ABSTRACT
China`s recent growing presence in Africa nearly over a decade is a reflection of its broader emergence as a global power. In the wake of its rapid economic development as the second largest economy in the world today, and of its growing role in the global geo-political arena, there are increasing heated debates around the world on the kind of development path and foreign policy China is pursuing, and how it affects the rest of the world, including Africa. This gave birth to this research work which discusses the Africa and China’s Relations in the 21st Century; Using Nigeria as case study. This relation is governed by agreements which cut across political, trade, investment, aid, technical and military. The implementation of these agreements is uneven as China is strategically on the advantage side and Nigeria perpetually on the disadvantaged position. Therefore, the study examines the key features and patterns of the economic relations between Nigeria and China specifically to identify and examine the determinants of Nigeria–China relations; critically examine the relationship between economic reforms and increase in foreign investment between Nigeria and China. To analyze the issues raised, the study was anchored on the dependency theory. The research relied heavily on secondary source of data in order to substantiate the research hypotheses. The findings after a detailed review of the existing literature and analysis of available data were: Nigeria’s exports to china have been dominated by oil exports; import concessions and preferential treatments granted to Chinese investors at the expense of Nigerians created a loss in revenue; Chinese manufacturers have gained at the expense of Nigeria because of their ability to produce and export cheap products to Nigeria thereby undermining Nigeria’s industrializations efforts. It is thus suggested that the Nigeria economy be diversified; exports and dependence on oil exports be balanced with other resources untapped.
TABLE OF CONTENTS
Title page i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table of contents vi
CHAPTER ONE: Introduction 1
- Background of the study 1
- Statement of the problem 3
- Objectives of the study 5
- Research questions 6
- Research hypotheses 6
- Significance of the study 7
- Scope and limitation of the study 7
- Research methodology 7
- Definition of Terms 8
- Chapterization of the study 8
References 10
CHAPTER TWO: Literature Review 11
- Introduction 11
- China‟s Foreign Policy 14
- Central Pillars of Chinese Foreign Policy 15
- Peaceful Co-existence as the Basic of International Conduct 16
- Identify with Target states 18
- The Open Door Policy 19
- Chinese Foreign Policy towards Africa in the 21st Century 21
- The Forum on China Africa Co-operation (FOCAC) 22
- China‟s Exim Bank 27
- Chinese Provinces 31
- Chinese Military 34
- Chinese Think Tanks 36
- Foreign Policy Instruments 38
- Interest Free Loan and FDI 38
- Debt Cancellation 39
- Aid Packages 40
- Theoretical Framework 41
- Neo-colonialism 41
- Dependency Theory 45
- Conclusion 49
References 51
CHAPTER THREE: Oil and Nigeria-China Relations 54
- Introduction 54
- The History and Determinants of Nigeria- China Relations 54
- The Era of Informal Ties, 1960-1971 54
- The Era of Formal Ties, 1971-1998 57
- Obansanjo‟s Economic Diplomacy and Nigeria-China Relation (1999-2007) 60
- Oil and Nigeria: Historical Perspectives 64
- Politics and China‟s Quest for Nigeria Oil 73
- The History and Determinants of Nigeria- China Relations 54
References 85
CHAPTER FOUR: China’s Trade and Investment in Nigeria 89
- Chinese Investment Flow in Nigeria
- Summary: China as the Vanguard of Nigeria‟s Commerce 9489
- Aid and Debt 97
- Beijing versus the West 97
- Nigeria‟s Loans and Debt from the West 98
- China‟s Aid and Loans to Nigeria 100
- Challenges of Chinese Loans and Investment in Nigeria 103
References 106
CHAPTER FIVE: Summary, conclusion and recommendations 107
- Summary 107
- Conclusion 108
- Recommendation 109
Bibliography 111
Chapter One Introduction
Background of the study
During the Cold War ideological conflicts between the capitalist Western bloc and the communist Eastern bloc dominated international politics (Cesa, 2009:177). In response, Afro-
Asian countries convened the Bandung Conference of 1955 in Indonesia to demonstrate their amity and impartiality towards the Cold War belligerents. This was the precursor of the nonaligned movement (Hunter & Sexton, 1999:181). Among the countries involved was China, a communist state and a solid ally of the Soviet Union up to the mid-1950s. The Sino-Soviet alliance ebbed away as China inveighed against, inter alia, the 1956 Soviet invasion of Hungary and criticised Nikita Khrushchev‟s idea of peaceful coexistence with the capitalist West (Lüthi, 2008). China also wanted to adhere to a strict form of communism which prescribed that capitalist and imperialist systems could only be replaced with a more humane and communist structure through radical revolution which would more likely involve violence. The Soviet Union under Khrushchev was distancing itself from this view and entertained the possibility of a parliamentary solution to capitalism and imperialism. China accused the Soviet Union of revisionism and made clear its ambition to be the due representative of communism and this gave birth to China Relations with Africa (Hunter & Sexton, 1999:183).
