Nigeria’s growing economic relations with China By Dapo Fafowora

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 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.

Sino-Nigerian relations have developed rather slowly over the years. It is now gathering some 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 1997, 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 $57 million in 1980 to only $7 million in 1985, recovering somewhat to $35 million in 1989. Thereafter, Nigeria-China trade grew from $35 million to $97 million in 1993, and reached $327 million by 1997. It is currently estimated at $13 billion.

President Jonathan’s visit to China is significant as it underlines Nigeria’s growing economic relations with China. From the Nigerian perspective, closer economic ties with China have become imperative. The new Chinese loan of $1.5billion brings to a total of nearly $15 billion China’s investments and loans to Nigeria in recent years, including the $2.5billion investment in the newly refurbished Lagos-Kano rail line. Nigeria’s share of Chinese investment in Africa has increased to over 30 per cent. In 2012, total Chinese investment in Nigeria was $13.3 billion. In contrast total US FDI in Nigeria was $8 billion. To counter the growing economic relations between China and Africa, President Obama announced during his recent hurried visit to Africa an offer of $7 billion infrastructure loan to Africa. Some cynics will consider this offer as too late and too little. Financial commitments by the World Bank and the IMF are far less than Chinese loans 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 percent 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, 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, 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 per cent of the global demand for oil. Over 30 per cent of China’s oil supply is imported, with the country becoming the world’s second largest consumer of oil after the US. So, closer economic co-operation is in the mutual interest of both countries. But there is a pitfall here which Nigeria has to watch very closely. 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 Nigeria are currently estimated at $3 billion, while Nigeria’s exports are estimated at only $1 billion, a trade gap of $2 billion. 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. 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.

China has the largest foreign exchange reserves in the world some of which is being invested in Africa where growth prospects are becoming increasingly attractive. Nigeria is eager to diversify its trade relations by reducing its trade dependence on the Western industrial countries. China, with its horde of foreign reserves, is one of the few countries in the world today that can assist Nigeria with its huge financing gap, particularly for infrastructure development, in such critical sectors as roads, the railways, bridges, airports, and public transportation in which Nigeria is hugely deficient. Nigeria will not achieve its huge economic potential unless it modernises its infrastructure. China can offer Nigeria such assistance with loans and investments in the critical sectors of the Nigerian economy. In April 2006, President Obasanjo observed, while addressing the visiting Chinese President, Hu Jintao, in Lagos, that “This 21st century is the century for China to lead the world. And when you are leading the world, we (meaning Nigeria) want to be close behind you.” It was the most effusive compliment to China by a Nigerian leader and demonstrated Nigeria’s eagerness to expand its economic relations with China.

Until recently, relations between the two countries were tepid and took some time to develop. At its independence in 1960, Nigerian leaders knew very little about Communist China, a remote country, with its turbulent political history and frequent upheavals. Western influence in Nigeria was very strong and the Western media gave Communist China a bad press all over Africa, decrying its lack of respect for human rights and its authoritarian -style of government. Culturally, the Communist style of government had little or no appeal for African leaders. In fact, like many other states in Africa, Nigeria refused to even recognise the existence of China and did not enter into diplomatic relations with her until after the Nigerian civil war in 1970. At the UN Nigeria voted routinely along with the Western powers to deny China admission to the UN. Instead, Taiwan, which the Chinese regard as a ‘renegade’ province of China, was given China’s seat at the UN. China was badly isolated globally. During the years of the Cultural Revolution China turned its back on the rest of the world, including Africa. Before then, during the cold war era, it had tried unsuccessfully to get a foothold in Africa but it encountered strong opposition from the West as well as the Soviet Union with which it had fallen out. Its interests then in Africa were basically strategic and consisted mainly of challenging both Soviet and Western dominance in Africa during the cold war.

To counter Western influence China encouraged wars of liberation in Africa and was supporting armed anti-colonial struggles in some 24 African countries, including South Africa. China’s main aim was to reduce Africa’s economic dependence on the West by offering long-term low interest loans to Africa and promoting the so-called ‘benevolent trade’ such as by buying up large coffee and tobacco surpluses from Tanzania. By 1976, China was already giving Africa more aid than the Soviet Union. It achieved a major breakthrough in Africa by financing and constructing the Tanzam railway that gave it access and some limited political influence in central Africa. Beijing’s involvement in the African liberation wars paid off when many African governments, including Nigeria, provided critical support on the UN General Assembly resolution admitting China as a member in October, 1971, and replacing Taiwan. Relations between Nigeria and China also began to improve dramatically. China had supported the secessionists during the Nigerian civil war and is believed to have sent Biafra some limited arms through Tanzania. The secessionist leader, Ojukwu, actually wrote Chairman Mao, seeking Chinese assistance ‘in our struggle against Anglo-American imperialism and Soviet revisionism to achieve a socialist revolution in Biafra’ and Africa. But China secured Nigeria’s recognition in October 1971, after which the two states began building modest bilateral ties based on terms of co-operation agreed between them in 1972 during Gowon’s official visit to Beijing.

Predictably, the growing economic relations between China and Africa have caused some concerns in the Western countries, particularly in the US. In 2005, during a Congressional hearing in Washington, the chairman of the Africa sub-committee warned that ‘China is playing an increasingly influential role in Africa, and that the Chinese intend to aid and abet African dictators, gain a stranglehold on precious African natural resources, and undo much of the progress that has been made on democracy and governance in the last 15 years’. There were complaints from the US as well when a satellite launch deal was signed in 2005 by Nigeria and the China Great Wall Industry Corporation. But Africa needs to develop rapidly and, if necessary, will engage other powers to achieve its economic and technological goals. Africa cannot remain the economic preserve of the Western powers alone. It must diversify its economic relations in line with the process of economic globalisation. It is not China that is responsible for dictatorships in Africa, but the Western powers that, for long, supported African dictators, and refused to support liberation wars in Africa. There is no real danger of the Chinese exporting Communism to Africa. The Soviets did not succeed in doing so. If they tried, it is less likely that the Chinese would succeed where the Soviets failed.

The Chinese have no interest in exporting their Communist ideology to Africa. Like Africa, China was, for centuries, the victim of invasion and colonialism by the Western countries. It has no colonial past or imperialist ambitions in Africa that can stand in the way of increasing economic co-operation between the two. China has no military bases in Africa or anywhere else outside its own territory. It is unlikely to use force to advance its economic interests in Africa What China wants, like any other foreign power, is access to Africa’s huge natural resources, particularly its oil, and new markets for its industrial products. Africa is more mature now and should ignore unjustified foreign concerns about its new economic relations with China. In its economic engagement with China, it should, collectively, be able to protect its own economic interests.

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