Declaration
I hereby declare that this project entitled ” Is China’s trade and investment relationship with Nigeria beneficial for development? ” has been undertaken by me under the supervision of Dr Hakeem Onabanjo. I further certify that this work has not been previously submitted for the award of a degree elsewhere. All ideas and views are products of my research. Where the views of others have been shared, they have been duly acknowlegded.
IS CHINA’S TRADE AND INVESTMENT RELATIONSHIP WITH NIGERIA BENEFICIAL FOR DEVELOPMENT?
BY
Chinazom Chukwuma
BU/16C/BS2368
This project shall be submitted in Partil Fulfilment of the requirements for the awards of Bachelor of Science Degree in the Department of
International Relations & Diplomacy.

To the
Department of International Relations and Diplomacy Faculty of Management and Social Sciences.
Baze University, Abuja
August, 2018
Acknowledgements
I would like to express my special gratitude to my dissertation supervisor, Dr Hakeem Onapajo. He consistently steered me in the right direction throughout this dissertation and always gave me useful and honest feedback. Also, I must express my profound appreciation to my parents and those who have showed unfailing support and continuous encouragement throughout my years of study and over the process of researching and writing this thesis. This accomplishment would not have been possible without them. Thank you
Certification
This is to certify that the research project Is China’s trade and investment relationship with Nigeria beneficial for development? ” by Chinazom Chukwuma has been approved by the department of International Relations and Diplomacy Faculty of Management and Social Sciences, Baze University, Abuja.

Dr Hakeem Onapajo
Project Supervisor

Professor Osita Agu
Head of Department

Assoc. Professor Emeka E. Ene
Dean, Faculty of Management and Social Sciences

External Examiner
Dedication
This dissertation is dedicated to all of my lecturers in Baze University. Thank you!
I also dedicate this work to my mother and father, Mr ; Mrs Chukwuma, who first taught me the value of education.

Abstract
As economic linkage between Sino countries especially China with Nigeria have grown in intensity, it is seen as an engine to Nigeria economic growth. Therefore the amplified presence of China investment in Nigeria is now widely noticed and has drawn scrutiny from the populace raising questions of whether collaboration with the Asian giant is beneficial to the country and it developmental goals. The study is an ex-post facto type of design that examines the Political Economy of Nigeria-China Relations (2000-2015) using secondary source of data. It appraises the impact of diplomatic and economic relations on the political economy of Nigeria and China. It predicates its investigations on dependency theory as the method of analysis, while method of data collection was qualitative in nature. Data collected were analyzed using qualitative descriptive analysis. The study notes, among others, that the Chinese manufacturing operations contribute to the country’s GDP but offer tough competition for local producers. There should be the policy priority for Nigeria to make sure that FDI inflows from China and its trade relationship with China exert the reinforcing and beneficial effects on GDP and exports through active acquisition of advanced technology and open trade regime. Imports from China far outstrip exports, creating a large trade deficit and flooding the market with low tech manufactured goods that might otherwise be produced domestically. The study argues that there is a huge imbalance in trade between Nigeria and China and a need to improve more on the diplomatic relations between both countries. The study recommends that Nigeria’s first priority lies in developing the capacity to better manage its own policies toward China’s engagement.
TABLE OF CONTENTS
DECLARATION————————————————————————————1
TITLE————————————————————————————————-2
CERTIFICATION———————————————————————————-3
DEDICATION————————————————————————————–4
ACKNOWLEDGEMENT————————————————————————-5
ABSTRACT—————————————————————————————–6
TABLE OF CONTENTS————————————————————————–7
CHAPTER ONE: INTRODUCTION AND BACKGROUND TO STUDY
Background of the study—————————————————————————-Statement of the problem————————————————————————–
Objectives of the study—————————————————————————–
Significance of the study————————————————————————–
Theoretical Framework—————————————————————————
Method of data collection————————————————————————
Method of data analysis—————————————————————————
Hypothesis——————————————————————————————
CHAPTER TWO: LITERATURE REVIEW
2.1 China’s Foreign Policy and interest in Africa—————————————–
2.2 Nigeria’s Foreign Policy Objectives and Interests with China———————
2.3 Historical Analysis of China-Nigeria relations—————————————
2.4 Gap in Literature————————————————————————-
CHAPTER THREE: ANALYSIS OF CHINA-NIGERIA RELATIONS
3.1 Diplomatic Relations between Nigeria and China———————————-
3.2 Nigeria’s Economic Relations with China————————————————
3.3 China’s Investment in Nigeria————————————————————-
3.4 Economic implications of China’s Economic Interest and the Future for Nigeria–
3.5 Competitive Bidding Processes———————————————————–
3.6 Nigeria’s Efforts to Create an Investment Friendly Environment——————–
CHAPTER FOUR: PROSPECTS AND CHALLENGES
4.1Trade Imbalance between Nigeria and China Relations——————————–
4.2 Historical trend——————————————————————————
4.3 Potential Gainers and Losers————————————————————-
4.4 Nigeria’s Efforts to Create an Investment Friendly Environment——————-
CHAPTER FIVE: CONCLUSION
5.1 Summary of Major Findings————————————————————-
5.2 Mitigating the trade imbalance————————————————-
5.3Benefits/Challenges of Nigeria-China Investment Relations———————–
5.4 Recommendations and Options for the Future—————————————
5.5 Agenda for China – Nigeria relations————————————————-
5.6 Conclusion——————————————————————————-
Chapter One
Introduction
1.1Background of the study
The Nigeria-China relationship has made some amazing progress going back to over three decades. China has a record of not enjoying imperialistic or expansionist propensities or so far as that is concerned, subjugating those she has relations with (Kwanashie 2007). That withstanding standard is being connected in her relations with Nigeria. Nigeria and the People’s Republic of China set up formal on February 10, 1971. Through its relations with Nigeria, China has attempted to stress monetary, diplomatic and social relations. Relations between the two countries developed faster because of the universal disengagement and Western judgment of Nigeria’s military administrations (1970s-1998). Nigeria is the biggest economy in Africa; its re-emanant economy turned into the largest on the continent in 2013, and it creates a huge extent of products and enterprises for the Western Africa subcontinent. China is the world’s biggest manufacturing economy and exporter of goods. It is additionally the world’s quickest developing business sector for shopper products. It is the biggest trading country on the planet and assumes a conspicuous part in the worldwide trade zone and has progressively participated in international organisations and agreements in recent times.

In spite of the fact that as said before China and Nigeria set up strategic relations as specified in 1971,yet the internal emergencies faceded by the two nations lessened the pace of China’s economic relations with Nigeria, the trade strategy since 1960 saw extraordinary swings from high protectionism from the West in the initial couple of decades after independence. China and Nigeria have seen their connections develop from exploratory trips of the 1970s, to political errands and now to trying to help financial and venture possibilities, in any event,this is the thing that everybody does as they set foot on China terrain. The truth of the matter is that China has effectively changed itself from a creating country to the world’s biggest production line. The amazing ascent as a worldwide monetary monster and additionally political strength is a formula for copying by Africans and indeed Nigeria.

As indicated by a discourse paper by Professor Lawal Marafa (2010) taking a closer look at the China and Nigeria development link, there are shared characteristics and parallels that can be drawn. By estimate, Nigeria is around 10% of China; by populace, it is around 10%; by provincial importance they share status symbols, inside, they are both enriched with massive resources, and so forth. Furthermore, they have similarities and differences in historical legacy, historical development, pluralistic culture and so on. While the two nations have the biggest populace on their particular landmasses and immense regular assets, both have generally low per-capita wage with China working sincerely towards normalizing this distinction. In 1999 and 2001, Olusegun Obasanjo went by China and because of these visits, a number of trade, economic, technical, scientific, technological and very recently on investment protection, consular affairs, narcotic drugs and psychotropic substances and tourism cooperation agreements were signed by both countries Abua (2004). Although China has been looking beyond Nigeria and into Africa, the theme here can be articulated and translated into the context of bilateralism. The outcome of his trip was able to set a long-term agenda beneficial to both countries and particularly to Nigeria.
Its a well known fact that China look to seek investments in Africa. As China endeavors to expand its investment potential and court new markets, frequent visits to Africa have turned out to be normal place. Presumably that the ascent of China over the most recent two decades has been wonderful. One just needs to take a gander at comparative statistics and the figures will represent themselves. This change started in the late 1970s after the open entryway strategy organised by the then pioneer, Deng Xiaoping. Before that point, China was generally devastated and monetarily distraught. Presently, China is monetarily solid and has developed as a power that must be reckoned with in. China is known to have taken up projects that can be executed and yield benefits to all and sundry. Although they are faced with a huge population and huge landmass that defies imagination and in some parts are inaccessible, projects and targets are mostly met when set. As Nigeria and China bilateral relationships has existed for years, there is need to investigate on the impact of their relationship on projects, jobs, quality of life and find out the challenges ; lessons we can learn from the past in order to experience a better society that Nigerians have been promised since the advent of the democratic government. This study intends to investigate political economy of Nigeria- China relations from 1999 to 2015.

1.2 Statement of the problem
Nigeria’s quest for development which has spanned some decades and is yet to deliver on the ultimate goal of poverty reduction, despite various plans, programmes, and projects. Analysis of growth drivers on one hand has identified several factors including macroeconomic environment, political and social environment and investment gap. Some policies are required to attract foreign direct investment and to direct such investment into appropriate sectors, Ogunkola, Bankole and Adewuyi ( 2008).

Weak and unreliable infrastructure, macroeconomic instability, microeconomic risks from corruption and weakness of institutions and regulations to guide investment behaviour are the main constraints to high performance of the economy (World Bank Group 2014). As a resource-rich country, Nigeria’s economic performance has been unfortunately driven by the oil and gas sector to the extent that even progress recorded towards genuine economic development prior to the discovery of oil in commercial quantity has been virtually eroded. In recent time (2000- 2005), the GDP growth was about 5.7% and the growth in the non-oil sector which contributed about 5.9% of the GDP (Ogunsawo, 2007). However, the sector dominates the supply of foreign exchange and given that the political economy of the country vested this important resource in the hand of the government it also contributes a large chunk of government revenue. The decline in the non-oil sector such as agricultural sector performance has been dramatic since the discovery of oil. The manufacturing sector has not performed even better. It has also 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. An analysis of constraints to the high performance of the non-oil sectors identifies low productivity as a precursor to low private returns and which in turn lead to low investment.
In recent years, with the rapid economic development of both China and African continent, the interaction between the two parties, which used to centre on political sphere, is now featuring cooperation in various areas, especially, in the economic. According to Broadman (2008), there has been movement of Chinese companies into African countries particularly in the areas of construction, mining, and oil extraction. Such efforts have been encouraged by the Chinese government. It is a general belief that the increasing Chinese investments of capital and technology in Africa will reasonably help to unlock the African continent’s vast resources and potentials. China’s rapidly developing oil consumption seems to have a bigger effect on Chinese-African trade (Taylor, 2010). This is the main reason behind the whole raft of new contracts between 2002 and 2006. During this period, Chinese oil companies have signed deals to buy refineries and explore oil and gas in many African nation including Nigeria. In fact, China is now Africa’s third largest trading partner, ahead of the United Kingdom and only behind the United States and France. Importantly, the bulk of this growth in trade is driven by a desire to obtain sources of raw materials and energy to fuel the Chinese economy and for fresh export markets (Taylor, 2006). Interestingly, Nigeria is taking a fair share of the Chinese economic activities in the African continent.
Nigeria and the People’s Republic of China established formal diplomatic ties on February 10, 1971. Relations between the two nations grew closer as a result of the international isolation and Western condemnation of Nigeria’s military regimes (1970s-1998). Nigeria 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%. (Duhu, 2015).

