China is on course to overtake the US as the world’s biggest economy by 2028, five years earlier than expected due to the pandemic fallout, and this could create immense benefits for the Nigerian economy if harnessed.
China’s quick recovery from the devastating effect of the pandemic has made the Centre for Economics and Business Research (CEBR) projects the pandemic will cause China’s GDP to surpass the GDP of the US by 2028 instead of the earlier projection of 2033.
The Chinese economy expanded by 2.3 percent in 2020 after a strong fourth quarter reading of 6.5 percent. While the pandemic pushed other countries into recession, China avoided one after expanding by 3.2 percent and 4.9 percent in the second and third quarters following a contraction of 6.8 percent in the first quarter.
As the economy of China expands, the growth will be accompanied by corresponding increase in demand for goods and services, a change in which Nigerian businesses and the economy can prepare to take advantage of.
The pandemic dealt a much larger blow to the US economy than to China’s, and the CEBR has projected the pandemic will cause China’s GDP to surpass the GDP of the US by 2028, instead of the earlier projection of 2033.
The US GDP was worth $21 trillion in 2019 while China’s was $14 trillion, according to official data from the World Bank.
CEBR also estimates that China’s GDP will grow 5.7 percent per year until 2025, followed by 4.5 percent annually until 2030 while the US economy will grow 1.9 percent per year from 2022 to 2024, and then 1.6 percent per year.
Nomura Holdings, a leading Japan-based financial company, had estimated China’s economy would surpass the US’s in 2030, but China’s dramatic rebound in 2020 caused the firm to revise the timeline to 2028.
China grew 2.3 percent in 2020, and the World Bank has projected that China’s economy will grow by 7.9 percent in 2021 while the US is projected to grow by 3.5 percent this year.
What is in it for Nigeria?
China is one of Nigeria’s biggest national trading partners. Nigeria exported goods worth N220 billion to China in 2017, this expanded to N378.5 billion, N595.9 billion in 2018 and 2019, respectively.
Nigeria’s exporting capacity has a lot of room to grow more even as the China economy expands.
Data from the Nigeria’s National Bureau of Statistics also show the country’s huge dependence on Chinese products.
Nigeria’s import from China grew from N1.78 billion in 2017 to N4.3 billion in 2019 and stood at N4 billion in the third quarter of 2020.
Experts say there could be gains for Nigeria in China’s milestone.
According to Andrew Nevin, chief economist at PWC, Nigeria needs to remember that the service industry is bigger than the goods industry, and this has been evident in diaspora remittances in recent times.
“We have a challenging port system and the underdeveloped infrastructure which gives Nigeria a relative disadvantage in exporting goods for now.
“Nigeria must think more of service in the coming years, where educated people can render services of other countries like China while remaining in the country, hence, winning FX for Nigeria,” Nevin says.
Omotola Abimbola, a macroeconomist at Chapel Hill Denham, also explains how Nigeria can position itself using its natural resources and agricultural produce, saying “As China becomes richer and bigger, its consumption expenditure will also grow with it, which means they will consume a lot of goods and services.”
Many Latin American countries and some countries in the West like Australia have benefited a lot from China growth through trade in natural resources, which Nigeria has abundantly.
“Nigeria has also not done so much in terms of agriculture; we need to grow our export. For instance, China is a big consumer of soyabeans and palm oil, which will be in more demand and as they grow.
“Nigeria must exploit its massive gas resources and train its huge population to better position for numerous benefits itself as China expands,” Abimbola states.
China’s growth can open up business opportunities for industries in Nigeria to export more goods, creating more jobs and economic growth in Nigeria.
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