get further boost and enjoy rapid development.[2] China and Nigeria have a couple of unifying characters in common. First of them all, is their natural advantage in population with China`s population estimated at 1.34 billion and China holds as the second largest economy in the world after United States of America. While on the other hand, Nigeria is the largest market in Africa. It has a population put over 158.3 million people in 2010 and the largest in Africa.

The recent boost in Nigeria-China economic relations is as a result of a number of factors among the most important factors is the recent phenomenon of increased income for both China (More sustained) and Nigeria[3]. Also, there are economic complementarities between the two countries. A dimension of this is the market opportunities which drive the relationship. Thus, while Nigerians (Consumers) are looking for cheap products from China, Chinese growing manufacturing firms are seeking market opportunities for their intermediate and final manufactured products from Nigeria. Also, the input sourcing and export promotion drive of the two nations is another dimension of the economic complementarities. As the growing Chinese firms are seeking raw materials (oil and other minerals, agricultural products, etc for inputs and generation of energy), Nigerian exporters are seeking market opportunities for their primary products. China’s ability to provide the financial and technical assistance (at concessionary interest rate or /and with aid) to Nigeria which is in need of such is another critical factor. The recent repeated political visits by Nigerian government and the reciprocal visits by the Chinese Government which led to the signing of bilateral Trade Treaties and Memorandum of Understandings between the two nations have also strengthened the relationship.

Although before now, Nigeria has established bilateral trade relationship with China, but the magnitude of the trade was not as it is now. Available data from the World Bank (2007) show that in 2000, four broad commodities were exported totaling US$307.3 million, with the main export commodity being mineral fuel and lubricants which represented US$273.7 million (90% of total exports) and next important export in 2000 was crude materials excluding food and fuel which totaled US$33.3 million. The remaining two broad commodities exported to China were quite insignificant with values between US$0.1 million and US$0.2 million. Nigeria’s exports to China increased to US$526.9 million in 2005; the increase was more than 50%. The China’s share of Nigeria’s total exports fell from only 1.5% in 2000 to 0.79 in 2007. In terms of imports, Nigeria’s total imports increased from US$5.3 billion in 1996 through US$5.8billion in 2000 to US$17.7billion in 2005. The dramatic increase of Nigeria’s total imports between 2000 and 2005 was also reflected in the country’s imports from China which rose phenomenally from as little as US$252million in 2000 to US$2.3billion in 2005. Nigeria imports almost all of the broad categories of products from China. In 2005, imports of machinery and transport equipment ranked first followed by manufactured goods, miscellaneous manufactures, chemicals and food and live animals. China’s share of Nigeria’s imports rose from 3.5% in 1996 to 13.44% in 2007. Nigeria’s import from China is more diversified than its exports and Nigeria is a small player compared to other countries exporting to China.

Given the trade pattern, China had a trade surplus with Nigeria during the period 2003-07. The trade surplus rose by almost 91% in 2005 and 24% in 2007 for agricultural, while it rose by about 41, 45 and 27% in 2005, 2006 and 2007, respectively for non-agricultural. The total trade surplus of China against Nigeria was about $3.3 billion in 2007. On product basis, China recorded trade deficits in a few products. Among the economic consequences of the recent growing trade relations between the two countries are the fact that there is a rise in the price or terms of trade (TOT) of primary products of interest to Nigeria and a decline in the price or TOT of manufacturing products produced by China, which resulted into intense competition in the World market. The consequence of all these are the issues of gains/losses and gainers/losers.[4]

Hitherto, traditional development partners mainly from Europe and the Americas (U.S. A and Canada) have dominated trade, investment (in terms of foreign direct investment FDI) and grants and financial as well as technical aid to the country. These are governed by various bilateral and regional agreements that exist between these countries and Nigeria. Although Nigeria and these countries have come a long way in their relationship, it is debatable if such has in any significant way assist the country in its quest for development. The relationship appears to be exploitative at least from the trend in the structure and pattern of trade and FDI inflow to the country. This is based on the fact that oil and gas sector dominates the country’s exports to the tune of about 98% and FDI inflows to the oil and gas sector accounted for about 40%.[5] However, the research seeks to know how is China different from other trading powers? What lessons can we learn from the past in order to make the blossoming relationship produce a win-win outcome?

1.1 Objective of the study

The main objective of this study is to analyze the impact of China-Nigeria economic relations as Nigeria has become an important source of oil and petroleum for China's rapidly-growing economy and Nigeria is looking to China for help in achieving high economic growth. Above all, the researcher seek to examine China`s economic and political impacts on Nigeria economy owing to China’s contemporary role on the international scene. To identify and analyze the opportunities which can be derive by the country from its trading relations with China. To also look at the evolution of the country’s trade regime and trade policy focusing on the key sectors of its imports from and exports to China, and with particular reference to the market access conditions of imports into the country.

1.2 Research Methodology

The researcher opted to integrate the qualitative approach in this study due to its significant advantages. The use of qualitative data gathering method is advantageous as they are more open to changes and refinement of research ideas as the study progresses; this implies that qualitative data gathering tools are highly flexible. Qualitative is analytical so using primary and secondary sources. Under primary source, I shall conduct various interviews across Nigeria and government officials concerning their perception about China-Nigeria economic relations if need be. While the secondary source shall come from archival materials, published books or scholarly works, internet, international organization official documents, journals, press release, news papers etc. Finally, I shall employ quantitative approach if need be but the research is purely an international relations perspective.