In Lagos, Onitsha, Aba, Kano, and in almost every Nigerian market, one can buy something Chinese – textile, food items, drugs, electronics, phones, computers and cooking utensils. Rail rehabilitation which is currently steeped in controversy is under Chinese Company. Nigeria’s communications satellite (NIMCOSAT 1) was designed, built and funded by China. The NIMCOSAT 1 was also launched in China (ibid). Nigeria is therefore, doing so much today with China in terms of trade and investments. Nigeria offers China both a market for its goods and vast supplies of untapped resources, including oil. Also Nigerian government, in recent times, has found Chinese companies more sensitive to economic challenges than their western Counterparts.
China’s relation with Nigeria has recently become a burning issue. This has to do with China’s seemingly interest or quest to dominate the Nigerian market and economy. Accordingly, scholars and commentators alike have expressed various opinions on the issue without any meaningful conclusions. While some view the relationship as beneficial to China and detrimental to the overall development of Nigeria, others see it as the spring post or opportunity that Nigeria needs to develop and compete in the world market. Although Sino-Nigeria relationship dates back to more than three decades, recent developments call for a careful and detailed analysis of this relationship and to this end, we seek to provide analysis of the relationship with respect to investment, trade and aid: To what extent is China different from other exploitative practices? What is the impact has China in social economics development of Nigeria? What lessons can we learn from the past in order to make the blossoming relationship produce win-win outcome?
This study is to critically to investigate on political dimension of the economic and diplomatic relations between Nigeria and China as it facilitates or hinders migration of labour between both countries. The study therefore seeks to provide answers to the following questions:
1 Does the diplomatic relations between Nigeria and China has impact on
Socio economic development in Nigeria?
2 Does Nigeria- china economics relation improved their balance to trade and
Investment?
3 Has Nigeria really benefited from the diplomatic relation of Nigeria-China?
4. What are the challenges to Nigeria-China diplomatic and economic relations?
The study intends to investigate and provide answers that will address the questions stated above.

1.3 Objectives of the study
The general or broad objective of this study is to appraise the political economy of Nigeria- China relations with emphasis on their diplomatic and economic ties. Nigeria has become China’s fourth biggest African trading partner, and the second largest Chinese export destination on the continent. Trade between the two countries accounted for nearly one third of the trade between China and the whole of West Africa, indicating the importance of Nigeria to China’s entry into the regional market. The specific objectives are as follows:
1. To establish whether the diplomatic relations between Nigeria and China
has impact on socio-economic development in Nigeria.

2. To ascertain if Nigeria – china economics relation improves their balance of
trade and investment
3. To ascertain if diplomatic relation of Nigeria-China really benefited from
Nigeria
4. To determine the challenges to Nigeria-China diplomatic and economic
relations.

1.4 Significance of the study
The significance of this study consists of two principal levels: practical and academic significance. Practically, this study will be a valuable resource for policy makers and practitioners studying Sino-Nigeria economic relations, and for those interested in Nigeria’s economic diplomacy and foreign policy. This study will also enhance our general historical knowledge of the bilateral, diplomatic and economic relations between Nigeria and China especially in the areas of bilateral trade, politics, military etc. The academic significance of this study is to unveil the contemporary importance of China-Nigeria economic relations relating the situation with their diplomatic and economic ties. Nigeria had traditional development partners mainly from Europe and the Americas (U.S.A and Canada). They 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.

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, therefore, China could help raise Africa from economic stagnation.
Finally to find out to what extent is China different from other exploitative powers? We want to contribute our quota to the existing literatures as regard political economy of China-Nigeria relations and to also examine the importance of China`s contemporary presence in Nigeria and how these diplomatic and economic 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 political economy of China-Nigeria relationship in Africa.

1.5 Theoretical framework
Dependency theory
Dependency theory originates with two papers published in 1949 –one by Hans Singer, 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 was developed from a Marxist, Paul. A. Baran in 1957 with the publication of his “The Political Economy of Growth”. 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. Joseph Nye 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 sometime 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 characterised the interactions between the poor nations and the developed ones right from the colonial times till date (Dos Santos,1993). 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 Chinese loans 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.

Application of this theory:
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 (Offiong, 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 of trade, seemingly harmless loans, poor quality manufactured goods etc. Dependency theory is a social science tool of explanation that was predicated on the 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.

Finally, this theory also helps us to appreciate the fact that any approach that avoids the essential understanding and a careful analysis of the character and dynamics of Nigeria as a post-colonial state, a dependent, neo-colonial state, and the process of class formation in the Nigerian society in addition to an understanding of the structural position of the country in the international political economy, will only be scratching the surface leaving the fundamental issues unaddressed. Nigeria seems to need the Chinese market so much so that the latter’s activities in the continent is taken as any other market-driven economy, which is not the case, as we shall see later in this study.

1.6 Hypothesis
This study will test the following hypotheses:
The diplomatic relations between Nigeria and China has enhanced
Socio -economic development in Nigeria.

The Nigeria-China economic relations have not improved their balance of
trade and investment relations.

3. Nigeria really benefited in Nigeria –China relation.

4. There are challenges to Nigeria-China diplomatic and economic relations.

1.7 Method of data collection
Essentially, secondary sources of data were used to collect data for the study. This is due to the nature and demands of the hypotheses we put forward for investigation and empirical validation. Secondary sources of data refer to a set of data authored by another person, usually data from the available data, archives, either in form of document or survey results and code books collected for a purpose other than the present one (Ikeagwu,1998). Data were generated by studying official documents, journals, library materials, Internet websites, etc.

1.8 Method of data analysis
To analyze the data that will be generated for this study, we will rely on qualitative descriptive analysis. Qualitative descriptive analysis, as Asika (2006) puts it, means ”summarizing the information generated in the course of the research verbally”. This entails extracting meaning and making logical deductions from the already documented mass of data. The adoption of the foregoing analytical method became inevitable because the study principally relied on secondary sources of data. In addition, graphs and tables were used to clarify the researcher’s points and emphasis.

References
Abua, Justin, 2004, ‘From China, A Harvest of Agreements’ ThisDay
Newspaper, 16 November
Baran, P. A. (1957). The theory of the leisure class. Monthly Review, 9(3), 83-91.

Broadman, H. G. (2008). China and India go to Africa: New deals in the developing world. Foreign affairs, 95-109.

Duhu, J. O. (2015). Political Economy of Nigeria-China Relations (1999–2013) (Doctoral dissertation).

Dos Santos, T. 1993. The Structure of dependence; in Mitchell Seligson and John T. Passé- Smith, eds., Development and Underdevelopment: The Political Economy of Inequality, Lynne Renner Publishers, 195-221.
Egbula, M. and Zheng, Q. 2011. China and Nigeria: A powerful south-south alliance.
Keohane, R. O., & Ostrom, E. (Eds.). (1994). Local commons and global interdependence. Sage.

Kwanashie, M. (2007). Internal and external pressures for reforms. Nigeria’s Reform Programme: Issues and Challenges, 15-34.

Offiong, D. A. (1980). Imperialism and dependency: Obstacles to African development. Enugu, Nigeria: Fourth Dimension.

Ogunkola, E. O., Bankole, A. S., ; Adewuyi, A. (2008). China-Nigeria economic relations. AERC Scoping Studies on China-Africa Economic Relations.

Ogunsanwo, A. (2007). Nigeria and China. a round table on Sino-Nigerian Relations. Economic and Political Dimensions, held at the Nigerian Institute of International Affairs, Lagos, on Wednesday, 26.

Taylor, I. (2006). China’s oil diplomacy in Africa. International affairs, 82(5), 937-959.

Taylor, I. (2010). International Relations of Sub-Sahara Africa. Bloomsbury
Academic
World Bank Group. (2014). World development indicators 2014. World Bank Publications.

Chapter 2
Literature Review
2.1 China’s Foreign Policy and Interest in Africa
Sino- African Relations are not new, dating back to ancient times and progressing gradually based on common historical experiences. However, it wasn’t until 1956, when Egypt became the first African nation to establish diplomatic relations with the People’s Republic of China (P.R.C), that inter-governmental relations between the P.R.C. and African countries were inaugurated. Over the subsequent half-century, the trajectory of Sino-African relations went through several fundamental shifts. In recent years, with the rapid economic development of both China and African continent, the interaction between the two parties, which used to centre on political sphere, is now featuring cooperation in various areas, especially, in the economic.
China- Africa diplomacy has been progressing rapidly over the past two decaades. China has signed mutiple bilateral agreements with many African countires inluding Egypt, South Africa, Nigeria, Sundan, Senegal, Algeria, amongst others (Utomi, 2009). According to Broadman (2008), there has been movement of Chinese companies into African countries particularly in the areas of construction, mining, and oil extraction. Such efforts have been encouraged by the Chinese government. It is a general belief that the increasing Chinese investments of capital and technology in Africa will reasonably help to unlock the African continent’s vast resources and potentials. China’s rapidly developing oil consumption seems to have a bigger effect on Chinese-African trade. This is the main reason behind the whole raft of new contracts between 2002 and 2006. During this period, Chinese oil companies have signed deals to buy refineries and explore oil and gas in many African nation including, Sudan, Algeria and Nigeria (Taylor, 2006) .

In fact, China is now Africa’s third largest trading partner, ahead of the United Kingdom and only behind the United States and France. Importantly, the bulk of this growth in trade is driven by a desire to obtain sources of raw materials and energy to fuel the Chinese economy and for fresh export markets (ibid). Interestingly, Nigeria is taking a fair share of the Chinese economic activities in the African continent. Since the 21st century, China has steered away from ideology based relations and has focused on economy based engagements. Reformist policies since the 1970s has accounted for China’s rapid growth and industrialization. This expansion into Africa proposed a partnership considered as a substitute measure for development from Western relationships of the past. Furthermore, the Chinese Investment Model has played a role in shaping China’s relationship with Africa. This standard of investment and infrastructure loans otherwise known as the “Beijing Consensus” will be discussed as it is a relevant approach to this dissertation.
According to Ramos (2004), this view is considered as a new assertiveness to politics, development, and the worldwide struggle for power. Essentially, this perspective challenges the Washington understanding, a neoliberal lens, which mostly considers democracy, suitable governance and poverty decline (Sautman and Hairong, 2007). The Chinese create highly competitive strategies to bid for resource and construction projects with the use of investment and infrastructure loans. Mostly, these loans are issued at about zero interest rates, or the payments can be made using natural assets (Brautigam, 2003). In essence, the Chinese are not forcing certain ideals or packages involving conditions, but Chinese aid comes without strings attached and is perceived to be accompanying initiatives by various African States to address development issues not already solved by western involvement (Sautman et al, 2007).
Perhaps, still by default, China stands to inherit the continent of Africa because it has been able to develop a more patient ear to listen to the discordant sounds of the people while the west remains overly impatient and critical of the faltering steps of African countries towards liberal democracy(ibid). On account of democracy and human rights issues, Africa has been refused direly needed technical assistance and aid by the west, while China has been more disposed to oblige without too much fastidious interference in the internal issues of those countries.

  It is no secret that China seek to pursue investment drive in Africa. As China attempts to diversify its investment potential and court new markets, high level visits to Africa have become common place.  No doubt that the rise of China in the last two decades has been phenomenal. One only needs to look at comparative statistics and the figures will speak for themselves. This transformation began in the late 1970s after the open door policy orchestrated by the then leader, Deng Xiaoping. Before then, China was relatively impoverished and economically disadvantaged. Now, China is economically strong and has emerged as a power that must be reckoned with in global economic as well as political decision making. China is known to have taken up projects that can be executed and yield benefits to all and sundry. Although they are faced with a huge population and huge landmass that defies imagination and in some parts are inaccessible, projects and targets are mostly met when set. This is what many African countries want to achieve.
Nowadays China stands at the key stage of comprehensively deepening reform and accelerating the change of economic growth mode. Not long ago, the Chinese Government has approved the 13th Five-Year Plan 2016-2020 for Economic and Social Development, raising the concept of achieving innovative, coordinated, green, open and shared development (Egbula & Zheng, 2011). This reflects China’s development guideline and confidence.

