TABLE OF CONTENTS
Title page – – – – – – – i
Approval page – – – – – – ii
Dedication – – – – – – – iii
Acknowledgement – – – – – – iv
Table of contents – – – – – –
List of table – – – – – – – vi
List of figure – – – – – – – vii
List of Abbreviations — – – – – –
Abstract – – – – – – – .v
CHAPTER ONE: Introduction
1.1 Background to the study – – – – 1
1.2 Statement of the problem – – – – – 5
1.3 Objective of the study – – – – – 6
1.4 Significance of the study – – – – – 7
CHAPTER TWO: Literature Review
2.1 Literature Review – – – – – – 8
CHAPTER THREE: Methodology
3.1 Theoretical framework – – – – – 26
3.2 Hypotheses – – – – – – 30
Research Design – – – – – – 30
3.4 Method of data collection – – – – – – 31
3.5 Method of Data Analysis – – – – – 32
3.6 Logical Data Framework – – – – – – 33
CHAPTER FOUR: NIGERIA- CHINA TRADE RELATIONS
4.1 China’s trade in the Nigerian markets – – – 36
4.2. China’s trade in the Nigerian mobile phone and electronic markets – – 42
4.3 China’s trade in the textile market in Nigeria – – 46
4.4 The emergence of china town in Nigeria – – – 55
4.4.1 China establishes west Africa trade hub in Lagos – – 58
4.5 Nigeria’s trade and interest in china – – – 60
4.5.1 Nigeria’s imports from china – – – – – 61
4.3.2 Nigeria’s export to china – – – – 66
4.6 China-Africa trade relations – – – – – 70
CHAPTER FIVE: CHINA’S FOREIGN DIRECT INVESTMENT IN NIGERIA
5.1 China’s foreign direct investment in the oil sector in Nigeria – 83
5.2 China’s investment in the power sector in Nigeria – – 96
5.3 China’s investment in the infrastructural development in Nigeria – – 102
President Jonathan’s trip to china: matters arising 112
5.5The implications of Chinese growing economic interest in Nigeria – – 117
CHAPTER SIX: SUMMARY, CONCLUSION AND RECOMMENDATIONS.
6.1 Summary – – – – – – – 122
6.2 Conclusion – – – – – – 123
6.3 Recommendations – – – – – – 123
Bibliography – – – – – – 127
LIST OF TABLES
Table4.1 Major China’s Companies in Nigeria – – 42
Table.4.2 Some Textile Industries Closure And Job Losses In Nigeria – – 49
Table 4.3 China’s share in Nigeria’s Imports (2000-2013) – – 55
Table 4.4 Nigeria Top Ten Export Products To China – – 63
Table 4.5 Top Ten Import Commodities By Nigeria From China – – 63
Table.4.6 Nigeria’s import from China by product in percentage (2011) 64
Table.4.7 China’s import to Nigeria by products in percentage (2012) – – 66
Table 4.8 Nigeria’s export to china in percentage (2012) – – 69
Table 4.9 Major China’s trading partners in Africa – – 72
Table4.10 African Countries That Dominate Exports or Imports To/From China 73
Table 4.11 Major African imports from china, major importing countries – 74
Table 4.12Africa’s major exports from china, major exporting countries – 74
Table.5.1 Some China’s Investment and Contracts in Nigeria (2006- 2010) – 79
Table 5.2.. Some China’s Investment and Contracts In Nigeria (2011-2013) – 80
Table5.3 China’s Companies in the Nigeria Oil Sector – – 93
Table 5.4: China’s Imports from Nigeria by Product’s percentage – – 95
Table 5.5 China’s Investment In The Nigeria Power Sector – – 101
Table5.6 China’s investors and some of their investment in the Nigerian infrastructural sector – – – – – – 106
Table 5.7Sector specific opportunities and challenges facing Nigeria due to its investment relations with China – – – 109
Table 5.8: Nigeria’s major export destinations and their shares – – 119
Table
5.9 Nigeria’s major import trading
partners and their shares – – 120
LIST OF FIGURE
Fig4.1 Values of imports by country into Nigerian (first quarter, 2012) – – 39
Fig.4. 2 China’s version of Iphone, smart phone and lap tops – – 45
Fig 4.3 China’s export products to Nigeria – – – 69
Fig 5.1 China import from Nigeria by products – – 95
Fig 5.2 Nigeria’s major export destinations and their shares – 119
Fig.5.3. Nigeria’s major import Destinations and their shares- 120
Abbreviations
ACFTU All China Federation on Trade Union
AGOA African Growth and Opportunity Act
CBN Central Bank of Nigeria
CCC China Construction Company
CCECC China Civil Engineering Construction Corporation
CDMA Code Division Multiple Access
CEC China Geo-Engineering Commission
CECC China Economic and Commercial Counselor
CICIR China Institute for Contemporary International Relations
CMDA Chenni Metropolitan Development Authority
CMEC China Machinery Engineering Corporation
CNEEC China National Electrical Equipments Corporation
CNMGC China National Materials Group Corporation
CNOOC China National Offshore Oil Corporation
CNPC China National Petroleum Corporation
COSCO China Ocean Shipping Group Company
CPCC China Petroleum and Chemical Corporation
CRCC China Railway Construction Corporation
CSCE China State Construction Engineering