1.3 Literature Review

There are abundance studies on China-Nigeria economic relations with divergent opinions. However, Ogunkola et al. (2008) in their book “Nigeria-China Trade and Economic Relations” pointed out the recent developments in China-Nigeria relation present Nigeria with both opportunities and challenges. Opportunities to learn from China’s growth, development and poverty-reduction strategy and maximizing the spill-over from China’s growth in terms of supply of required inputs and services are important for Nigeria’s development strategy. This is important for Nigeria given the size of Chinese market and its growth trajectory in recent time. The relation with China also provides the country with alternative markets for sourcing inputs for the industrial sector and finished products for consumption purposes. Hence, it has potential of meeting Nigeria’s quest for the much needed diversification of markets for Nigeria’s merchandise. The authors noted that Nigeria’s exports to China spread over many and varied products and increase from $20.3 billion in 2000 to $44.4 billion in 2005. They identify the top 10 exports to China to include: pulp of wood/of other fibrous cellulosic matt; tanning/dyeing extract, tannins and derives; preparation feathers & down, artificial flower; lac, gums, resins & other vegetables saps &extract; oil seed, oleagi fruits miscall grain, seed, fru; cotton and cocoa preparations; copper and articles thereof; ores, slag and ash; and mineral fuels, oils and product of their distillation. Following the dramatic increase of Nigeria’s total imports between 2000 -2005, the country’s imports from China rose phenomenally from as little as $252 million in 2000 to $2.3 billion in 2005 (Ogunkola et al, 2008)

In another vein, Pat Utomi, (2009) “China and Nigeria”, he argued that local businessmen commented that they greatly benefitted from the willingness of many Chinese partners to arrange financing for their projects. This was seen as an opportunity to engage in joint ventures while also learning from Chinese business practices. Another incentive for doing business with the Chinese is the willingness of Chinese expatriates to accept the same living conditions offered to local workers. The author opined that though contrary to the previous experienced, Nigerians commented that this was often an impediment when dealing with expatriates from other countries. He argued that the reduced costs of hiring Chinese expatriates made Nigerians more competitive with large Western multinational corporations. Furthermore, for many years, China’s economic engagement with Nigeria was limited. Relations stayed at the government-to-government level consisting of aid agreements and development projects. However, relations have since greatly expanded into the private sector, with investment often directly encouraged by both the Nigerian and Chinese governments. The Chinese business presence, previously limited to the venturing of Hong Kong textile producers and steel processors, is increasingly being replaced by big commitments from Chinese financial institutions.

Another comparative study was conducted by Adeolu O, et al, (2010) that looked at the effects of global financial meltdown as it affects China-Nigeria cooperation. The author opined that the global financial crisis was triggered by the sub-prime mortgage lending crisis in 2007 in the United State of America (USA). The global financial crisis is characterized by credit squeeze and this has affected the world economy in no small measure since it became a full-blown crisis towards the end of 2007. The crisis got to a peak in September 2008 when several major financial institutions in the USA collapsed. With respect to Nigeria and China- the case of exports, Nigeria export of oil to Asia rose from $8,995.77 million in 2006 to $10,487.47 million and $13,973.39 million in 2007 and 2008 respectively. Similarly, Nigeria Export of oil to China increased from $914.82 million in 2006 to $4,055.92 and $4,412.65 Million in 2007 and 2008. Therefore, it can be seen that the global economic crisis has not hindered bilateral trade flows (import and export flows) between Nigeria and China.

What makes this book outstanding is the provision of full data and analysis into the world financial crises which witnessed economic growth between China-Nigeria despite global crises around the world.

Gregory (2009) believes that Chinese telecommunications companies have moved determinedly into the Nigerian market, as they have elsewhere in Africa, though have not attempted to run their own networks. The Zhong Xing Telecommunication Equipment Company (ZTE) has been in the country since 2001, and claimed that its core businesses in Nigeria are manufacturing handsets and supplying system equipment. The company estimated that it has sold 40 million handsets in Nigeria, ZTE also supplies system equipment to two local network providers, Starcom and Multilink’s. Huawei is another Chinese telecommunications company, which is also active in Nigeria and has expanded its presence there far more aggressively than ZTE. It has six offices in the country compared to ZTE’s two, and supplies system equipment to all its network service providers, including market leader MTN, and Zain, Glo, Visafone and Zoom Gregory (2009).

Lawal (2009) as part of China’s strategy in Africa, the scholar asserted that China created the Forum on China-Africa Coop­eration (FOCAC) in 2000. The first ministerial conference under the aegis of FOCAC was held in Beijing in October 2000. At this meeting, more than 80 ministers from China and 44 African countries came together. And at this time, the Beijing Declaration of the Forum on China-Africa Cooperation and Program for China-Africa Cooperation in Economic and Social Development were promulgated and adopted as the basis for future cooperation. Under this new dispensation, China becomes a major player in the global economy. The author noted that China can be a role model for African communities seeking to establish development frameworks for economic prosperity, growth and overall development. Such cooperation, in addition to opening up markets, can be mutually beneficial Lawal (2009).

With rich resources, huge market potential, technological know-how and accessible capital, Africa and China can achieve a win-win cooperation; thus giving impetus to the drive towards a sustainable development of the global economy”. (President Kufuor of Ghana 2000)[6]

In the case of Africa, according to Corkin (2008), Angola is currently China’s largest trading partner in Africa, accounting for roughly one fifth of the African continent. Angola export to China rose from $ 243 million in 1996 to $ 10.9 billion in 2006 while China’s exports to Angola rose from $ 28.5 million in 1996 to $894 million in 2006, he opined that China runs a considerable trade deficit with Angola (as one of the China’s main oil producer) while Angola enjoys trade surplus with China.