China‟s engagement with Africa has continued for over half a century. The Sino-African Relations have evolved from “brothers” (Chang, 2006) to “strategic partners” (China‟s African Policy, 2006) with the changes of China‟s domestic situation and international environment. Launched in 2000, the Forum on China-Africa Cooperation (FOCAC) has become an important vehicle of China-Africa strategic partnership to boost cooperation in various fields (China Urges, 2010). In 2006 “strategic partnership (China‟s African Policy, 2006)” has been articulated again as China‟s dominant Africa Policy. Instead of singing the old tune of proletarian internationalism which stressed “rich ideology and the reinforcement of political benefits (Sorensen, 2010, p139)”, the policy paper highlights “economic win-win cooperation (China‟s African Policy,
2006),” which can be better understood within the framework of “South-South cooperation (China Africa, 2000)”.
China‟s engagement in Africa is one of the most controversial issues in international relations in the new century. Abundant books, academic papers and media reports have appeared, focusing on several aspects of china‟s activities on the continent. Opinions are diverse. In her book The Dragon’s Gift: The Real Story of China in Africa, American professor Deborah Brautigam (2010) highlights the positive roles of china‟s involvement in Africa. When defending the criticism such as human rights from the West, she stresses that the West did the same or even worse things at times in the past, and points out china‟s inability of handling some issues such as labour practice that are not solved yet inside China neither.
China as economic partner to Nigeria has been very dogged and focused in its relations with Nigeria over the decades. Despite the ups and downs of Nigeria-China relations, the Chinese have continued to ensure that their market shares in Nigeria remain on a steady path of growth. This should suggest that China has a long term plan for its engagement with Africa, and it is important for African states, particularly Nigeria to develop a strategy for managing the relationship (Alli, 2007).
It is therefore clear that the economic engagement of Nigeria with the Chinese has grown so rapidly that the nation Nigeria has not been able to pause and think out of proper framework for engagement. From a seeming unknown some years ago, China now bestrides the Nigerian economic terrain like a colossus sending shivers down the spine of many other powers that would like to consider Nigeria their sphere of influence. Importantly, this rapid growth in trade relations between the two nation-states has been largely to the advantage of China.
Given this background, this research focuses on Afro-Sino relations in the 21st century using Nigeria as a case study.
Statement of the Problem
Since 1960, China has gone through a radical revolutionary process. During the Nigerian civil war 1967-1970 the federal government was suspicious that China was colluding with Tanzania to assist Biafra‟s session bid. Also the federal government was and still is skeptical of China policy of communism, which was seen as a threat to capitalism. (Garba,1977). Also their ideology and China‟s image of subversion. This factor has been militating the stable establishment of cordial relations between Nigeria and China. The physical distance between both countries also constitutes a hindrance in maintaining and strengthening a cordial trade relations China is an important country to Nigeria international relation. The relationship between China and Nigeria has been friendly characterized by pledges to lay a stronger foundation for a better entitle between the two countries. One major problem in the economics relationship between both countries is the negative balance of trade which has generally been to the detriment of China. China imports from Nigeria oil, groundnut, cocoa, and cotton; this largely explains the reasons why there is trade imbalance between the two countries. Nigeria economy since the discovery of petroleum has remained undiversified and monocultural, dependent on the export of petroleum, which accounts for over 90percents of export revenues and import of manufactured goods from China. (Omitiri, 2000)
Another major hurdle is Nigeria‟s political unpredictability. Chinese investors are considered to be more comfortable with risk than their Western counterparts, yet if signed contracts are routinely reviewed and suspended when power changes hands, their appetite for risk is likely to
fade. Even with the perils of changeable government contracts, Chinese investors prefer public sector over private sector partners, which are seen as even less reliable. While its politics are exceedingly stable, china also faces criticism over a lack of transparency in its business dealings. And its companies have been accused of bribery and other forms of corruption, particularly during the boom years of the mid-2000s .