2.2 Nigeria’s Foreign Policy Objectives and Interests with China
From the Nigerian perspective, it is expected that its business relationship with China will be in tune with one of the major goals of the New Partnership for African Development (NEPAD) which according to Musila and Sigué (2006) is to achieve and sustain an average gross domestic product (GDP) growth rate of at least 7 per cent per annum. This is expected to reduce the proportion of Nigerians living in poverty by half by the year 2015, Musila and Sigué (2006). Nigeria and China signed their first economic, scientific and technical cooperation agreement, as well as a trade agreement, in 1972. This took place during a visit to Nigeria by the former Chinese Minister of Foreign Trade and Economic Cooperation, Fang Yi. Since then trade links have grown significantly, covering most aspects of economic life.

Since Nigeria’s return to democratic governance in 1999 with the election of President Olusegun Obasanjo, China and Nigeria signed various agreements on trade, economic and technological aid, and investment security (Naid, 2007). Nigeria has attempted to sway towards other countries such as China and its oil firms for trade as an alternative that will offer greater benefits and bargains. The Nigerian government made attempts to boost Nigeria’s oil production and therefore revenue using Chinese investments. Rising oil production will enable the country balance its power, particularly over the other firms that have dominated the Nigerian oil sector and are competing for more access to the nations overflowing resources. Chinese investments in oil were initially for infrastructural benefits.

However, this level of access granted Chinese firms the opportunity to procure contracts in the Nigerian oil sector in return for infrastructure deals, while enhancing the capabilities of Chinese firms equally. Essentially, while Chinese infrastructure aid in Nigeria aids in tackling one of the major challenges to attaining sustainable development, like aid from nearly all aid providing states, it is connected to certain political and tactical gains (ibid). Likewise, though the increase in Chinese imports from Nigeria offers the government a substitute measure of finance and adds diversity to trading partners particularly with colonial tendencies of the past, China’s entry into Nigerian markets notably for natural resources has instigated accusations of a new kind of imperialism (Utomi, 2009). Though, the lack of effective leadership to implement adequate economic development strategies and the less than transparent path followed by the leaders are usually criticized for the country’s continued state of dependence and underdevelopment.
There is therefore the urgent need for Nigeria to leverage on the Chinese success. Nigerian leaders should learn about the great transformation of China and turn the existing disadvantages in relations to Nigeria must do more than sell oil or depend on China for trade guarantees. The country should as a matter of urgency use its ongoing bilateral relations to leverage on the Chinese success and adapt the lessons to its own circumstances. The relationship must add to the basis for long term investment in education, research and technology. Nigeria should pragmatically learn how to build institutions. It is all obvious that Nigeria is underperforming in spite of strong revenue flows from high – priced crude oil exports. Various bureaucratic obstacles and a lack of strong institutions have led to constrained progress in areas of infrastructure and technology transfer vis-à-vis Nigeria engagement with China. Until Nigeria can develop credible, accountable, and transparent institutions, a free – market system that encourages investment, diversification, and competition is unlikely to emerge.
Historical Analysis of China- Nigeria Relations
China knows that it cannot overlook Nigeria which boasts the third largest economy in Africa, only behind South Africa and Egypt, holds significant energy resource and immense market potential that cannot be ignored (Omitola, 2007). Nigeria is currently the 7th most populated country in the world with projections to surpass the population of the United States by 2050 and 752 million by 2100 (ibid). Given China’s goal to build infrastructure projects in resource rich, yet potentially unstable countries, it must continually adapt to protect its citizens in the changing environment in which they work. Thus, China seeks new forms of partnership to achieve its ambitions through countris like Nigeria. According to Nwachukwu (2017), China is widely seen by Nigeria as a model for modernization; more responsive to African needs than Western partners; and able to provide consumer goods that are better suited for Nigerian pockets.

Nigeria’s first official contact with the Peoples’ Republic of China (PRC) was in 1960, when it was invited to the country’s independence celebrations. The delegation delivered congratulatory messages from Zhou Enlai and the Late Vice Premier, Marshall Chen Yi. In their message, the Chinese leaders acclaimed “the great victory won by the Nigerian people in their struggle against colonialism” (Owoeye 1986). Nigeria seemed to have reciprocated this gesture when, on gaining admission to the United Nations (UN) later that year, it supported PRC’s membership in the world body (ibid). Following the establishment of diplomatic ties in 1971, a six man delegation led by the Nigerian Commissioner for Economic Re-construction and Development, Adebayo Adedeji, visited Beijing in August 1972, where agreements on economic and technical cooperation, including trade, was signed between the two countries (Ogunsanwo, 2008). The trade agreement was hardly significant as it had no impact on the largely unregulated import of Chinese goods that had been entering Nigeria for years and was to become impossible to control in the years ahead (Omitola, 2005). The agreement on economic cooperation was open ended. In theory therefore, there was no limit to the number of projects Nigeria could call on the Chinese to implement in the country.

In 1975 and 1976, Nigerian imports from China totalled US$69.86 million and US$140.87 million respectively, while Nigeria’s exports to China for these combined years was US$8.85 million (Ogunsanwo 2008). The Nigerian government was concerned about the adverse trade imbalance in view of declining foreign reserves in 1978. This led to a visit by the Chinese Vice- Premier, Geng Biao in October 1978. After the negotiations, the two countries agreed to cooperate in the fields of agriculture, industry and trade. China agreed to buy palm kernels, cocoa, cashew nuts and cotton as an initial step towards correcting the trade imbalance (Owoeye 1986).
The Sani Abacha government diplomatically commenced the steps that drew China closer to Nigeria. The impact of sanctions imposed by the United States and its Western Allies on Nigeria by 1995 because of its human rights abuses led the government to look “East”. However, trade statistics showed that the balance had been heavily weighted in favour of China, which imported goods and services, of a value of not more than N39.360 million from Nigeria, as compared with Nigeria’s import of N5.388 billion from China in 1996 (Chibundu 2000).
Regrettably, the balance of trade continued to be in favour of China. It however, became a major concern to the Federal Government of Nigeria and it was therefore, the considered opinion in government circles that the balance of trade could be considerably bridged if China was to adopt a deliberate policy to import directly (without third parties) such agricultural products as cocoa, palm kernels, palm oil, beniseed, cotton, wood etc which were in abundance in Nigeria (Chibundu 2000). Besides, Chinese enterprises could invest with or without Nigerian partners in food and raw material production, livestock and fish production, establishment of plantations etc in the agricultural sector. There were also opportunities for Chinese investors in the solid mineral sector: coal, petroleum, gas, lead, tin etc which remained insufficiently tapped in Nigeria. It was for these reasons that the government promulgated the Nigerian Investment Promotion Commission Decree No. 16 of 1995 to further liberalise the investment environment in Nigeria. Under this Decree, a prospective foreign investor can now invest wholly or in partnership with a Nigerian counterpart and participate in the operations of any enterprise, except for very few in the exclusive list reserved by the government for serious reasons (Chibundu 2000).
In December 1995, the Nigerian Federal Ministry of Transport signed an agreement with the China Civil Engineering Construction Corporation for the rehabilitation of Nigeria’s railway at a cost of US$529 million, which included the supply of coaches, locomotives, wagons and guard vans, as well as restructuring of rail lines, unfortunately, the job was not completed on target date because Nigerian contractors did not supply track materials within the stipulated period. This was followed in May 1997 by agreements on oil cooperation. At that time, the Chinese expressed interest in purchasing Nigerian crude oil for blending purposes and to participate in the petrochemical industry (Chibundu 2000).
In 1999 and 2001, Olusegun Obasanjo visited China and as a result of these visits, a number of trade, economic, technical, scientific, technological and investment protection agreements were signed by both countries (Abua 2004). To consolidate existing bilateral relations between the two countries, the Chinese President Hu Jintao paid a two-day official visit to Nigeria on the 28th April 2006. President Jintao and his Nigerian host signed a Memorandum of Understanding (MOU) on petroleum cooperation (Udeala 2010). This deal provides for substantial Chinese investment in the Nigerian oil industry. As part of the agreement, Nigeria granted China four drilling licences in exchange for commitments to invest US$4 billion in oil and infrastructural projects (Udeala 2010). This agreement took place weeks before the end of his second term (The Report 2010).
During President Umaru Yar’Adua’s visit to China in February 2008, both countries agreed to pursue a strategic partnership in power and energy as well as in transport infrastructure Adeniyi (2011). Many financial agreements were also concluded. These include US$500 million concessionary loan for projects to be identified by Nigeria, construction of a hospital in Abuja to be facilitated by a US$4.2million for the construction of China-Nigeria Friendship Cultural Centre in Abuja (Okeke 2008). President Goodluck Jonathan also maintained strong relations with China. Chinese companies were awarded contracts in the Nigerian economy. The former Vice President of Nigeria, Namadi Sambo, said, “The government has invested over $10 billion on the generation, transmission and distribution in the power sector. And over US$2 billion has been invested in the rejuvenation of the rail system in Nigeria” (ThisDay 2010). The construction of Papalanto power gas turbine plant in Ogun State was awarded to a Chinese consortium SEPCO while the rejuvenation of the rail systems was awarded to the China Civil Engineering Construction Company (CCECC) (Ogunkola 2008). More so, the relations between the countries have continued to wax stronger. Though, the trade volume between Nigeria and China stood at over N1 trillion in 2012 with a deficit of N270 billion against Nigeria (Businessday 2014).

In 2015, President Jonathan’s successor, President Buhari acknowledged the Chinese for their long-term support and investments to Nigeria because it had protected their national security and the developing economy. In Buhari’s address during the 2015 presidential speech, he put forth his agenda and described the challenges Nigeria was currently experiencing. Terrorism was a priority on the agenda followed by poor physical infrastructure, quality of education and unemployment. Given a long-standing win-win relationship, China is already providing assistance to Nigeria. Li Keqiang, the Chinese Premier made a pledge to Nigeria to assist in finding the 276 Chibok school girls that were abducted by the Boko Haram through the use of Chinese intelligence services (Boko Haram is a terrorist group that started in the Northern region of Nigeria with the ideology of rejection towards western education). China also trained the Nigerian military force in anti-insurgency operations (Eze, 2011).
With Chinese workers on infrastructure and energy-related projects being kidnapped in Nigeria countless times, China is working closely with Nigeria to strengthen its Chinese-Nigeria strategic partnership, reflecting the importance of their economic relations. Looking at the physical infrastructure transformation, China won its biggest foreign contract on the amount of $12 billion with the Nigerian government to build another train system. This train system is said to run 871 miles from Lagos (West) to Calabar (East). Today, China is considered one of Nigeria’s most dependable allies and partners. It is also one of Nigeria’s biggest trading and export partners. A poll in 2014 placed Nigeria as the most pro-Chinese nation in the world with 85% of its citizens approving of Chinese positive influence in the country (Umejei,2014). This may be why the Nigerian Government has seriously expanded bilateral trade and cooperation with China.

Nigeria has faced two serious insurrections to its internal security and its territorial integrity since the return to democracy in 1998. It was China that reacted to the hesitation of western nations by providing direly needed aid to Nigeria in fighting insurgents (Bukarambe, 2005). This encouraged the government of Nigeria to develop close cooperation with China leading to the supply of equipment, training and technology to Nigeria. Both nations also signed an agreement to develop cooperation in communications and space programs. It is worthy of note that it was in partnership with China that the Nigerian Communications Satellite (nigcomsat-1) was launched in 2007 to develop cellular and internet networks in Africa ( Umejei, 2009).