South Africa in the picture, Burke et al, (2008) indicates that South Africa is China’s second largest trading partner in Africa, after Angola. The trade volume between South Africa and China accounted for 20% of the total trade volume between China and Africa as a whole. The direct bilateral trade between both countries started in the 1990s and in 2004, South Africa granted China market economy status. However, to correct this lingering situation, South Africa and China have committed to work together to create favorable conditions for growth in relations between both countries and balance of trade (Burke et al 2008).

Having examined different sources from the literature review, there were quite a number of contradictions and divergent opinions among the authors who have studied on China-Nigeria’s relations. According to Adeolu, et al. (2010), posited that Nigeria’s exports to China increased to $ 526.9 million in 2005. However, the increase was more than 50% of which China’s share of Nigeria’s total exports fell from 1.5% in 2000 to 0.79 in 2007. In addition, Gregory (2009) in his book “Elephant, ants and Superpowers: Nigeria’s Relations with China” shared similarity with Adeolu that Nigeria’s exports to China as at 2005 recorded $ 527.1 million while China’s import to Nigeria the same year rose to 2305.3. More so, Ogunkola et al. (2008) contributed differently that Nigeria’s exports to China though spread over many products and increase from $ 20.3 billion in 2000 to $ 44.4 billion in 2005. Holistically, this is one of the areas the researcher intends to contribute to the existing literatures and to also unveil or expose some erroneous notion about China-Nigeria economic relations.

1.4 Research Questions

Is China presence in Nigeria an opportunity or opportunism?

Does the presence of China in Nigeria and its policy of non-interference in the internal affairs a challenge to other powers?

Is a China-Nigeria economic relation a win-win game?

These are central questions that the researcher seeks to answer, by no means exhaustively, yet the researcher do aspire to provide a detailed, systematic analysis of China-Nigeria economic relations and to discover whether the relationship is a win-win approach.

1.5 Significance of the Study

The significance of this study is to unveil the contemporary importance of China-Nigeria economic relations relating the Nigeria’s situation with the West and America; normally, traditional development partners mainly from Europe and the Americas (U.S. A. and Canada) dominated trade, investment (in terms of foreign direct investment, FDI) and grants and financial as well as technical aid to the country. These were governed by various bilateral and regional agreements that exist between these countries and Nigeria. Although Nigeria and these countries have come a long way in their relationship, it is debatable if such has in any significant way assist the country in its quest for development. The relationship appears to be exploitative at least from the trend in the structure and pattern of trade and FDI inflow to the country.[7] More so, China says its trade and capital comes with no strings attached and African countries seem to welcome that (polgreen & French 2007). But the West concluded that China used this strategy against Africans, majority of Africans and Nigerians insist that the Chinese had raised themselves from third world country to be one of the world powers after the death of Mao Zedong in 1976,[8] therefore, China could help raise Africa from economic stagnation. Finally to find out to what extent is China different from other exploitative powers?

I personally want to contribute my quota to the existing literatures as regard China-Nigeria economic relations and to also examine the importance of China`s contemporary presence in Nigeria and how these relationship is an opportunity to Nigeria in her quest for economic liberation. It is hoped that the investigation will lay to rest arguments that propagate a win-lose situation rather than a win-win approach. Significantly, the study is intended to contribute to the knowledge on China-Nigeria economic relationship in Africa

1.6 Structure of the Thesis

For clarity and orderly investigation of the study on China-Nigeria economic relations, the thesis is divided into six (6) chapters:

Chapter one shall deal with the introductive aspect that will explore why the researcher believe China-Nigeria economic relations is significant, to also review some relevant literatures covering the economic impacts of China-Nigeria developments.

Chapter two shall deal with the development of Sino-Nigeria political relations, examining the economic integration before the open door. The chapter delves into mechanisms that are precipitating China-Nigeria economic boom, including the increase in number of high level visits, forum and bilateral trade agreements that have taken place over of the years.

Chapter three looks at the overview of China`s trade and investment in Africa using Nigeria as a case study. More so, examining the characteristics of Chinese trade and investment in Nigeria with imports and exports substitution and finally analyze the challenges and opportunities facing this relationship.

Chapter four offers a general overview of economic impacts of China on Nigeria relating it to Chinese engagement in the private sector and the inflow of FDI into the country. In another vein, the chapter shall also be looking at the global financial crises as it affects the two positively or negatively.

Chapter five delves into the area of Chinese aid to Nigeria. The plans behind China’s aid program to Nigeria and the effects this aid is having on the socio-economic growth comparing it with the West, shall also be examined. The opportunities and challenges attached to this aid shall also be explored.

Chapter six shall be the concluding part recommendation and general analysis facing the relations.

Chapter 2: The Development of Sino-Nigerian Political Relations

2. 1 Introduction

Good Brothers, Good friends and Good partners” Mr.Borging, the Chinese Ambassador to Nigeria (This Day 2007)[9]

February 10th, 2011 was the 40th anniversary of the establishment of diplomatic relations between China and Nigeria. China in Asia and Nigeria in Africa and with the establishment of diplomatic relations, the bilateral relations entered into a brand-new phase. The frequent high level visits from both sides built up the mutual political trust, the exchanges and co-operations in the fields of economy, culture, science, education and health etc have been very fruitful. It was in October of the very year of 1971, that Nigeria and other developing countries from Asia-Africa and Latin-America stood up outside pressures and fully supported China in restoring its legitimate seat in the United Nation (UN). Since then, the cooperation of China and Nigeria in international affairs has enjoyed broader space. More importantly, looking back on the past 40 years of China-Nigeria economic relations, we may assume or conclude that reasons why the relations have managed to withstand the unexpected changes of international situations and remained ever new could be as follows:

Firstly, being good brothers in political contacts, that are always treating each other sincerely, friendly and as equal. China and Nigeria had similar historical experiences and both pursue the independent foreign policy of peace. These have been the brain behind solid foundation, friendliness and cooperative relations; both countries attach importance to each other’s concerns and seek common ground while reserving differences as well as continuously enhance mutual trust.