CSCEC China State Construction and Engineering Corporation
EPZ Export Processing Zones
Ex-Im Export Import
FDI Foreign Direct Investment
FOCAC Forum on China-Africa Corporation
GDP Gross Domestic Products
ICTSD International Center for Trade and Sustainable Development
ILO International Labour Organizations
IMF International Monetary Fund
IOM International Organization for Migration
JV Joint Ventures
LFZDC Lekki Free Zones Development Corporation
MFA Ministry of Foreign Affairs
MOU Memorandum of Understanding
NIOMR Nigerian Institute for Oceanography and Marine Research
NLC Nigerian Labour Congress
NNPC Nigerian National Petroleum Corporation
NTB Non Tariff Barriers
OECD Organization of Economic Cooperation and Development
OGC Oil and Gas Commission
PHCN Power Holding Company of Nigeria
PRC Peoples Republic of China
RFR Right of First Refusal
RMRDC Raw Materials Research and Development Council
SAP Structural Adjustment Programme
SEPCO Shandong Electric Power Construction Corporation
SEZ Special Economic Zones
SOE State-Owned Enterprises
SON Standard Organizations of Nigeria
UN-COMTRADE United Nation Commodity Trade
UNCTAD United Nation Conference on Trade and Development
UNDP United Nation Development Programme
UNTL United Nigeria Textile Limited
WB World Bank
WTO World Trade Organization
ZTE, Zhonxing Telecommunication Equipment
Abstract
Available
evidence reveals that China is gradually taking over economic activities in
Africa and Nigeria in particular. In fact, China is seriously competing with
United States in terms of the volume of goods and services exported to Nigeria.
It is therefore not surprising that a Nigeria-China relation has improved
tremendously in recent time. This has therefore spurred a renewed interest in
Nigeria-China economic relations. However, extant literature have glossed over
how this relations accounts for the increasing China’s trade investment in Nigeria
and China’s escalating Foreign Direct investment in different sectors in
Nigeria. Hence, this study was designed to ascertain whether the growing
Nigeria-China economic relations is implicated in the increase in China’s trade
investment in Nigeria and to establish if China’s increasing economic interest
is implicated in the volume of Chinese Foreign Direct investment in Nigeria.
The study anchored analysis on the Marxian political economy theory. The study employed the qualitative method and ex-post-facto
research design. Data for this study were sourced from books, journals,
magazines, newspapers and internet documents. Data were further sourced from
the websites of the Nigerian Institute of International Affairs (NIIA) Lagos;
Chinese Embassy in Nigeria, Nigerian Bureau of Statistics and Ministry of
Finance in Nigeria. The data were
analyzed using descriptive analysis, logical induction, and content analysis.
After a critical analysis of available data and literature, the study revealed
as follows: First, China’s trade investment in Nigeria has risen to a
staggering $13 billion dollars in 2012 from $2 billion dollars in 2002,
and is still increasing exponentially even in the current year 2014. Secondly,
the study revealed that China has overtaken the US as the largest foreign
investor in electronic gadgets in Nigeria. This explains why virtually all the
phones and electronic gadgets in Nigeria are made in China. The study further
revealed that Nigeria currently sells 30% of its oil to China. Since, Nigeria’s
oil is so vital to China’s economy, China has deepened interest in oil
exploration in Nigeria. However, tantalizing as these opportunities may be,
there is need for the Nigerian state to develop its technological base and
boost its negotiation capacity so as to maximize the benefits in the country’s
economic relations with China.
CHAPTER ONE
Introduction
Although informal relations between Nigeria and China started before independence, Nigeria’s official contact with the People’s Republic of China (PRC) was in 1960 when China was invited to Nigeria’s independence celebrations. China opened its embassy in Lagos on 6th April, 1971, while Nigeria reciprocated in October of that year. Perhaps, there are some characteristics that are common to Nigeria and China. The People’s Republic of China was founded and proclaimed on the 1st day of October, 1949 and the Federal Republic of Nigeria emerged as an independent entity from British colonial rule on the 1st day of October, 1960. Therefore, Nigeria and China share symbolic day and month of political independence. Beyond this, China is the most populous country in the world (with estimated population of 1.5 billion), while Nigeria is a country with the largest concentration of blacks in Africa (with an estimated population of 150 million), (Oluwole, 2002).