China also secured oil drilling licenses and agreed to invest US4 billion in oil and infrastructure development projects in Nigeria and both countries agreed to improve bilateral relations. Increasing trade and investment in agriculture, telecommunications, and energy and infrastructure developments, while the railway sector secured a USD 1billion loan to help it upgrade and modernize its network nationwide (Umejei, 2014). In addition, there are about 40 officially identified development finance projects in Nigeria, ranging from a USD 2.5 billion loan for Nigeria Railway, power and telecommunications projects. In 2008, Nigeria and China signed a Memorandum of Understanding (MOU) for USD1 billion for the construction of houses and water supply in Abuja (Ogunsaawo, 2008). In all these however, the most pressing area of need in the last five years has been the security challenge posed to Nigeria by the Islamic extremist group, Boko Haram.
As President Mohammadu Buhari campaigned for the presidency of the most populated African nation, he marshaled out his priority areas to include updating physical infrastructure, fighting corruption, lowering unemployment, securing the state and its citizens, and improving education standards. He however, identified terrorism, specifically Boko Haram, as the most immediate priority. It is encouraging that all these sectors are receiving assistance and cooperation from China. US intelligence sources had predicted that with Nigerian’s security apparatus over-stretched, the terrorist group will likely continue to expand the territory it controls in the northern parts of Nigeria and then spread into neighbouring countries (Utomi,2009) . This grim piece of intelligence assessment has been contradicted by empirical evidence with Nigeria’s turning to China and Beijing understanding the importance of supporting Abuja in fighting terrorism. Support of Nigeria’s anti- terror campaign is one of the many areas in which the two countries collaborate and strengthen China- African Economic relations.
Boko Haram has not only committed atrocities against the government and people of Nigeria and its African neighbours, but has targeted critical national infrastructure projects, raising safety concerns for foreign firms and their workers.In a swift response to one of such attacks, the Chinese foreign ministry spokesperson, Hong Lei on May 21, 2014 stated that “China stands ready to join hands with the international community and plays a positive role in fighting against corruption and upholding peace and stability in Africa” (Udeeala, 2014). Chinese satellites were deployed to gather any useful information towards finding the abducted 276 school girls in addition to training Nigerian military forces in anti- insurgency operations.

Furthermore, bilateral trade between the two countries have grown exponentially in the last 10 years and much of Nigeria’s population has benefited from heavy infrastructure improvements and remodeling handled by Chinese firms. The Nigeria–China Chamber of Commerce was established to ensure further development of trade relations between the two countries. Trade between Nigeria and China reached a new high of $7.76 billion in 2010, making Nigeria the fourth-largest trade partner (after Angola, South Africa and Sudan) and second-largest export market of China in Africa (after South Africa) (Umejei,2013). Sino Nigerian bilateral trade and investment relations got a boost even during the period of informal ties between the two countries.

Examples include the Abuja Light Rail, Abuja- Kaduna Railway and Lagos Rail Mass Transit System. About 1,402 kilometres of rail network contract costing Nigeria about USD 12 billion and connecting Lagos in the West to Calabar in the east was won by the China Railway Construction Corporation Limited (CRCC). The Chinese will as a result export about USD 4billion worth of construction equipment, trains and steel products to Nigeria while up to 200,000 jobs will be created here during construction, and 30,000 available for young Nigerians once the rail line is operational (Utomi, 2009). There are also huge engineering engagements in the area of hydro power infrastructure and renewable energy development.

Nigeria’s communications satellite (NIMCOSAT 1) was designed, built and funded by China. The NIMCOSAT 1 was also launched in China. Nigeria is therefore, doing so much today with China in terms of trade and investments. Nigeria offers China both a market for its goods and vast supplies of untapped resources, including oil. Also Nigerian government, in recent times, has found Chinese companies more sensitive to economic challenges than their western Counterparts ( Umejei, 2009). For instance, Nigeria was the fourth largest trading partner of China in Africa and in the first eight months of 2012, it was the third and still improving. From 2000 to 2011, there are approximately 40 Chinese official development finance projects identified in Nigeria. Chinese investment in Nigeria is increasingly compared to Western nation’s FDI inflow. Chinese companies are building infrastructure that is essential to Nigeria’s industrialization at lower cost, compared to charges by western countries (Adegbulu,2006) . Unlike the West, China refrains from demanding wholesale privatization and government downsizing in the economy. China’s FDI in Nigeria can be classified into two areas: public and private. Private investments initiated and financed by Chinese investors are mostly joint ventures between Chinese and Nigerians or entirely Chinese or in partnership with others ( Kabassi, 2012). Here, Chinese are participating in the textile industry, light manufacturing, agro-allied industries, communication, power plants construction, Nigerian railway rehabilitation, among others. High profile Chinese investments pervade Nigeria’s economic sectors including: oil and gas, heavy, technology among others. In Lagos, Onitsha, Aba, Kano, and in almost every Nigerian market, one can buy something Chinese – textile, food items, drugs, electronics, phones, computers and cooking utensils. Rail rehabilitation which is currently steeped in controversy is under Chinese Company (Utomi, 2009).

Essentially, while Chinese infrastructure aid in Nigeria aids in tackling one of the major challenges to attaining sustainable development, like aid from nearly all aid providing states, it is connected to certain political and tactical gains (Akongbowa, 2008). Likewise, though the increase in Chinese imports from Nigeria offers the government a substitute measure of finance and adds diversity to trading partners particularly with colonial tendencies of the past, China’s entry into Nigerian markets notably for natural resources has instigated accusations of a new kind of imperialism (Taylor,2006) . Though, the lack of effective leadership to implement adequate economic development strategies and the less than transparent path followed by the leaders are usually criticized for the country’s continued state of dependence and underdevelopment.
In addition, China’s thirst for natural resources and minerals as well as the simultaneous infrastructure development, is aggravated by the massive dependence of Nigeria on China for financing of its infrastructure, and has been represented as being a new form of Imperialism. For example, the U.S Secretary of State in 2012 criticized China for exhibiting neo-colonialist tendencies in Africa ( Kabassi, 2012). More extreme allegations in this view highlight China’s pledge to assist with infrastructure development in Africa which has steered to countries like Nigeria to be “de facto” Chinese areas areas ( Durden,2012 ).

Gap in the Literature
Based on the above literature reviewed, the diplomatic relation of china –Nigeria has lasted over forty-five years and many scholars have different opinions about trade imbalance and if the diplomatic openness to international competition has created avenue for a foreign country like China to create a large trade deficit and flood Nigeria market with low-tech manufactured goods that might otherwise be produced domestically and also for them to gain access to the abundant raw materials of this country. The difference in opinion and empirical findings on the impact of diplomatic and economic relations is of serious concern, especially in developing countries; and necessitates further researches. This is the gap that this study wants to fill.

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Chapter Three
Findings and Discussions
3.1 Diplomatic Relations between Nigeria and China
This section of the dissertation will present the broader results of examination conducted on the Chinese FDI and Trade trends in Nigeria, particularly from 2000 till 2014. This involves the various agreements and policies which have influenced the patterns of Chinese investments in Nigeria. Likewise, the impacts of foreign Investment and bilateral trade policies will be provided through analysis of case studies that represent this partnership between China and Nigeria.

In order to build investors’ confidence, the two countries signed the following Agreement and MoUs. These are:
The Bilateral trade Agreement signed on 27th August, 2001;
Memorandum of Understanding on Investment Cooperation between the Ministry of Commerce of both Countries signed on 28th February, 2006; and
Memorandum of Understanding on Economic Cooperation Agreement between Nigeria and Guandong Xinguang International Group of China on 15th march, 2006  
Nigeria and China signed Investment Promotion and Protection Agreement (IPPA) in 2001. It was ratified on 31st December, 2002.

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 Centers, Construction of Industrial Zone and Eco-Agriculture Zone signed on 11th July, 2013( Egbula & Zheng, 2011).
It is noteworthy that China’s interests in Nigeria and Africa at large are two folds: (i) diplomatic and (ii) economic. The Chinese people will not forget that it was due to strong support of vast number of developing countries including Nigeria that China successfully regained its lawful seat in the United Nations Security Council in 1971. Nigeria was in the forefront of the support for China right from the beginning. Nigeria voted in the United Nations General Assembly in support of China’s admission to the United Nations. That was Nigeria’s debut at the United Nations General Assembly with Mallam Aminu Kano representing Nigeria (Ogunsawo,2008)
The Second is Nigeria’s oil and gas which China desperately needs to sustain its 10 percent annual economic growth. Africa now supplies 25 percent of China’s oil import. China is more acceptable in Africa partly because it is viewed with more credibility than Western Nations with their imperialist legacies (Akongbowa, 2008). As noted, China’s main interest in economic frontlines is securing supply lines for oil and minerals. China has only 2.3 per cent of the world’s oil reserves and even less of gas (1%). Meanwhile, it consumes 6.7 million barrels per day, which is the second largest consumption after the United States (Ogunkola, 2008).
While some scholars admit that both countries depend on each other for the achievement of their goals at the international arena (Utomi, 2012), others believe that it is triggering dependency for the Nigerian economy (Naid, 2007). This section highlights the history of Chinese engagements in the oil sector as well as illustrate the complex relationship between Chinese oil investments in aiding with Nigerian development through financial assistance programmes and infrastructure growth, which has ensured Chinese presence in other vital sectors of the economy.

3.2 Nigeria’s Economic Relations with China
Table 1: Major Agreements between China and Nigeria
Agreement for the avoidance of double taxation and prevention of
Fiscal evasion with respect to tax on income, agreement on consular affairs and agreement on cooperation on strengthening management of
narcotic drugs, psychotropic substances and diversion of precursor chemical
2002
Nigeria agreed to supply PetroChina with 30,000 barrels per day (4,800 m3/d) of oil for $800 million. 2005
China secured four oil drilling licenses and agreed to invest $4 billion in oil and infrastructure development projects in Nigeria, and both nations agreed to a four-point plan to improve bilateral relations – a key component of which was to expand trade and investments in agriculture, telecommunications, energy and infrastructure development. 2006
China also agreed to grant a loan of $1 billion to Nigeria to help it upgrade and modernize its railway networks. 2006
China agreed to buy a controlling stake in the Kaduna oil refinery that would produce 110,000 barrels per day (17,000 m3/d). Nigeria also promised to give preference to Chinese oil firms for contracts for oil exploration in the Niger Delta and Chad Basin 2006
The CNOOC purchased a share for $2.3 billion in an oil exploration block owned by a former defence minister. China has also pledged to invest $267 million to build the Lekki free trade zone near Lagos. 2006
Memorandum of Understanding on promotion bicameral economic cooperation and partnership between Ogun State of Nigeria and Zhejiang province of China 2009
Trade between the two countries was worth US$7.8 billion. 2010
Agreement on Trade, investment promotion and protection and Nigeria was the 4th largest trading partner of China in Africa and in the first 8 months of 2012 it was the 3rd 2011
Major agreements to boost defence, trade and economic cooperation 2013
Agreement and MoU between Nigeria and China to be signed as President Buhari visits China 2015
( Egbula & Zheng, 2011, Umejei,2014, Akongbawa,2008, Utomi, 2009, Moghalu, 2015)
According to Bukarambe (2005), since Nigeria and China first established economic relations, the pattern of trade has been such that Nigeria exports raw goods to China while they import finished goods from China. He further asserted that, “the continuation of the trend uninterrupted, unaltered and unabated indicate that China had a net industrial and developmental advantages over Nigeria from the beginning and the imbalance remained” ( Bukarambe, 2007, p.92)).
However, the implication from this trade analysis is that the Sino-Nigeria trade which has increased since both countries started relations has largely been export of primary products to China and import of finished products to Nigeria, particularly, as Nigeria lacks the technological know-how to produce the finished goods (Akongbowa, 2008). For China, these advantages have been widening trade imbalance in her favour, access to large Nigerian domestic market with penchant for imported goods and avenue to invest heavily in underdeveloped sectors of the Nigerian economy. Also, China has undertaken to reduce the average tariff on agricultural imports from 22% to 15% and eliminate export subsidies and non-tariff barriers to the import of several important agricultural goods (Chinese Chamber of Commerce Report). However, this initiative was not taken seriously by the Nigerian government. The failure of the cassava initiative by the Obasanjo’s government is a sad example. Farmers were encouraged to plant cassava but government did little in promoting the initiative (ibid).
China has set up over 30 solely owned companies or joint venture in Nigeria actively involved in the construction, oil and gas, technology, services and education sectors of the Nigerian economy ( Kabbassi, 2012 ). Some of the wholly foreign owned investments are: ZTE Nigeria Investment limited, Plas Alliance Company, Royal Motors Company Limited etc. Some of these Chinese investments have also benefitted from incentives in the country such as pioneer status and expatriate quotas (Ogunkola 2008). According to UNCTAD (2008), Nigeria accounted for over 80 percent of about $7 billion inflow to West Africa and this was dominated by Nigeria’s oil industry, these inflows mostly originated from China. In 2007, the China National Offshore Oil Company (CNOOC) Limited made payments for a 45% stake in the Akpo oil field (UNCTAD, 2009), with expected production of 225,000 barrels of oil per day. The total deal offered to CNOOC was worth US$2.7 billion (Abbah 2006). Subsequently, Chinese National Petroleum Corporation (CNPC) received the license for four oil blocks -OPL 471, 721,732 and 298 in return for a commitment to invest US$2billion to rehabilitate the Kaduna oil refinery. President Musa Yar’Adua’s inquiry into the oil block auctions in 2007 was strongly critical of the oil-for-infrastructure approach ( Kabbassi, 2012 ). The investigative committees report questioned the conduct of the bidding rounds and the awarding of blocks to bidders who were well connected but had little industry experience (Egbula and Zheng 2011). Secondly, the committee said the system had been abused, with the Asian multinational oil corporations gaining access to high potential oil assets but failed to deliver on the promised infrastructure projects. With contracts cancelled or suspended, this resulted in a deep set-back for this Chinese oil company.