Secondly, being good friends in international stages, always coordinating with and supporting each other, like the promotion of South-South cooperation, work for a fair rational new international political and economical order and safeguard the common interests of all developing countries.

Thirdly, being good partners in economic and trade relations, always trying to achieve mutual benefit and win-win result. Either during the conduct of aid or trade both give priority to the well being of the people, more so, encouraging the Chinese companies to increase their investment in Nigeria, promote the added value of the exported Nigerian products and more employment opportunities to the local people, and thus enable a consistently healthy and sustainable development of the bilateral cooperation[10]

2.2 Sino-Nigerian Relations before the Open Door Policy

“Nigeria and China: A tale of two giant” Alaba Ogunsanwo, 2008[11]

China remains the most populated country in the world with over 1.3 billion people.[12] While Nigeria is ranked 7th in the list of most populated countries in the world with over 162 million people estimated by United Nations in July 1, 2011.[13] In another development, going by Goldman Sachs predictions in 2005 that the future outlooks for the two economies, China and Nigeria can be considered blissful according to this renowned institution’s account, the two nations by 2050 shall be regarded as the largest economies on different plains; Monye posited that China will be the largest economy in the world while Nigeria will be Africa’s prime. This is not only scenario where the two nations are in tandem with each other with respect to other nations of the world. Presently, the two countries also share one similar thing or characteristics but of a different size. They are China and Nigeria, respectively the world most populous and Africa’s most heavily populated nations. Furthermore, it appears that the bonds of economic relations between them are firing up especially the re-introduction of FOCAC meetings and different changes in the two countries.[14]

Nigeria’s relations with China have grown in the last decade from the limited and intermittent contact that marked the immediate post-independence era to an increasingly complex and expansive engagement. While, like most other African countries in the 1960s and 70s, Nigeria viewed China as a nonaligned developing country, it did little to foster business or even special diplomatic relations with the Asian giant. Nigeria’s trade focused primarily on European and North American countries, which proclaimed themselves development partners. China’s own economic and political challenges made it an unlikely development partner at that time. Following Deng Xiaoping’s reform policies of the 1970s and 80s, China’s dramatic growth and modernization, and attendant industrial, energy, and market expansion needs, brought it into greater contact with Africa. Its new expanded presence offered a partnership seen by many stakeholders as an alternative model to Western relationships.

Traditionally, African countries have traded rigorously with the developed nations, especially the European Union (EU), Canada and the US. These economic relationships are governed by various bilateral and regional agreements that exist between these countries and Nigeria. Although, the relationships have gone a long way, the developmental impact is contestable. However, due to the trade performance of some Asian countries that has enhanced their income and improvement in technology, especially China and India, many African countries including Nigeria have began to diversify their markets to these countries.[15]

Initially, Nigeria became politically independent on October 1st, 1960, after about seven decades of colonial rule by the British. Prior to colonial rule, most of the groups that today make up the country were often distinguished by differences in history, culture, political development, and religion. The major differences among these pre-colonial groups pertained to their socio-political organization. In another development, Nigeria kept a low profile. It did not send troops to engage in the Persian Gulf War but continued to be an active supporter of UN policy. Buying the bulk of Nigeria's crude oil, the United States was Nigeria's most important trading partner until the civil war; Nigeria had had no significant relationship with the Soviet Union and Eastern Europe. However, the ties with the Soviet Union had increased, although they remained minimal in comparison with ties to the West. Nigeria's other major trading partners were Japan, France and so on, from which it continued to obtain loans and aid.

Although Nigeria has always leaned toward the West; the closeness of the relationship has varied. Nigeria's Western ties were originally strongest with Britain, its former colonial ruler. The special relationship, which lasted until the 1966 coup, led Nigeria to side with Britain on most issues. After the coup and the civil war, the new Nigerian leaders were less favorable toward Britain, especially after Britain took a position of neutrality in the civil war, refused to sell arms to the federation and ignored the blockade against Biafra. Nigerian leaders also were rankled by Britain's support of white-dominated governments in southern Africa. Several Nigerian groups pressured the new government to weaken ties with Britain as the only way to true independence. At times, more verbal and symbolic damage was done to Nigerian-British relations for Nigerian popular consumption than was true in reality[16]

Throughout the Cold War, the United States and the Soviet Union were interested in Nigeria because of its size, population, economic and military potential, and, especially for the United States, its oil. From 1966 to 1977, Nigeria was very attached to the United States. The two countries took opposing positions over southern African liberation. Nigerians were angered by pro-Biafra propaganda in the United States and the U.S A refusal to sell arms to the federation during the civil war. United States of America involvement was suspected by Nigeria in the assassination of Murtala Muhammad. In 1977 Jimmy Carter became president, and Nigerian relations with the United States suddenly changed. The United States recognized Nigeria as a stabilizing force in Africa and was willing to consult with Nigeria on African issues.[17] However, China- Nigeria established diplomatic relations on February 10, 1971. But the internal crises faced by both countries reduced the pace of economic integration like Nigeria, the trade policy since 1960 witnessed extreme swings from high protectionism from the West in the first few decades after independence and also placed high restrictions on the importation of capital goods that could have enhanced local industries like machineries to boost agricultural production. The relation of the two countries grows closer as a result of international isolation and condemnation of Nigeria’s military regimes 1970-1998.[18]

