• Saturday, April 20, 2024
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BusinessDay

Nigeria-China trade hits $6 billion

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Siaka Momoh and Austin Imhonlele

Despite criticisms of Chinese foray into the African market, the trade relations between China and Nigeria is becoming significant

The bilateral trade between Nigeria and China has grown steadily as the volume of trade between the two countries in 2009 hit $6.373billion, in favour of China. Giving a break- down of the trade relationship between the two countries, the Consulate-general of the People’s Republic of China in Lagos, Guo Kun, said China’s export to Nigeria stood at $5.476 billion, while import from Nigeria was $0.897 billion.

According to him, the figures represent an increase of 76.3% compared to 2008. “Yet I couldn’t stress more that China does not pursue trade surplus with Nigeria; China wishes to work with Nigeria to balance the trade. The most important reason for China’s trade surplus with Nigeria is due to the different economic structures of the two countries. Manufacturing is an important part of China’s economy, while in Nigeria, oil industry is the prime sector with very limited crude oil currently exported to China. This naturally creates the imbalance of the trade.’’ But Kun noted that the Chinese and Nigerian governments are committed to solving the problem by cooperation.

Mechanical and electronic products, textile, and light-industrial products constitute the major commodities China exports to Nigeria. The major commodities China imports from Nigeria include agricultural products, minerals, and textile raw materials, and wishes to have further cooperation in the field of energy and infrastructure. The Consulate-general stated further: “Our government always encourages Chinese companies to invest in Nigeria and provide subsidy, and grant preferential tax provision to companies which invest in Nigeria. Until now, China had invested 7.24 billion dollars and created more than 30,000 jobs for Nigerians. The Lekki Free Trade Zone is a very good example.”

If this project becomes successful, Nigeria’s capability in manufacturing will be largely enhanced, and this will definitely contribute to Nigeria’s exports. Also, the Chinese government spares no effort in providing convenience to Nigerian investors in China.

In 2006, during China’s president Hu Jintao’s visit to Nigeria, he laid out a four-point proposal for the development of bilateral relations, which could be seen as the blueprint for the future. The first point of the proposal is to enhance mutual political trust towards promote strategic cooperation. The second is to expand cooperation in areas such as agriculture, energy, electricity, infrastructural construction, telecommunications and satellite technology, to achieve a win-win situation for both countries. The third is to expand cultural exchanges and cooperate in combating various diseases including malaria and bird flu. The fourth is to strengthen cooperation in international affairs to promote world peace, enhance cooperation on major international issues, such as the reform of the United Nations, human rights, anti-terrorism and peacekeeping, and promote South-South and South-North dialogues, with the ultimate aim of jointly safeguarding the rights and interests of developing countries.

Enhancing solidarity and cooperation with African countries has always been an important component of China’s independent foreign policy of peace. In 2006, China and Nigeria signed a memorandum of understanding on establishing a strategic partnership.

Sino-Nigeria relations are now undergoing all round development, and the two countries have reached a consensus on building strategic partnership with a mutual political trust, economic reciprocity and mutual assistance in international affairs. Though Sino-African relations dates back to centuries, Nigeria’s contact with China, officially, only began in the 1950s; 1957, to be precise. Chinese relations with Africa were essentially with North Africa. In fact, Nigeria’s contact with the Chinese was through Egypt. It is on record that Chan Hiang-Kang, commercial officer in the Chinese Embassy in Cairo, established unofficial trade links with Nigeria, along with Ghana, Ethiopia, and Tanganyika (now Tanzania) in 1957.

It was a taboo for Nigerians to have anything to do with the communist world to which China belonged at the time. Nigerians like Funmilayo Ransome-Kuti, a frontline Nigerian political and social activist, much to the chagrin of the colonial authorities, visited Berlin and Beijing in the 1950s to attend meetings. Her application for the renewal of her passport was turned down. All contacts with the Eastern bloc countries were prohibited. All Nigerian students who obtained scholarships from undisclosed sources, as well as Nigerian trade union leaders who attended international conferences in those countries had to be smuggled out of Nigeria through Ghana. But this position was reversed in 1958 by then Nigerian Prime Minister, Tafawa Balewa, in a policy statement in parliament.

In 1971, Nigeria/China mutual friendly disposition blossomed into the establishment of relations at ambassadorial level. Thus, a rewarding relationship between both countries began in earnest. Fang Yi, former Chinese Minister of Foreign Trade and Economic Cooperation, visited Nigeria in 1972, a visit that provided an opportunity for signing the first economic, scientific, and technical cooperation agreement as well as a trade agreement. There were several other visits to Nigeria, including that of a team of Chinese engineers from the China Civil Engineering Construction Corporation (CCECC) in 1996, for on the spot assessment of the Nigerian Railway Project. This is aside from relations that had to do with agriculture – irrigated rice plantations in Itoikin, Lagos, water resources in Borno State and Nigeria’s NEPA in the 1990s.

The Chinese also had something to do with the troubled Ajaokuta Steel project and the Delta Steel project, Aladja – Chinese experts inspected these projects, and the enabling agreement was signed on May 12, 1997, during the visit of Li Peng, former Premier of the state Council; but the project was plunged into a quamire by an alleged corruption scam in which the late Sani Abacha, some of his family members, Anthony Ani, former Minister of Finance, and Bashir Dalhatu, former Power and Steel Minister, were involved.

Discussions between Nigeria and China on the rehabilitation of the Nigerian Railways commenced during the Murtala Muhammed/Obasanjo regime of 1975-1979, when deliberate efforts were made to deepen relations between the two countries. The Chinese side was enthusiastic to complete the job, having just completed the TANZAM Railway project in East Africa. But subsequent discussions failed because of the alleged greed on the part of some Nigerian leaders.

It is remarkable that China’s ambitious strategy for Africa is driven mainly by China’s energy hungry economy. The current economic expansion in China requires natural resources that Africa has in abundance. So, for the Chinese, the aim of the expanding economic links is very clear. In turn, Africa has benefited in the form of increase in prices of natural resources such as oil, gold, bauxite, diamond, and granite. This has contributed to the significant economic expansion in Africa in the last seven years.