In the information and communication technology (ICT) sector, the development of the national backbone infrastructure occupies a prominent place. Nigeria’s first communication satellite NigComSat-1 received financing from China Exim Bank. The Nigerian Communication Satellite (NIGCOMSAT-1) was launched on 13 May, 2007 at the cost of $256m, out of which China Export Import Bank gave a loan of $200m and offered to control and managed it for two years. Unfortunately, due to solar power assembly problems, the satellite was de-orbited on November 10, 2008. The Chinese authorities quickly commenced replacement of the satellite at no cost to Nigeria ( Umejei, 2009).

The Chinese Civil Engineering Construction Corporation (CCECC) was awarded the contract for the modernization of the Nigerian one track rail line to standard gauge rail project (Kabbass, 2012). In October 2006, the Nigerian government signed a US$2.5 billion loan facility with China, a substantial part of which was used to finance the refurbishment of the railway system (ibid). The China Exim Bank is partly funding thermal power stations in Nigeria. By the end of 2006, China was providing US$3.5 billion toward the construction of six major hydro-power projects amounting to some 6,000 megawatts (MW) of installed capacity (Umejei, 2013).
Furthermore, It was revealed that in 2011, Nigeria spent about N1.57 trillion to import goods from China as compared to a mesly N157.5 billion from in exports from China, showing that Nigeria imported ten times more than their exports to China ( Udeala,2013). It is estimated that in 2015, Nigeria spent about N839 billion on imports from China and earned just N82.3 billion from exports. China has adequately benefitted from the balance of trade between both countries, where import from China between 2013 and 2015 was 7.8 times more than Nigeria’s export. China is one of the few trading partners that Nigeria still operates a trade deficit with, as 22 percent of Nigeria’s imports between 2012 and 2015 were from China, while only 1.5 percent of exports went to China ( Nuhu, 2012). This imbalance, however, is never mentioned by the Chinese Embassy who have immensely benefitted from imports brought into Nigeria.

The Industrial and Commercial Bank of China Ltd (ICBC) and Nigeria’s Central Bank agreed on a currency swap deal.The purpose of the deal was to address short-term foreign currency liquidity challenges and ease the pressure on the dollar as China’s trade relations with Nigeria was on the rise. China is Nigeria’s largest trade partner in imports( Umejei, 2013). The currency swap deal has its downsides as it could potentially weaken Nigeria’s domestic production as the country would then rely on China’s imports since importers would have easy access to the Chinese Yuan to bring in cheap goods rather than produce within the country (Udeala,2014). Nigeria needs to improve its domestic trade capacity to possess a favourable trade position with China. Creating partnerships with the Chinese should be to increase manufacturing capacity of goods Nigeria can produce themselves rather than Nigeria depending on import from China (ibid). A conscious deficit gap closing should be seen if Nigeria continues to progress in its industrialisation agenda. Nigeria’s sole focus should be on creating a sustainable model to ensure local economic development and growth.

Nigeria’s unfavourable trade with China has led to the collapse of industries like the textile industry. China has been associated with the importation of several substandard items into Nigeria with the Federal Government doing little or nothing to stop this. Earlier this year, the National Agency for Food and Drug Administration and Control (NAFDAC) reported that 91 percent of tomato pastes imported into Nigeria are substandard with most of these imports arising from China and India. China has been a major beneficiary of the slump in the oil prices with Nigeria being an exporter of crude oil to China (Umejei,2014).A Bloomberg article from (2014) on China_Africa relations reported China’s illicit trade of Rosewood which is currently estimated to be worth at least $1.3 billion. Nigeria is China’s biggest supplier of this wood in Africa. China’s illegal harvest of Rosewood from West Africa has led to the destruction of forests within the region. The mentality that China’s current relation with Nigeria is a favourable one needs to be changed. Rather, Nigeria must seek to accept only partnerships that would benefit the country rather than hurt us. A review of the exploitative elements in this marital contract is long overdue.
Table 2. Various Countries share of Nigeria’s Export (%).

Year USA UK Spain France Italy Argentina Japan China India Brazil
2000 39.20 0.40 6.24 8.01 4.15 0.57 0.60 0.34 11.10 5.03
2001 39.61 0.12 8.63 7.78 4.73 0.39 0.82 0.98 10.39 5.70
2003 38.15 0.12 7.84 6.07 2.86 0.14 3.89 0.43 9.97 6.90
2004 25.09 0.20 5.54 4.29 3.90 0.16 3.89 0.43 8.58 3.50
2005 35.09 0.28 1.37 4.62 3.50 0.09 0.53 2.64 10.39 5.00
2006 41.10 0.27 6.18 3.46 3.18 0.09 0.76 1.64 8.18 2.09
2007 17.05 0.90 2.61 2.29 2.88 0.09 0.73 6.29 2.70 5.39
2008 20.84 0.27 8.42 2.90 3.71 3.62 2.25 5.44 3.17 4.53
2009 22.77 0.38 3.87 1.90 3.72 4.55 2.26 5.59 3.17 2.23
2010 34.37 1.46 3.27 4.05 3.52 0.1 0.45 1.66 10.48 6.98
2011 22.55 6.22 5.90 5.86 5.09 0.92 0.31 2.02 10.8 8.4
2012 16.86 6.32 5.45 4.16 6.15 0.12 0.49 5.62 11.10 7.54
2013 8.47 5.13 6.99 5.87 6.98 0.003 0.49 1.22 12.65 9.47
2014 3.78 5.07 9.31 5.73 4.38 0.2 2.16 1.62 14.56 8.08
2015 3.45 4.32 9.47 5.34 2.26 0.1 3.49 1.64 17.33 6.59
Source: Nigeria Bureau of statistics (http://nigerianstat.gov.ng/tradestat)
Despite the diversification efforts and export promotion of the non-oil sector, Nigeria’s export is dominated by oil export in terms of value. The United States has remained the largest single importer of Nigeria’s crude oil averaging 31.6 percent share of oil export since 1999. Other major importers of Nigeria’s crude are Spain, France, Italy which are in Europe, Brazil and Argentina (recently) are emerging partners in America. India and China are emerging partners in Asia.
While the relative oil export share of Spain has been fluctuating, Italy’s share has been decreasing since 2003. The share of United Kingdom (Nigeria’s colonial master) has remained very disappointedly poor. India’s share in Nigeria’s oil export was quite impressive, almost ranking second to United State till 2003 when it share started declining.
China’s relative share was not impressive until 2005 and subsequently has remained a major importer of Nigeria’s crude oil, even when United States share was absolutely declining over the period China relative share was increasing.
Nigeria’s total exports to China are spread over different products which have been classified according to the standard International Trade Classification (SITC). Nigeria’s exports to China were not impressive prior to 2007. The year 2007 marked a turning point in Nigeria’s Export to China, which had improved tremendously across products. Manufactured goods, chemical products, crude materials including crude oil have been consistently the most sought after by china among the Nigerian exports product. The least export to China has remained animal/veg/wax, while food and live animal, beverages and tobacco are declining in importance to China’s demand. Products like mineral fuel/lubricants, machinery/transport equipment, miscellaneous manufacturing arts, and commodities n.e.s had swing in demand.
In overall, the share of China in Nigeria’s total export has improved, first talking from the position in 2001 to all time low of 0.007 percent in 2006, thereafter rising to all time relative shares of 5.62 percent in 2012.
Table 4. China’s share in Nigeria Products Exports (%)
Description 2000 2006 2007 2009 2010 2011 2012 2013 2014
Capital goods 0 59.7 2.87 1.02 1.2 26.15 0.15 0.56 0.47
Consumer goods 0.15 5.56 1.08 8.03 5.49 18.06 19.87 2.21 27.48
Intermediate goods 0 34.71 7.52 12.15 44.82 4.39 3.78 7.57 3.03
Raw materials 99.84 0 88.39 78.57 47.65 51.24 76.15 89.63 69.03
Animal 0 0 0.04 0.23 0.07 0.33 0.51 0.88 0.04
Chemicals 0 5.56 0.26 0.2 0.88 0.27 1.27 1.49 0.22
Food Products 0 0 2.07 1.8 0.58 1.37 1.22 0.44 0.31
Footwear 0 0 0.45 0.58 0.84 0.03 0.03 0.06 0
Fuels 99.84 0 84.08 76.08 48.35 45.03 79.74 77.36 90.47
Hides and Skins 0 0.29 3.73 6.25 40.51 2.07 1.54 3.08 0.21
Mach and Elec. 0 59.7 2.05 0.29 0.7 0.98 0.09 0.46 0.08
Metals 0 34.25 1.59 0.79 0.42 1.72 1.29 1.53 0.5
Minerals 0 0 0.56 0.58 0.32 0.48 0.13 2.58 0.57
Miscellaneous 0 0.15 0.03 0.93 0.84 0.21 0.07 0.07 0.02
Plastic or Rubber 0 2.14 4.07 2.71 20.15 12.97 4.98 0.39
Stone and Glass 0 0 0.01 0.54 0.02 0.11 0.03 0.1 0.02
Textiles and Clothing 0 0.02 0.35 1.24 0.2 0.82 0.19 1.24 0.04
Transportation 0.15 0 0.81 3.63 1.61 25.36 0.55 1.43 2.17
Vegetable 0 0 1.43 1.43 1.86 1.01 0.35 3.44 4.85
Wood 0 0.03 0.28 1.35 0.09 0.07 0.02 0.86 0.11
Source: World Trade Integrated solution (https://wits.worldbank.org)
3.3 China’s Investment in Nigeria
Although, information about Chinese activities in the country points to increasing economic (trade, commerce and investment), social (health and education) and technical relation, the composition of Chinese FDI into Nigeria is fragmented. China has set up over 200 solely owned companies or joint venture in Nigeria actively involved in the construction, oil and gas, technology, services and education sectors of the Nigerian economy. Indeed, the increased Chinese economic interests in Nigeria can be broadly classified into two: private and public. According to information obtained from the Nigerian Investment Promotion Commission (NIPC), Chinese private FDI is composed of agro-allied industry, manufacturing and communications sectors. On one hand, some of these investments are joint venture mainly between Chinese and Nigerian investors. On the other hand, some are wholly foreign owned either wholly by the Cinese or in partnership with other foreign investors. Some of the Chinese investments have also benefited from investment incentives in the country such as pioneer status and expatriate quotas have been granted to some of these companies.