More importantly, by 1960-1998 the governments of newly independent Nigeria adopted a broadly pro-Western stance, and while it did not actively support Taiwan, it also did not seek relations with China. Chinese Premier Zhou En-Lai’s 10-country trip to Africa in 1963 did not include Nigeria, and a Chinese delegation that visited Nigeria in 1964 seeking the establishment of diplomatic ties was sent away empty-handed. Unlike other African countries that did draw close to China, Nigeria never received gifts of imposingly built sports stadiums or government ministry buildings from the Chinese government during this era.[19]

After two years examination on the matter, in September 1968 the Chinese government publicly backed the bid by Nigeria’s Ibo-dominated Biafra region to secede from the federation. A statement by Chinese Foreign Minister Chen Yi at the time linked this support to the Soviet Union’s backing of the Nigerian government on the issue, though another factor appears to have been the support given to Biafra’s cause by China’s key ally in Africa at the time, Tanzania. China covertly supplied the Biafra administration with small quantities of light arms, souring China’s relations with the Nigerian government, but making no discernible difference to the outcome of the war, which ended with Biafra’s collapse in January 1970.[20]

In another vein, on the part of China, in the nineteenth century China was invaded by the Western powers, forced to grant extraterritorial privileges, sign unequal treaties, pay reparations, and turn to the outside world for famine relief, development aid, weapons, and manufacturing skills. To gain its independence the country had to remake its technology, educational institutions, ideology, laws, and military and political systems on Western models. Chinese thinkers believed that nothing less than national survival was at stake. In the same line, Japan showed his exploitative desperation over the economy of China and South-East Asia with the support of her superior military backbone, Japan gained concessions in China with the Western powers in World War 1 and China`s internal political weakness precipitated Japanese invasion in Manchuria turned it into puppet state and despite Chinese appealed to the League of Nations ,Japan invaded Shanghai and other significant cities near the port city on 18 January 1932, and because of state of military aviation in China was very poor, regional warlords having purchased foreign aircraft on the basis of bad leadership at the time.[21]

Chinese economic and technological systems were backward compared to those of the West. To develop without relying on foreign powers, Mao Zedong and his colleagues devised a system modeled on Stalinism but with a number of unique features. They collectivized the land and organized the peasants into communes. The party-state extracted capital from agriculture, used it to build state-owned industry, and returned the profits to more industrial investment. This led to rapid industrial growth in the 1950s, although growth slowed later under the impact of the Great Leap Forward and the Cultural Revolution. In three decades China made itself self-sufficient in nearly all resources and technologies.[22] However, by the end of Mao’s life in 1976 China’s economy was stagnant, and technology lagged twenty to thirty years behind world standards and most Chinese lived in cramped quarters with poor food and clothing, few comforts, and freedoms. Most of Asia and the world had raced beyond China toward technical and social modernity.

China’s post-Mao rulers, led by Deng Xiaoping, adopted a different economic development strategy called "reform and opening." Reform meant changes in the domestic economic and administrative systems, especially freeing the peasants from the communes so they could farm as families or engages in local industry and freeing industrial enterprises to compete in a market environment. Opening meant joining the global economy, allowing foreign trade and investment to flourish. China has now become one of the world’s major trading nations and is poised to join the World Trade Organization which sets the rules for the global trading economy during this period.[23]

2.3 Sino-Nigerian Political Relations

The main objective of this section is not to unveil the Sino-Nigerian political relations alone, but to also show some perspective on how certain aspects of the political relations could influence or contribute to China-Nigerian socio-economic development. It is imperative knowing that politics is the ultimate driving force in the Sino-Nigeria relations therefore; trade and investment would certainly play a part in the relationship and many more.

However, Since the founding of People`s Republic of China in 1949, China has made tremendous efforts to explore a development road designed for her own needs and suitable to her own national conditions, which was finally summed up by Deng Xiaoping, the architect of the opening-up in 1978. The past three decades have been a critical period for Chinese people to seek harmonious scientific and sustainable development at national and international level to strengthen cooperation and embrace globalization with the world. In its quest to be part of globalization, China- Nigeria established diplomatic relations on February 10, 1971. But the internal crises faced by both countries reduced the pace of economic integration like Nigeria, the trade policy since 1960 witnessed extreme swings from high protectionism from the West in the first few decades after independence and also placed high restrictions on the importation of capital goods that could have enhanced local industries like machineries to boost agricultural production. The relation of the two countries grows closer as a result of international isolation and condemnation of Nigeria’s military regimes 1970-1998. While on the other hand, the Chinese open door policy embarked by the communist party in 1978 led by Deng Xiaoping which gives equal commercial and industrial rights to all the nationals precipitated the economic relations between the two.[24] However, in the early post-independence era, economic exchanges between China and Africa were largely marginal, as language and cultural barriers kept trade levels relatively low in comparison with Western powers that had established strong colonial linkages. China’s strategy was largely centered on the search for ideological allies against capitalism and opposition to Western influence. But despite China’s role in the nonaligned movement and broader Asian efforts to woo African states in forums such as the Bandung Conference, the conservative Nigerian government in Lagos at independence was an unlikely ally of a communist government and did not rush to embrace its Chinese counterpart. Chinese premier Zhou En-lai’s 10-country trip to Africa in late1963 did not include Nigeria.

Under the leadership of Deng Xiaoping, China’s relationship with Africa shifted from a period of indirect political and ideological support to direct support for various national liberation movements. Nigeria, as a self-styled frontline state against white-led regimes in southern Africa, served as a facilitator of support for liberation fighters. This interface strengthened diplomatic relations with China but affected trade only marginally, because Taiwan remained the favored trading partner at the time. Nonetheless, this period saw an incipient expansion of Chinese trade relations with Nigeria. Hong Kong Chinese were especially successful in investing in Nigeria. At the invitation of the premier of the Northern Region of Nigeria in the 1960s to take advantage of thriving cotton production in the region, their investment helped shape the early days of textile manufacturing in Nigeria.