Due to some high-profile mishaps, the “made in china” label has suffered considerable damage around the world, and Nigeria is no exception the 2009 agreement against counterfeit goods has not quieted complaints about the quality of Chinese goods on the Nigerian market. Analysts say stronger action is needed to strengthen institutional capacity to effectively track fake goods in both countries.
Most of Nigeria‟s imports from China are labour intensive, light manufactures which Nigeria was producing under the import substitution industrialization strategy. There is evidence of import competing products, as seven products are both imported and exported simultaneously by the two countries, with Nigeria‟s imports of the products largely overwhelming its exports. Major products in this category are cotton (HS 52), rubber and articles thereof (HS 40), electrical and electronic equipment (HS 85), tools, implements, etc.
Although previous scholarly works on China-Africa alliance abound in the above regard for example to Kasongo, (2007); Konings, (2007); Gongyuan,1996; Polgreen &French,2007; Large, (2008); Ali, (2006); etc; not much has been done on Nigeria-China economic alliance, particularly between the period 1999-2010. In fact even where scholars such as Agbu,(1994); Ogunsanwo,(2007); Fadina,(2007); Kwensashie (2007); Chibundu,(2007); Okafor, (2008) etc made remarkable intellectual contributions in the subject area, much still need to be done in the
area of Chinese investments and pattern of trade in Nigeria, as it effect Nigeria industrial development.
Objectives of the Study
The failure of various economic measures adapted by different government has attracted intellectual discourse amongst political and economic scholars. Opinions are diverse on reasons for the inability of Nigeria to make progress in her developmental quest. While some blame it on the foreign policy thrust of Nigeria state, others hinge it on domestic political environment. The school of thought that blames it on the foreign policy thrust advocates a shift form pro-west economic relation to a more favorable Asian axis for solution to the nation‟s underdevelopment. In response to this advocacy, Nigeria has adopted economic diplomacy as her foreign policy thrust since 1988, Nigerian economic diplomacy has seen her opening its foreign relation more with the People Republic of China than most countries of the world especially within the period under study.
The central objective of this work is to critically evaluate the implications and impact of Nigeria China relations on Nigeria industrial development in 21st century.
Specifically, the study has been designed to achieve the following detailed objectives:
- To determine the implication of Nigeria China trade relation on Nigeria industrial development.
- To ascertain the impact of China direct investment on the rate of unemployment in Nigeria.
- To evaluate the reason behind China‟s policy choice of going global.
Research Questions
Going by the aforementioned objectives, the following research questions will guide the research project:
- Has Nigeria-China trade relation enhance industrial development in Nigeria?
- Has China‟s trade investment reduced the rate of unemployment in Nigeria?
- Has China‟s quest for oil and market responsible for its policy choice?
Research Hypotheses
The study shall investigate the following hypotheses:
- H0– Nigeria-China trade relations have undermined Nigeria industrial development H1– Nigeria-China relations have not undermined Nigeria industrial development
- H0– China‟s trade and investments have reduced the incidence of unemployment in Nigeria.
H1– China‟s trade and investments have not reduced the incidence of unemployment in Nigeria
- H0– China‟s policy choice of going global is to assure supply of oil and market for its product.
iv. H1– China‟s policy choice of going global is not to assure supply of oil and market for its product
Significance of the Study
The significance of this study can be viewed from both theoretical and practical angles. Theoretically, this work is designed to open up new vitas on the study of Afro-sino relations and industrial development in Nigeria. This is predicted on the belief that there is need to look at the phenomenon from other angle that were seemingly neglected and de-emphasized.
Consequently, upon the above, this work will add to the body of existing literature on the study of Nigeria-China trade relation and further enlighten the student, policy makers and political actors on the subject matter.
On the practical angle, this study will help to re-organize Nigeria-China trade relation in Nigeria to achieve industrial development, this in turn will help African leaders in general and Nigeria leaders in particular to adjust and take the correct attitude towards Chinese trade relation to attain industrial development.
Scope & Limitation of Study
This study shall cover the Afro-Sino relations in the 21st century using Nigeria as a case study.
In the course of carrying out this research work, the researcher experienced a number of challenges which militate against achieving the aim of the study which includes financial constraint, time constraints because the study was carried out during an academic session and the inability to move out of the school premises freely for the purpose of the research work.
Research Methodology
This study adopts the historical method which involves making use of primary sources which include interview, government publications, and official documents relating to Afro-Sino relations. Moreover, this study depends on secondary sources such as books, journals, conference proceedings and internet sources which are to be explored to enrich this work.
Definition of Terms
- Economy: the state of a country or region in terms of the production and consumption of goods and services and the supply of money.