Thus in 2005, the official record by Nigeria was $1.88 million FDI inflow from China. This seems to be at variance with the impression created in the media. Various explanations can be adduced for the seemingly paucity of observed figure: First, the upsurge in Chinese FDI inflow to Nigeria occurred only in the recent time i.e. between 2006 and 2008, a period that is not covered by the available data. Second, there is also the possibility that the promises and declarations captured by the media did not eventually materialised. A case in point is the sales of Kaduna Refinery that was announced in January 2006. It was meant to be a $2.3 billion worth of investment by the Chinese state controlled energy company, CNOOC. By March 2007, the government was considering a review of the deal (Aboudou-Kabbassi, 2012). The “public” investment and economic activities of Chinese in Nigeria have also gained prominence in recent time (ibid). This is not unexpected given the high profile witnessed at the political level. This type of investment spanned different areas of the Nigerian economy and prominent among them are those in oil and gas, construction especially building of infrastructure. There is the need to distinguish between investment, loan and contracts. This, however, requires further insight to data. Currently available data do not offer sufficient information. For example, a further probing of the deal to refurbish the Nigerian railways by the Chinese reveals that it has a soft loan component.
FDI has a host of advantages including augmentation of domestic capital; transfer of technology, knowledge and skills; promotion of competition and innovation; and enhancing export performance (Udeala, 2014). These must be weighed against other issues such as anti-competitive and restrictive business practices; tax avoidance and abusive transfer pricing; volatile flows of investment and related payments deleterious for balance of payments; transfer of polluting activities and technologies; and excessive influence on economic affairs with possible negative effects on industrial development and national security.

As at 2012, FDI in Nigeria stood at about $ 8 billion, which represented about 15 percent of the total FDI received by Africa; this also amount to about 25 percent of the country’s GDP as it utilizes the myriad of available natural resources to woo investors from different parts for the globe. With the huge FDI, Nigeria stands in the nineteenth position among the leading nations with the highest FDI in the world ( Udeala, 2014). Although the country is faced by several challenges, but the enormous natural resources available in the have made it a destination of choice for global investors. Due to its abundant oil reserve, Nigeria’s FDIs are majorly from the United States, United Kingdom (with about 20% of the total FDI), and China (Bukarambe, 2007). In recent times, China has become a conspicuous associate of Nigeria; this has translated in a large FDI to Nigerian from the Asian giants. Against all odds, Nigeria remains an investment destination for global investors. With a population of 160 million people and vast natural resources, FDI in Nigeria is expected to be on the rise for a long time to come.

Table 5: Capital Importation by Country ($millions)
Country 2007 % 2008% 2009% 2011% 2012% 2013% 2014% 2015%
United Kingdom 4705 (49.2) 4105 (36.7) 731 (13.8) 3432.32(45.2) 10262.81(61.8) 10635.38(49.9) 10917.97(52.6) 3830.96(39.7)
United States 1850(19.3) 14950 (44.4) 3296 (62.2) 1484.1(19.5) 2540.2(15.3) 4146.54(19.5) 3737.43(18) 2454.2(24.5)
Netherlands 157 (1.6) 154 (1.4) 186 (3.5) 762.99(10.1) 207.02(1.2) 217.46(1) 553.58(2.6) 1151.97(11.9)
China 11(0.1) 36
(0.3) 139 (2.6) 58.07(0.7) 47.65(0.2) 87.8(0.4) 116.89(0.5) 10.31(0.1)
Others 2850 (29.8) 1926 (17.2) 948 (13.7) 1850.48(24.3) 3558.24(21.4) 6231.19(29.2) 5424.89(26.1) 2195.56(22.8)
Total 9573 21171 5300 7587.96 16615.92 21318.37 20750.76 9643
Source: CBN 2016 Annual statistical bulletin
3.4 Economic Implications of China’s Economic Interest and the Future for Nigeria
China’s economic relations with Nigeria have grown over the years. Trade and investment have increased between the two countries. Though both countries are to benefit as a result of increased trade, many are skeptical about the real benefit as a result of increased trade, many are skeptical about the real benefit Nigeria stands to gain with her relations with China. Aspersions are cast to the substandard goods imported from China. Apprehensions also exist for Nigerians. There are anecdotal evidence pointing towards Chinese firms not conforming to the Nigerian labour standards as well as those of the International Labour Organization (ILO) (Ogunkola et al 2008).
The analysis of the trade data shows that: Nigeria’s oil export to China has increased tremendously in recent years. Total export to China by SITC classifications has also increased (especially for manufactured goods, chemical products and crude oil). The share of China’s oil import from Nigeria has also increased enormously. Nigeria’s import from China both in terms of value and share has increased immensely, with China becoming the top most import source. It is important to note that while Nigeria’s trade with her traditional economic partners is reducing, trade between Nigeria and China has continued to increase. Nigeria’s trade with China has been imbalanced and may portend danger to her reserve.
3.5 Competitive Bidding Progresses
With the oil-for-infrastructure deals on hold, Chinese engineering and construction companies wishing to enter the Nigeria market must do so through competitive bidding processes. Chinese companies bid for contracts either on their own or jointly with international partners. Their success in the bidding process has been largely attributed to pricing. Chinese companies are fabled to produce roads, dams and hospitals well below the costs sought by western firms ( Egbula, et al, 2011). The success of Chinese firms bid for contracts can also be explained by their easy access to credit. China’s state owned banks have committed billions to finance and insure the activities of Chinese multinational corporations in Africa, making bids from Chinese firms more secure and thus more attractive to Nigerian decision makers. Another way that Chinese firms enter the Nigerian market is by buying into existing businesses. An example of this is Sinopec’s purchase of the Canadian company Addax Petroleum (ibid). Analysts see such buy-ins as especially attractive in the oil sector, where Chinese firms were stung by the suspension of the oil for infrastructure arrangements.

References
Abbah, T. (2006). China-Nigeria economic cooperation in whose interest.
Leadership, Sunday, June 4, 2006.

Aboudou Kabassi, F. (2012). A Tale of Two Superpowers: Nigeria and China
Relations.

Akongbowa, B. A. (2008). Nigeria-China economic cooperation:
Conceptualization, contending issues and prospects and its implications for
the West African sub-region. 12th EADI General Conference, Global
Governance for Sustainable Development, (p. 9). Geneva
Bukarambe, B. (2007). Nigeria-China relations: The unacknowledged Sino-dynamics. Paper Presented at the Conference on Nigeria and the World after forty years: Policy Perspectives for a New Century, NIIA, Lagos, 2001,
Egbula, M. and Zheng, Q. 2011. China and Nigeria: A powerful south-south
alliance.

Naid, S., 2007, ‘China–African Relations in the 21st Century: A ‘Win–Win’
Relationship’, in Melber, H., ed, Current Africa-China Issues, Skockholm,
Sweeden: Elanders Gota.

Ogunsanwo, Alaba, 2007, „Nigeria and China in the New Dispensation?, Paper
Delivered at Roundtable Discussion on 26 September.Ogunsanwo, Alaba., 1974,
China?s Policy in Africa (1958-1971), London: Cambridge University Press.

Ogunsanwo. A. (2008). A tale of two giants: Nigeria and China. In Kweku,
& Sanusha, N. (eds.) Crounching tiger, hidden dragon? Africa and China.
Kwazuhi Natal, Capetown South Africa: University Press.

Ogunkola, Olawale, Abiodun Bankole, and Adeolu Adewuyi. 2008. China- nigeria economic relations. AERC Scoping Studies on China- Africa Relations.
Udeala, S. O. (2014). Nigeria-China Economic Relations under the South-South Cooperation. African Journal of International Affairs, 13(1-3), 61-88.

Umejei, E. 2009. NigComsat 1: Re-inventing the Satellite Controversy. Emeka Umejei’s Blog Web log post. Available: https://
emekaumejei.wordpress.com/2009/01/04/nigcomsat-1re-inventing-thesatellite-
controversy/ 2018, August 1.

Umejei, E. L. 2013. The Framing of China in Nigeria: An Analysis of the
Coverage of China in Nigeria by Thisday newspaper. Unpublished masters thesis.
Grahamstown: Rhodes University.

Chapter Four
PROSPECTS AND CHALLENGES OF NIGERIA-CHINA RELATIONS
4.1 Trade Imbalance between Nigeria and China Relations
China’s economic cooperation with Africa has been exceptional as reflected in its economic engagements with nearly all the 54 countries on the continent. Within Africa, Nigeria is an important country for China, if we take into consideration the population and natural resources of Africa’s largest economy. Although Nigeria-China trade has grown exponentially over the last few decades, the two countries’ trade relations have remained disproportionately in favour of China. Nigeria is a perennial importer of Chinese goods, thus giving rise to capital flight and the weakening of the Nigerian manufacturing sector (Abodou-Kabassi, 2012). The key question is how this trade imbalance can be remedied.

4.2 Historical trend
Nigeria’s trade with China had existed long before diplomatic normalization took place in 1971. Since then, economic ties between the two countries have continued to wax stronger. However, Nigeria’s trade deficit with China has been a knotty issue since the 1970s. For instance, between 1972 and 1974, Nigeria exported USD 14 million worth of goods to China, while imported goods from the Asian country were worth USD 249 million (Akongbowa, 2008).  Following the normalization of diplomatic relationship, the two governments began to work out modalities to mitigate the trade imbalance. In September 1974, a five-man delegation of the Nigerian government, led by the head of state, General Yakubu Gowon, went to China to discuss trade between the two countries. Unfortunately, nothing tangible came out of the trip, because ten months after that visit, General Gowon was overthrown by (late) General Murtala Ramat Muhammed. Subsequent efforts were made by General Olusegun Obasanjo in 1978 and 1979 (Ogunkola et al, 2008).
According to Nigerian former diplomat and political scientist, Alaba Ogunsawo (2008), negotiations between Nigerian officials and then Chinese Vice Premier, Geng Biao, along with other Chinese officials, did bring only a limited aid package for Nigeria. As an initial step towards remedying the trade imbalance between the two countries, China signed agreements of cooperation in the fields of agriculture, industry and trade, and further pledged commitments in a number of other areas. Some of these areas included sending medical personnel and agricultural experts to assist in the development of new model farms. China also agreed to buy Nigerian palm kernels, cocoa, cashew nuts and cotton. A further agreement involved manufacturing Nigeria-focused farming tools in China (ibid). Notwithstanding the above agreements, the trade imbalances between the two countries persisted and widened.
At the turn of the millennium, Nigeria renewed its economic diplomacy. Much effort was put into enhancing economic cooperation with China. To give impetus to the cooperation, in 2001 and 2005, former President, Olusegun Obasanjo, visited China. In 2004 and 2006, Chinese President, Hu Jintao, reciprocated both visits (Aboudou Kabbassi, 2012). These visits culminated in the signing of more agreements and Memorandum of Understanding, key among which is the strategic partnership of 2006. The focus of the partnership was trade expansion, investments in agriculture, telecommunications, energy, and infrastructure development. By 2005, bilateral trade between the two countries reached USD 2.8 billion. That year, China’s exports to Nigeria were valued at USD 2.3 billion and its imports from Nigeria were estimated at USD 527.1 million. And by 2010, Nigeria-China trade was USD 7.700 billion, making Nigeria China’s fourth biggest African trading partner, and the second largest Chinese export destination on the continent (Aboudou Kabbassi, 2012). However, China’s exports to Nigeria and imports from Nigeria were USD 6.737 billion and USD 962.5 million, respectively (ibid).
In 2014, trade volume between the two countries had grown to reach USD 18.1 billion, thus, making Nigeria China’s third largest export destination in Africa, after South Africa and Angola. Nigeria-China trade reduced to USD 14.94 billion and USD 13 billion in 2014 and 2015, respectively (National Beraeu of Statics, 2016). Latest trade data has shown further deterioration in trade between the two countries. According to the same National Bureau of Statistics report (2016) between 2013 and 2015, Nigeria’s trade deficit with China was USD 16.9 billion. Although the balance of trade is skewed in favour of China, Nigeria-China trade accounts for 8.3% of China’s total trade with Africa, and 42% of China’s trade with the Economic Community of West African States (ECOWAS).