In spite of these warm diplomatic ties, which saw Nigeria support the “One China, Two Systems” policy and the return of Hong Kong to China, there were very few high-level visits to Nigeria by Chinese leaders for many years. The visit of a former premier of the Sate Council Li Ping in 1997 was the highest level of visitation. On that visit several protocols were signed on subjects as wide ranging as investment protection and enhanced cooperation in the electric, steel, and oil industries. Implementation of these agreements, however, was half hearted at best.

The volume of trade between Nigeria and China continued to grow 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 Gulf of Guinea countries like Nigeria that produce fascinating low-sulfur crude oil and offered developing markets open to international investment, were particularly attractive to the Chinese. As China secured various joint-venture contracts with Nigerian oil companies, often in exchange for low-interest loans and targeted development projects, the volume of trade rapidly increased from 1.3 billion Naira in 1990 to 5.3 billion in 1996, to 8.6 billion. Most of this growth was attributable to the oil sector, with a small fraction emanating from the importation of cheaply manufactured Chinese goods and products.

Around 2006, the tone of the Chinese had changed, and the People’s Republic of China president Hu Jintao and Prime Minister Wen Jiabao were participating in regular shuttles to Africa, which Nigeria is a significant port of call. Hong Kong Chinese, who entered the Nigeria market earlier than other Chinese, as well as businessmen from the mainland, establishing new manufacturing ventures for export and local markets at a time when Nigerian manufacturing was uncompetitive and collapsing into a state of deindustrialization. Quickly, Nigeria top officials, ministers and governors began leading delegations to China seeking investments, aid and development partnership in their various states- in the belief that increasing ties to China could significantly help their communities.[25]

In fact, it was in February 1971 during the time of General Yakubu Gowon as Nigeria’s head of state and the great Chairman Mao of the People’s Republic of China that ambassadorial exchange agreements were signed. Over the years, leaders and high government officials from both countries have consistently paid courtesy and diplomatic visits. To comprehend or underline the growing importance of the relationship, here are some of the notable Nigeria’s leaders who visited China: the former head of state, General Yakubu Gowon September 1974, vice president Dr. Alex I. Ekwueme march 1983, Chief of the Army Staff, General Ibrahim Babangida September 1984, Chief of the Army Staff, General Sani Abacha October 1998, Chief of the Defense Staff, General Abdulsalam Abubakar July 1997, President Olusegun Obasanjo April 1999, August 2001 and 2005, former president of the senate Anyim Pius Anyim December 2001, vice President Atiku Abubakar July 2002 and Deputy Speaker Nwuche of the National Assembly July 2002, Federal Polytechnic Offa and Nnamdi Azikwe University are also involved.

While on the other hand, Chinese leaders who visited Nigeria are as follows: Vice Premier Geng Biao October 1978, Vice Premier Huang Hua November 1981, and Vice Premier Tian Jiyun November 1984, also Vice Premier Wu Xueqian March 1990, Vice Premier and foreign Minister Qian Qichen January 1995, State Councilor and Secretary General of the State Council Luo Gan September 1996, Premier Li Peng May1997, Special Envoy of the President Jiang Zeming, State Councilor Ismail Amat May 1999, Foreign Minister Tang Jiaxuan January 2000, President Jiang Zemin April 2002, and Vice chairman of the Standing Committee of the National People’s Congress Han Qide December 2003. China’s foreign Minister, LiZhaoxing January 2006, and President Hu Jintao April 2006. These visits at the highest level, no doubt, are the precursors to developments in other facets of the relationship. More so, the formal Nigeria president Olusegun Obasanjo visited China twice in two years, 1999 and 2001 with a return call by President Jiang Zemin in April 2002.[26] Lately the late Nigeria President, Umar Musa Yar’Adua paid a highly successful state visit to the Asian giant by March 1, 2008. Yar’Adua had, during his visit to China made a brief stop at Shanghai where he held talks with top executives of ZTE Researching and Developing Center and the outcome of the discussion culminated in the signing of a Memorandum of Understanding (MOU) between the federal government of Nigeria and the management of ZTE Cooperation. The government of Nigeria had made a down payment of $70, 500, 000 which is 15% of the total contract sum and signed a Sovereign Guarantee to the tune of $399,500.000 to enable ZTE source the loan from the Chinese government.[27]

These meetings have witnessed the signing of a number of agreements on trade, economic and technical cooperation, science and technology even in the areas of investment protection. Both Hu and Yar’Adua agreed that the two countries ought to advance ex-changes of personnel at all levels and be ready to work better for further cooperation especially on international issues. In the past, there had not been much notable issues in international foray that drew the two nation close.[28] That has

not placed any view on the shape of what the future will be for them either. Form the above analysis, it is glaring that China-Nigeria have been enjoying economic boom despite the up and down in their historical relationship. However, without political development they would never be economic development. The table 2.1 below shows some of the agreements between the two countries from 2001 to 2010.

Table 2.1 Selected Agreements between Nigeria and China, 2001 to 2010

illustration not visible in this excerpt

Source : http://www.wsws.org/articles/2010/may2010/nige-m28.shtml

2.4 The FOCAC Meetings

The FOCAC process was conceived in the late 1990 as a result of a number of African countries proposing the idea of such a forum to the Chinese authorities, with a view to consolidating and advancing Sino-African relations and interaction at the multilateral level. China’s proposal to convene an appropriate panel resulted in the establishment of the Forum on China-Africa Cooperation at the ministerial conference held in Beijing in 2000. Furthermore, the meeting was well attended, over 80 Chinese ministers and 44 African countries along with representatives of 17 regional and international organizations, attended the first FOCAC ministerial conference in Beijing in 2000. The real objective of the event was to create a framework for the development of a mutually-beneficial, stable and long-term relationships between China and Africa which Nigeria is part and parcel of: In the meeting FOCAC concluded with two documents: one is the Beijing Declaration of the Forum on China-African Cooperation, which outlined common positions on key international issue and the second one was the program for China-Africa Cooperation in economic and social Development , which defined a number of measures for cooperation in areas ranging from economics and trade to tourism, education and the environment[29].