In 1962, a communiqué of talks between Nigeria and the economic delegations in Beijing with the presence of Mr. Zhou Enlai, the then premier of the state council of China was signed. Chairman Mao Zedong granted an audience with all the scientists attending the Beijing scientific seminar and met with Mr. Chike Obi, head of Nigerian delegation in 1964. In 1972, a Chinese economic and trade exhibition, the first Chinese exhibition was held in the Nigerian capital Lagos after the set of diplomatic ties between Nigeria and China in 1971. Premier Zhou Enlai and the then foreign Minister of China, Mr. J.I, Pengfei, met with Mr. Okoi Arikpo, the then Nigeria foreign minister in 1973. In September 1974, Chairman Mao Zedong met with the then head of state of the military government of Nigeria and Commander in Chief of the armed forces, Gen. Yakubu Gowon in Beijing. Also in the year 1981, Vice Premier Huang Hua visited Nigeria for business talk. Major General Babangida, the then Army Chief of Staff, attended the 35th anniversary of the founding of the peoples’ Republic of China at Tian Ammen square in Beijing in 1984. 1985 to 1986 marked the signing of implementation of programme on the cultural cooperation agreement between the government of China and Nigeria in Beijing. In the year 1989, Chief of Army Staff, Gen Sani Abacha made official visit to China to consolidate the relationship between the two countries.
Gen. Sani Abacha (in power from 1993 to 1998) initiated contact with the Chinese government early in his rule. The Nigerian-Chinese Chamber of Commerce was founded in 1994 (Egbula and Quizheng, 2011). The 30 years that followed diplomatic relation between the demographic giants of Asia and Africa produced little economic consequence. While China was transforming into an economic power, for Nigeria the 1980s and 1990s were marked by a series of military coups. It was not until the return to democratic rule in Nigeria in 1999 that economic relations between Nigeria and China began to develop in earnest. Olusegun Obasanjo’s election in 1999 coincided with the start of a view Chinese orientation towards Africa in 2000.during Obasanjo’s second term (2003 – 2007), both China’s president Hu Jintao and Prime Minister When Jiabao visited Nigeria, and Obasanjo made two official visits to Beinjing. Various other ministerial level visits conducted during this time allowed the two countries to develop and intensify mutual friendship and familiarity (Mofom, 2004). In 2001, the two countries signed agreements on the establishment of a Nigerian trade office in China and a china investment development and trade promotion centre in Nigeria. The inter-governmental Nigeria-China investment forum was then founded in 2006.
During the Chinese foreign minister’s visit, a memorandum of understanding (MOU) on the establishment of a strategic partnership was signed. Nigeria Officials specified that petroleum, power, telecommunications and manufacturing sectors would be the main targets for investment. Given China’s keen Interest in securing a steady supply of fuel for its rapidly expanding economy, the petrol sector was at the centre of its investment strategy. The Nigerian agency responsible for the privatization of state-owned enterprises also appealed for Chinese investment in its privatization programme (China daily 2006). Beijing laid out a clear strategy based firmly on its economic interests. The ministry of commerce identified this interest towards Nigeria as:
Obasanjo’s approach to China in terms of foreign direct investment and trade, branded “oil for infrastructure”, which consisted awarding oil contracts on favourable terms in exchange for China’s commitment to deliver key infrastructure improvement products. According to Salter (2009), Obasonjo’s decision reflected Nigeria’s dire need for improved infrastructure and a growing frustration with the conditionalities associated with western aid. Obasanjo was also certainly impressed by the infrastructure he saw during his visit to China.
However, President Umaru Musa Yar’adua came to power following elections held in April 2007. Citing concerns about a lack of transparency, the new administration cancelled or suspended most of the oil for-infrastructure contracts signed during the Obasanjo regime. He discontinued the continuity by embarking on a re-allocation policy through the many reversals of private public enterprises that were concluded by the previous administration (Onuoha, 2008). Little progress was achieved as it concerned Nigeria-China relations within his three years of leadership.
Moreover, after Yar’Adua’s death in May 2010, Vice President Goodluck Jonathan assumed Presidency and the relationship began to rebound. At the end of 2010, China declared its new plan for a strategic partnership with Nigeria, featuring political equality, mutual trust, economic win-win cooperation and cultural exchange. When Jonathan stood for election in April 2011, the Lagos news paper the Punch reported that 119 tons of electoral materials, including ballot papers, were made in China. The Chinese President sent special envoy and minister of railways Shang Avan zu to attend Jonathan’s inauguration in May, 2011, during which they re-affirmed the friendship between the two countries and vowed to increases the involvement of Chinese enterprises in rail way and other infrastructural improvement as well as in Nigeria’s overall economic development (Salter,2009). The bilateral economic relations continues to increase, that even recently Jonathan and some senior cabinet members made a four-day trip to China which started on 19th July nations news paper, June 18 2013 p18). The rationale behind the trip is to make China to see Nigeria as an appealing ground for investment and trade, so that they can increase the rate of their trade and investment in the country.
This study is designed to explore the political economy of Nigeria-China economic relations ’’ between’’ 1999 to 2013. With the aims of ascertaining how trade and investment fared between these two countries within the period of study.
1.2 STATEMENT OF THE PROBLEM