4.3 Potential Gainers and Losers
Ideally, Nigerian consumers and government should gain from imports from China particularly if most of the imports are import-competing final products since this implies the market share of Nigerian producers would shrink and lead to excess capacity and shedding of workers (Adegbulu, 2006). This is captured in aggregate by an analysis of the gainers and losers of Nigeria-China trade relations via the trade balance between Nigeria and China. Table 5 shows that Nigeria imports were mostly agricultural (HS 01-24) and industrial (HS25s-99) goods from China during 2003-2010. In the specific case of agricultural goods, Nigeria’s deficits rose from $16.6 million in 2003 to $59 million in 2007 and $781.9 million in 2010. In the case of industrial products, Nigeria’s trade deficits rose from $1.7 billion in 2003 to $3.2 billion in 2007 (by almost 100%) and $41.5 billion in 2010 . After an initial reduction by only 8% in 2004, the trade surplus of China rose by almost 91% in 2005 for agricultural products and 24% in 2007 ( Udeala, 2010). For the non-agricultural goods also, China’s trade surplus rose by 27% in 2007 falling from about 40% increase in 2005 and 2006. The total trade surplus of China was $3.3billion in 2007 and $42.3 billion in 2010 (ibid). Given this analysis, losses to different economic agents in Nigeria can be imagined. There is therefore the need to boost Nigeria’s exports perhaps through bilateral trade agreements.
Table 6: Trade Balance between China and Nigeria (2003-2010) ($millions)
2003 2004 2005 2006 2007 2008 2009 2010
Sub-total:HS 01-24 (US$’000) 16.6 15.3 29.1 47.8 59.1 990.5
296.1 781.9
Sub-total: HS 25-99 (US$’000) 1,697.7 1.240.1 1,747.1 2,526.6 3,199.6 52,636.4
15,735.1
41,550.7
Total Surplus/deficit HS 01-99 1,714.3 1,255.3 1,776.3 2,574.4 3,258.8 53,626.9 16,031.2 42,332.6
Source: Data for 2003-2010 obtained from International Trade Centre COMTRADE Database.

Generally, producers and exporters of those broad categories of products whose exports increased between 2000 and 2005 are better off as they earned additional incomes from exporting to China, assuming export price of their products and the real exchange rate remained constant. Given that the main component of Nigeria’s exports to China is mineral and related products, most of the gains of Nigeria’s exports to China go to the government and joint venture oil companies (Ezirim, 2007). The benefit derived by ordinary Nigerians is therefore indirect, and emanates from the benefits that are generated by government spending on social and economic services in the country.
4.4 Nigeria’s Efforts to Create an Investment Friendly Environment
China has commended the Federal Government of Nigeria’s effort at creating a business-friendly environment for investors in the country. Chinese Ambassador to Nigeria, Zhou Pianjing, made the commendation at an international seminar on China-Africa relations organised by the Centre for China Studies in Abuja. The envoy said that Nigeria’s new ranking in the world showed its seriousness in promoting investment and development in the country. He further reiterated China’s commitment to support Nigeria’s industrialisation and economic diversification efforts. Pianjing said: “Nigeria has moved up 24 places to 145th and The World Bank also lists Nigeria as one of the top 10 reforming economies in the world in 2015. “The Chinese side is willing to push forward the implementation of the “Belt and Road” construction in Nigeria and Africa, and support Nigeria in implementing its Economic Recovery and Growth Plan ” (Shapiro, D. M., Vecino, C., & Li, J. (2018, p.95). He further said that more than half of the 60 billion dollars funding support pledged by the Chinese government for Africa had been “disbursed or arranged”(ibid).

Zhou Pianjingalso said that Africa would continue to remain a priority area for China’s international industrial cooperation. Furthermore, China made a 60-billion-dollar pledge made by President Xi Jingping at the 2015 Forum on China-Africa Cooperation was to ensure the implementation of an action plan for China-Africa cooperation ( Thisday.ng, 2016 report) . The plan covers a wide range of areas, including agricultural modernisation, infrastructure, financial services, public health, peace and security. Also in his address, Charles Onunaiju, Director, Centre for China Studies, said that the industrial cooperation between both countries would facilitate the Federal Government’s economic diversification goals (ibid).
Table 6 – Major Chinese companies in Nigeria
Companies Sector of Activities Assets (USD Million) Employees Investments in Nigeria
Sinopec Oil and Gas 152.80 373375 Blocks OML 64,66, 29% stake and operating rights to block 2 Nigeria-Sao Tome Joint Development ZONE Licenses for OPL 471,721,732,298
CNPC Oil and Gas 470.80 1.67 million
(80
000
foreigners) Licenses for OPL 471, 721, 732, 298
SEPCO Electric Power Construction 38.60 19756 Papalanto Power Plant
CCECC Construction 2.17 70000 Rehabilitation of Palanto-Lagos expressway, Athlees’s village, Ikot AkpadenOkoroette road, lekki Free trade zone
CSCEC Construction, Real Estate 58.9 121500 Refinery
CNOON Offshore Oil and Gas 13.8 21000 45% interest in offshore exploitation license, OML 130
Sinoma Cement egineering 2.9 9000 In collaboration with Nigeria dangot group for cement production line EPC project in 2008
CGC Construction 0.3 – Kebbi airport, Water supply project in Gombe, sake dam
Huawei Telecom 25.00 51000 Network, Mobile phones
ZTE Telecom 13.00 85232 CDMA, Mobile Phones
Zhonghao Overseas Construction
Engineering Company 300 – Exploration of solid minerals in Zamfara and oil in
Sokoto basin
China National Machinery ; Equipment Corp. Machinery ; equipment, Independent power plant construction Admiralty way, lekki Phase 1lagos state
Source: http://www.ncbcng.org/database
References
Aboudou Kabassi, F. (2012). A Tale of Two Superpowers: Nigeria and China
Relations.

Akongbowa, B. A. (2008). Nigeria-China economic cooperation:
Conceptualization, contending issues and prospects and its implications for
the West African sub-region. 12th EADI General Conference, Global
Governance for Sustainable Development, (p. 9). Geneva
Ezirim, G.E. (2007) “Reflections on the China in Africa Debate: Mercantilism,
Partnership or Resurgence of Hegemony? Journal of International Politics and
Development Studies, Vol.3 No.1 July/December FDI and Economic Growth:
Evidence from Nigeria. By Adeolu B. Ayanwale Department of Agricultural
Economics Obafemi Awolowo University Ole-Ife, Nigeria. AERC Research
Paper 165 African Economic Research Consortium, Nairobi April 2007.

Ogunsanwo. A. (2008). A tale of two giants: Nigeria and China. In Kweku,
A. & Sanusha, N. (eds.) Crounching tiger, hidden dragon? Africa and China.
Kwazuhi Natal, Capetown South Africa: University Press.

Shapiro, D. M., Vecino, C., & Li, J. (2018). Exploring China’s state-led FDI model: Evidence from the extractive sectors in Latin America. Asia Pacific Journal of Management, 35(1), 11-37.

ThisDay Newspaper (Thursday, July 26, 2016). ZTE Spends $500m on
Nigerian Operations.

Ogunkola, Olawale, Abiodun Bankole, and Adeolu Adewuyi. 2008. China- nigeria economic relations. AERC Scoping Studies on China- Africa Relations.
Udeala, S. O. (2010). Nigeria-China economic relations under the south-south cooperation. African Journal of International Affairs, 13(1-3), 61-88.

Chapter Five
Conclusion
5.1 Summary of Major Findings
The China-Nigeria relations as shown in the preceeding sections covered different facets of the Nigerian economy. The recent resurgence in the relationship has been attributed to improve and deliberate mutual efforts at the highest political levels. Chinese FDI inflows to Nigeria have been on the increase in recent years. A ten-fold increase in the flow of Chinese into Nigeria between 2000 and 2015 was recorded. Compared to other sources of FDI inflows to Nigeria, Chinese FDI inflows in Nigeria was $1.88 million in 2005 and as at 2012, FDI in Nigeria stood at about $ 8 billion, which represented about 15 percent of the total FDI received by Africa; this also amount to about 25 percent of the country’s GDP (Nuhu, 2012). The investments from China are into manufacturing, oil and gas, telecommunication, building and construction. Thus, while some of the Chinese investments and activities in the country are directed at addressing critical gap in the provision of basic infrastructure, these are not comparable to the level at which Chinese are seeking Nigeria’s oil and gas and other raw materials.
In the area of trade relations, similar recent upsurge was captured by the available data and pieces of information. Nigeria’s export to China is dominated by crude oil to the tune of about 95%. In terms of relative share of market, China constitutes only about 0.34% and 1.64% of the value of Nigeria’s exports in 2000 and 2015 respectively. Nigeria’s import from China is more diversified than the imports. Three product groups: electrical machinery equipment; vehicles and nuclear reactors, boilers machinery and mechanical appliances jointly accounted for over 70% of Nigeria’s imports from China. The observed structure of trade pattern is inconsistent with the Nigeria’s quest to export manufactured or processed products. The need to diversify export products may be an uphill task given China’s preference for raw materials and fuel and gas. More worrisome is skewed balance of payments position which has consistently been in favour of China.
The policy lesson from the analysis is that Nigeria has a lot to learn from the outward-oriented trade policy of China with its phenomenal growth of exports to Nigeria within a relatively short period of time. Nigeria’s export of primary products to China, and China’s export of manufactured products to Nigeria is incompatible with the industrialisation aspiration of Nigeria. Therefore, Nigeria needs to increase its exports to China by encouraging strategic manufacturing and exporting to that country. Thus, the existing export incentive schemes should be reviewed to make them more effective and country-oriented by considering a bilateral trade agreement. In effect, Nigeria should cultivate non-reciprocal preferential trade agreements with China since with preferential treatment and efforts directed at alleviating export capacity constraints which generally pervade domestic production; Nigeria should be able to increase exports to the Chinese markets by promoting the production of these commodities’ output for export in the immediate and medium term. Since a free trade agreement is inevitable in the long term the state of economic infrastructure in the country requires great improvement to ensure adequate and regular power supply to reduce cost of production and high transactions cost generally. This is likely to change the pattern of trade between Nigeria and China which is currently dominantly inter-industry.
5.2 Mitigating the trade imbalance
Solving Nigeria’s trade deficit with China would have to go beyond rhetoric and diplomatic meetings. In fact, much of the solutions lie with Nigeria, although not without commitments from China. There are four key factors that need to be addressed. First, Nigeria must address its problem of industrialization. Industrialization is a sine-qua-non for development and favourable balance of trade. Highly industrialised countries have undue advantage over their less industrialised counterparts in the area of trade. Lack of industrialisation has perpetually kept developing countries underdeveloped and with diminished living standards. Lack of industrialisation is what has perpetually kept Nigeria as an exporter of commodities and importer of manufactured goods from China ( Bukarambe, 2007 ). Hence, the resulting trade deficit. For Nigeria to improve its balance of trade with China, it must focus on increasing its technology adoption and industrialisation.
In other words, Nigeria needs to cut down its dependency on importation of manufactured goods from China and other more industrialised nations. The second factor entails escaping the commodity trap. Nigeria only exports about 10 percent of its manufactured goods as against 90 percent of crude oil and other raw materials ( Egbula & Zheng,2011). The ramification of this is two-fold. First, any negative fluctuation in the prices of the commodities at the international markets would drastically affect Nigeria’s trade balance, not just with China, but also with some of its trading partners. Second, if a country is not buying much of Nigeria’s oil, this would affect Nigeria’s trade balance with that country (ibid). This is the case with Nigeria-China trade. China’s crude oil import from Nigeria has been negligible. It accounted for 2% of Nigeria’s total crude oil export in 2014 and 3% in 2015 (Shapiro, Vecino & Li, 2018). What the Nigerian government should do is to diversify its economy to boost its efforts.. A third critical factor to be addressed is the lack of productive infrastructure in Nigeria. According to the World Bank’s Ease of Doing Business Report (2018), part of the reason Nigeria rank 145th out of 190 countries is the country’s huge infrastructural deficit. Infraastructure is essential for businesses to thrive.