Another FOCAC meeting which was held at Beijing on 4-5 November 2006, there was white paper- consisting of six sections each addressing a particular area of China- Africa relations confirmed China’s intention to build a comprehensive and long-term relationship with Africa, with China policy grounded on a positive and optimistic view of the continent. Therefore, FOCAC confirmed the priorities of the previous forums, as well as provided an expanded agenda for future Sino-Africa relations.[30]

In another vein, a new milestone in the history of China-Africa relations has been created when African leaders gathered in Beijing with their Chinese counterparts for the First Summit of the Forum on China-Africa Cooperation (FOCAC) and its Third Ministerial Conference in early November 2006. In fact, the year 2006 marked the ‘Year of Africa’ in China’s diplomacy. Also in the same year, China became Africa’s third largest trading partner following the United States and France, making Africa one of China’s major overseas origins for strategic resources, investment opportunities and greater product markets. The Forum on China-Africa Cooperation, established in 2000, provides an institutionalized platform for enhancing bilateral exchanges and cooperation. Over the last four FOCAC meetings in 2000, 2003, 2006 and 2009, China has offered a series of incentive measures to boost China-Africa ties, such as debt write-off to African countries, tariff-free for some African commodities exporting to China as well as establishing and increasing the Fund for African Human Resources Development, etc. At the opening ceremony of China-Africa Summit in early November 2006, President Hu Jintao announced China’s eight-point proposal supporting African development:

1. To double the 2006 level of assistance by
2. Provide $ 5 billion in preferential loans and credits within the next three years
3. Provide $ 5 billion to support Chinese companies to invest in Africa
4. To construct a conference center for African Union,
5. Cancel debt owed by the heavily indebted poor countries
6. Increase zero-tariff export items to China from 190 to over 440 from the least developed countries
7. Set up three to five Sino-African trade and economic zones
8. Send 100 Chinese experts to Africa and train 15,000 African professionals in areas of agriculture, health, education, science and technology; build 100 rural schools and 30 anti-malaria centers, etc.[31]

Furthermore, to win more hearts of African leaders, at the 4th Ministerial Conference of the FOCAC in the Egyptian Red Sea resort of Sham el-Sheikh in November 2009, Chinese Premier Wen Jiabao announced eight new measures the PRC will take to strengthen China-Africa cooperation in the next three years. The eight new measures, succeeding the above eight measures put forward by Chinese President Hu Jintao at the landmark Beijing Summit of the FOCAC in 2006, are aimed at improving people’s living standard in the Continent. The new eight measures are committed to:

- Establish a China-Africa partnership in addressing climate change, to build 100 clean energy projects for Africa
- Enhance cooperation with Africa in science and technology, carry out 100 joint demonstration projects with Africa and receive 100 African postdoctoral fellows to conduct scientific research in China
- Help Africa build up financing capacity, provide 10 billion U.S. dollars in concessional loans to African countries, and set up a special loan of 1 billion dollars for small- and medium-sized African businesses
- Further open up China’s market to African products, offer zero-tariff treatment to 95 percent of the products from the least developed African countries having diplomatic relations with China.
- Further enhance cooperation with Africa in agriculture.
- Deepen cooperation in medical care and health.
- Enhance cooperation in human resources development and education.
- Expand people-to-people and cultural exchanges.

[...]


[1] Wikipedia Encyclopedia. People’s Republic of China-Nigeria Relations. Retrieved 16 October 2011 from: http://en.wikipedia.org/wiki/People's_Republic_of_China_%E2%80%93_Nigeria_relations

[2] Chinese leaders who visited Nigeria are as follows: Vice Premier Geng Biao (October 1978), Vice Premier Huan

Hua (November 1981), Vice Premier Tian Jiyun (November 1984), Vice Premier Wu Xueqian (March 1990), Vice

Premier and Foreign Minister Qian Qichen (January 1995), State Councilor and Secretary General of the State Council Luo Gan (September 1996), Premier Li Peng (May 1997), Special Envoy of President Jiang Zeming, State Councilor Ismail Amat (May 1999), Foreign Minister Tang Jiaxuan (January 2000), President Jiang Zemin (April 2002), and Vice Chairman of the Standing Committee of the National People’s Congress Han Qide (December 2003). China’s foreign Minister, Li Zhaoxing (January, 2006), President Hu Jintao (April 2006)

[3] Nigeria population, Retrieved 20 November 2011 from www. Tradingeconomic.com/Nigeria/population/density-people.per-sq-km-wb-data.html

[4] Adeolu O. Adewuyi, et al, Impact of China-Africa Trade Relations: The Case of Nigeria. The Africa

Economic Research Consortium, January 2010 p. 3, 4

[5] Abiodun S.B., et al, China-Nigeria Economic Relations: Scoping Studies on China-Africa Relations, Trade Policy Research and Training Program (TPRTP) Ibadan, Nigeria, 2008

[6] Marafa, Lawal Mohammed. Africa’s Business and Development relationship with China: Seeking Moral and Capital Value of the last Economic frontier, Hong Kong, 2009 p. 8

[7] Adeolu O. Adewuyi, et al, Impact of China-Africa Trade Relations: The Case of Nigeria. The African Economic Research Consortium, January 2010 p.2

[8] Friedman, Edward, Paul Pickowicz, and Mark Selden. Chinese Village, Socialist State. New Haven: Yale University Press, 1991. ISBN 0300046553

[9] See This Day News Papers Chinese Ambassador to Nigeria Describing China-Nigeria Historical Development as fruitful despite criticism around the globe. Feb. 10, 2011. Retrieved Nov.29, 2011 from http://allafrica.com/stories/201102100689.html

[10] ibid

[11] Alaba Ogunsanwo, ‘ A tale of two giants: Nigeria and China 2008

[12] National Bureau of Statistics of China, April 28 2011. Retrieved 10 December 2011 from http://www.stats.gov.cn/english/newsandcomingevents/t20110428_402722237.htm

[13] See Wikipedia Encyclopedia - List of Countries Population. Retrieved December 10, 2011 from http://en.wikipedia.org/wiki/List_of_countries_by_population

[14] Tony Monye, Nigeria-China Trade Relations: The Yawning Gaps, Zenith economic Quarterly, April 2008

[15] Adeolu O. Adewuyi, et al, Impact of China-Africa Trade Relations: The Case of Nigeria. The African Economic Research Consortium, January 2010 p. 3

[16] Helen Chapin metz, ed Nigeria: A Country Study, Washington GPO for the library of Congress ,1991 Retrieved 30 Nov.2011 from www.countrystudies.us/nigeria/80.htm

[17] Ibid

[18] The Bilateral Relations between the Federal Republic of Nigeria and the People’s Republic of China. Retrieved 30 November 2011 from http://en. wikipedia.org/ wiki/ People's_Republic_ of _China_ %E2%80%93_ Nigeria_relations

.

[19] P. Utomi, China-Nigeria. Washington, DC Centre for Strategic and International Studies, 2008, p. 40.

[20] Porter B, the USSR in Third World Conflict. Cambridge University press, 1986, pp. 109-11

[21] Henry Sakaide, Imperial Japanese Navy Aces 1937-1945, Osprey Publishing, August 28, 1998, pp 6-8

[22] Andrew J Nathan, China’s Foreign Policy: The Historical Legacy and the Current Challenge. The author is a professor of Chinese Politics at Columbia University. The Great wall and the Empty Fortress: China’s Search for Security (New York: W.W Norton, 1997). Retrieved December 1th 2011

http://afe.easia.columbia.edu/special/china_1950_foreign_policy.htm

[23] Ibid

[24] Wikipedia encyclopedia. People’s Republic of China-Nigeria Relations. Retrieved 2 December 2011 from http://en.wikipedia.org/wiki/People's_Republic_of_China_%E2%80%93_Nigeria_relations

[25] See Pat Utomi, China and Nigeria, Washington, DC Centre for Strategic and International Studies, 2008, p. 41

[26] Chinese leaders who visited Nigeria are as follows: Vice Premier Geng Biao (October 1978), Vice Premier Huang

Hua (November 1981), Vice Premier Tian Jiyun (November 1984), Vice Premier Wu Xueqian (March 1990), Vice

Premier and Foreign Minister Qian Qichen (January 1995), State Councilor and Secretary General of the State Council

Luo Gan (September 1996), Premier Li Peng (May 1997), Special Envoy of President Jiang Zeming, State Councilor

Ismail Amat (May 1999), Foreign Minister Tang Jiaxuan (January 2000), President Jiang Zemin (April 2002), and Vice

Chairman of the Standing Committee of the National People’s Congress Han Qide (December 2003). China’s foreign

Minister, Li Zhaoxing (January, 2006), President Hu Jintao (April 2006)

[27] Chinese Embassy, China-Nigeria Political Relations, Retrieved 28 December 2011 from http://ng.china-embassy.org/eng/zngx/t142490.htm

[28] Leaders of Nigeria who visited China are as follows: Head of State, Gen. Yakubu Gowon (September 1974), Vice-

President Dr. Alex I. Ekwueme (March 1983), Chief of the Army Staff Gen. Ibrahim Babangida (September 1984),

Chief of the Army Staff Gen. Sani Abacha (October 1989), Chief of the Defense Staff, General Abdulsalami Abubakar

(July 1997), President Olusegun Obasanjo (April 1999, August 2001 and 2005), President of Senate Anyim (December

2001),Vice President Abubakar (July 2002), and Deputy Speaker Nwuche of the National Assembly (July 2002).

Federal Polytechnic, Offa and Nnamdi Azikwe University are currently involved

[29] FOCAC: A Win-Win Formula for Sino-African Relations? 10th October, 2000. Retrieved December 5 2011 From http://www.thebeijingaxis.com/tca/editions/the-china-analyst-jan-2010/64

[30] Ibid

[31] Dr. He Winping, China’s Diplomacy in Africa .Institute of west Asian & African Studies, Chinese Academy of Social Science pp1-2, Retrieved 6 December 2011 from http://www.african-bulletin.com/doc/wenpingc.pdf

Excerpt out of 129 pages

Details

Title
The economic Relations between China and Nigeria
College
Xiamen University  (Research School of South-east Asian Studies)
Course
International Relations
Grade
None
Author
Year
2012
Pages
129
Catalog Number
V206204
ISBN (eBook)
9783656341277
ISBN (Book)
9783656341482
File size
1184 KB
Language
English
Tags
relations, china, nigeria
Quote paper
Lawrence Okolo Abutu (Author), 2012, The economic Relations between China and Nigeria, Munich, GRIN Verlag, https://www.grin.com/document/206204

Comments

  • guest on 12/28/2012

    Nice one.China being the factory of the world,African countries need the cheapest and technology of the new cadre of developing world to shore up their economy.Nigeria being blessed with petro-dollar have to internalise chinese experience if they desire better life.

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