For Nigeria to benefit from international trade and to bring its trade deficit with China to a minimum, the country must revamp its infrastructure, especially its railways, roads and aviation networks. This will provide easy accessibility to areas of production and markets. The fourth and final factor that needs to be addressed to improve Nigeria’s balance of trade with China is for the Chinese government to declare its readiness to encourage Chinese companies to “outsource and “off-shore” to Nigeria (Egbula ; Zheng, 2011).Trade remains a core interest of many countries and by far an exceptional external condition for economic growth and development.
5.3 Benefits/Challenges of Nigeria-China Investment Relations
All economic agents (producers, consumers and government) in Nigeria stand to benefit from China’s transformational investment finance in Nigeria, particularly in the area of infrastructure and social amenities (Ezirim, 2007). Adequate infrastructure in Nigeria through China’s financial resources will improve investment climate and welfare in the country. Consequently, improved output, export, employment and government revenue should be expected. Establishment of China’s export processing zone should promote export and increased foreign exchange earnings. It is noteworthy to argue that anticipated gains are premised on the condition that all projects are completed and there are no white elephant projects or corruption in the process. It is doubtful if Chinese FDI in Nigeria will bring about positive revenue effect because of many taxes and other fiscal incentives as well as the possibility for tax evasion/avoidance by Chinese firms (Chibundu,2000§). Massive influx of Chinese FDI into the country to produce goods and services at cheaper prices coupled with import of cheap commodities from China will enhance the welfare of Nigerians. Granted that Nigerian firms are not competitive, massive influx of Chinese FDI into the country to produce goods and services may lead to closure of domestic competing firms, with adverse effects on employment particularly where Chinese firms are fond of bringing in workers from their country (Ogunsawo, 2008). The fact that Chinese firms in Nigeria bring in inputs from their own country and set up their own market outlets implies that there may not be any (or major) backward and forward linkages between Nigerian and Chinese firms (ibid). Domestic firms operating in sectors of interest to China (such as oil and gas, power, construction, manufacturing and services) may lose as a result of lack of competitiveness. Arising from increased investment relationship with China are a number of sector specific opportunities and challenges to be faced by Nigeria.
5.4 Recommendations and Options for the Future
One effective approach to address the trade imbalance is to evolve a cooperative mechanism that would enable Nigeria increase its export of manufactured goods to China. In addition, Chinese companies in Nigeria should diversify their economic activities. Rather than restricting themselves to merely importing finished goods from China for sale in Nigeria, they should invest in the productive sectors of the Nigerian economy and thereby gain from the export of such Nigerian- made goods.

In Nigeria and other parts of Africa, there is growing concern about substandard products coming from China. Nigeria needs firm commitment from China to tackle and stop this menace. One expects, in the long run, that the several Chinese companies now operating in Nigeria will transfer their technical and managerial skills to Nigeria workers to ensure strengthened cooperation and accelerate economic development in Nigeria.

Nigeria should diversify its economy as well as create an enabling business environment to encourage Chinese and other investors. We must work towards addressing basic and other infrastructural impediments to the spread of knowledge, such as provision of electricity, transport and better telecommunication facilities, as well as finding ways, where appropriate, to remove the impediment on regional integration.

Nigeria and China have long standing ties of bilateral relations and a mutual commitment to the quest for global peace, progress and economic prosperity. There is need for the Nigerian Institute of International Affairs (NIIA), Nigerian Institute for Policy and Strategic Studies (NIIPS), various Departments of International Relations in both the Nigerian and Chinese Universities and the Chinese Institute of International Studies (CIIS) not to restrict their activities to strictly academic endeavours. The CIIS and NIIA, for instance, should make the governments of China and Nigeria take and implement policies proposed by both institutes.

Nigeria’s relationship with China should henceforth reflect a profound understanding that our basic national objectives are long-term. Our policy now and in the near future, must be informed by our ultimate national interests. Nigeria has the responsibility to protect its economy from domination by foreign enterprises which are interested not in the local economies, but in the economies of the developed industrialised states.

Nigeria should learn from Chinese socio-economic transformation. As Nigeria rallies to industrialise its economy, it will not be out of place if it copies the Chinese model that is relevant to our local environment. But more than anything else, the Nigerian government should encourage Nigerians to effectively adopt technology that has kept China at the cutting-edge of global economy. For example, Nigeria has a lot to gain from having access to China’s low-cost technologies, because they are easily exportable and transferrable because of their adaptability and simplicity.

5.5 An Agenda for Future China-Nigeria Economic Relations
Against the background of the findings of this study, a number of policy implications, lessons and agenda for the future China-Nigeria economic relations are worth noting. One, attempts to compromise the benefits of FDI should be persistently resisted by the Nigerian Government through active engagement and negotiation with the Chinese government and investors. Second, good governance and stable macroeconomic environment in Nigeria is a necessary to promote productivity and sustainability of investment (Kwanishe, 2007). Three, Nigerian Government needs to institute policies aimed at maximizing the direct and indirect benefits as well as in minimizing the possible negative impacts. Furthermore, there is need to ensure implementation of laws and regulations in Nigeria and to ensure compliance by the Chinese investors. Such laws include labour law, social responsibility law and local content requirement (Ogunkola, 2010). The Nigerian legilature and its counterpart in the private sector should ensure the Nigerian labour law is followed by all firms including the Chinese-owned firms. Similarly, the Raw Material Development Council (RMDC) should see to compliance of local content requirements (in terms of human and physical materials) by all firms especially the foreign ones. The Nigerian Investment Promotion Council (NIPC) and other relevant organisations such as the Nigerian Extractive Industry Transparency Initiative (NEITI) should ensure compliance with the social responsibility law in Nigeria (Ogunsawo, 2008).

Again, given that the positive revenue effect of Chinese FDI may not be realized by the Nigerian Government, there is need to generate in a scientific manner, a number of scenarios on the level or number of incentives that can be given to foreign firms without jeopardising the economy (Umejei, 2013). Accurate data on the number, location and tax liabilities of all firms including the Chinese firms should be generated by the Federal Inland Revenue Service in collaboration with the NIPC and the Corporate Affairs Commission, while tax offenders should be sanctioned (ibid). It is important to note that widespread investment and contract awards to Chinese firms can cripple domestic contractors (Ogunsawo,2008). Thus, the Nigerian Government must be conscious of the high level of unemployment prevalent and thereby give local contractors some considerations in the award of contracts with a view to creating jobs for Nigerians. Local contractors can equally be encouraged to partner with Chinese firms.

The issues of negative externalities associated with investment including those of Chinese in Nigeria is worth mentioning. Oil exploration and production as well as manufacturing activities have been known to be associated with a series of environmental problems (Ezirim, 2007). This is a major cost of Chinese investment to be borne by the host communities and producers in which such activities are carried out. There is therefore the need to ensure compliance of all firms including Chinese firms with social responsibility laws in Nigeria (if any). Thus, Nigeria can establish a body or an agency that will audit the performance of the organisations in terms of social responsibility (Chibudu, 2000). This will enable it to reward those that are performing well and sanction those that are not. The importance of data for the purpose of periodic and continuous monitoring and evaluation of the impact of Chinese FDI in Nigeria cannot be overemphasized. Hence, the government has the responsibility to enforce the relevant law that will enable government agencies that gather data such as the National Bureau of Statistics (NBS), Nigerian investment promotion Council (NIPC), Federal Ministry of Finance and Central Bank of Nigeria (CBN) have access to important and necessary information for the evaluation of the benefits and costs of investment relation between Nigeria and China. According to Udeala (2008), It is on record that Chinese firms have the tradition of trying to hoard information on their activities in the host countries .
The relevant ministries and departments should be supported financially to gather information including those on China-Nigeria relations. China-Nigeria investment relation just like any bilateral relationship has some advantages and disadvantages (Umejei, 2011). This suggests that optimal outcome of the relationship will depend on the policies and institutions that are put in place particularly by Nigeria to maximize the complementary effects and to minimize the competing effects. China is virtually everywhere in Nigeria but information about its engagement and activities are fragmented. There is therefore, need to establish a coordinating body on China.
This body, preferably a technical arm of an existing body, should be empowered to scrutinize and evaluate agreements, memoranda and any other articles of association between Nigeria and China. The ultimate objective of the proposed body is to spell out the cost as well as the benefits of Chinese-proposed projects and/or programmes. This is similar to what a legal department would do to an agreement before initialising/signing. The proposed technical committee in its assignment must have taken into consideration domestically available resources including skills and ensure that as much as possible, the local content of the agreement is high enough not only for the purpose of generating employment for Nigerians, but also to develop their technological capability.

This part has considered the trade relations amongst China and Nigeria, it has contended that the high level of Chinese imports, in addition to the massive influx of Chinese firms, which don’t help with improvement of Nigeria’s industries or export profile. The trade irregularity is likewise a basic factor to Nigeria’s ventures, given that dominant part of the merchandise sold by Chinese organisations are either made in China or created in Nigeria by Chinese firms. In the end, this will prompt merchandise being dumped in Nigeria. Likewise, the joblessness factor will just intensify. Accordingly, Chinese Investment relations with Nigeria has caused a one of a kind circumstance that makes numerous issues that should be examined with the end goal of the improvement of Nigeria. Chinese exchange approaches are in effect generally intended to expand the additions for the Chinese economy and interests inside Nigeria. While Nigeria’s mission for improvement has attracted it to the Chinese, the proportion of joblessness, decay of nearby ventures will cause gigantic neediness that will be basic for Nigeria if suitable measures are not taken. The following section will talk about the zones focused for speculation.
5.6 Conclusion
The China-Nigeria relations have changed significantly over the years. During the 1960s and 1970s, Chinese relations with Nigeria were driven by ideological considerations, with China presenting itself as an alternative to both the West and the Soviet Union. During that time, China’s support consisted mainly of moral and material support for liberation struggles. During the 1980s, the relationship shifted towards economic co-operation based on common aims. After the end of the Cold War, China attached importance to both political and economic benefits and portrayed itself as an attractive economic partner and political friend. For African governments, this presented an alternative to the “Washington Consensus” and was termed the “Beijing Consensus”, i.e. support without interference in internal affairs ( Egbula et al, 2011). China’s engagement with Africa today is less motivated by ideological considerations but based on a commercial agenda that aims to sustain rapid industrialization and economic growth rates. China’s socialist market economy is driven by market-oriented State-Owned Enterprises and its interests in Africa are geared towards energy resources and minerals to feed its industrialization programme. Chinese investments and trade with Africa have increased significantly over the past few years, although Europe and the USA are still the predominant sources of foreign investments and the main markets for African exports.
The importance of the Sino-African relations has increased significantly over the past few years and this trend is set to continue. At present, the traditional economic relations with Africa’s former colonial power in Europe as well as the US and Japan are still far stronger. Africa now has the opportunity of shaping her relations with China differently. At a political level, this seems fairly easy due to
China’s policy of non-interference into domestic affairs and due to its willingness to accommodate Africa’s concerns, the term Beijing Consensus was used to describe the way in which China deals with other countries. China’s approach focuses on bilateral trade and a strong role for the state rather than on privatisation and free trade. The Beijing Consensus thus replaces the widely-discredited “Washington Consensus. Unlike the neo-liberal Structural Adjustment Programmes that the World Bank and IMF imposed on Africa, China does not demand privatisation, trade liberalisation or cuts in social spending, and instead renders project-based support, based on bilateral agreements. However, the policy of non-interference may become problematic when translated into support for dictatorial regimes, which may prolong their stay in power.
At an economic level, the challenges of shaping theChina-Africa relations for
Africa’s long-term benefits are far greater. There are substantial differences in the level of development and capacity between China and African states. Africa and Nigeria in particular may indeed receive (some) quantitative returns, but it is China that will achieve the further vast qualitative transformation of its economy, using the material and financial resources it gains from Africa. There cannot be genuine win-win development scenarios in such a situation. The current trade relations with China follows largely the colonial and neo-colonial pattern of Africa being an exporter of raw materials and an importer of finished products. This pattern may be beneficial to Africa’s trading partners but holds little promise for the continent in the struggle to address the burning social problems of mass unemployment and poverty. Thus the quality of the China-Nigeria economic relations needs to be altered substantially if Nigeria and Africa at large is to benefit.
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