Introduction
The bilateral relations between the Peoples Republic of China and the Federal Republic of Nigeria have expanded on strategic cooperation and the growing bilateral trade. China is viewed as one of the closest partners of Nigeria. China is also an important trading and export partner of Nigeria. A 2014 BBC World service poll indicated that 85% of Nigerians takes China influence positively, and only 10% held a negative view. This makes Nigeria one of the most pro-Chinese nations Worldwide. (Hanauer & Morris P 54)
On February 10, 1971, formal diplomatic relations were established between Nigeria and the People Republic of China. This relationship grew closer following the western condemnation and the international isolation of Nigeria military regimes (1970s-1998). Nigeria, therefore, became a useful source of petroleum and oil for the rapidly growing economy of China. China, on the other hand, provided extensive military-political and economic support to Nigeria. In 2004 and 2006 Hu Jintao, the President of China visited Nigeria and addressed a joint session of Nigeria's national assembly. A memorandum of understanding was signed by both nations on the establishment of a strategic partnership. China has greatly supported Nigeria's effort for a sit in the U.N Security Council.
The bilateral trade increased from $384 million in 1998 toUS$3 billion in 2006. During the visit of the Chinese president in 2006, China agreed to invest $4 billion in oil and infrastructural development in Nigeria and also secured four oil drilling licenses. Furthermore, China bought a governing stake in the oil refinery of Kaduna that was to produce 110,000 barrels per day. Nigeria agreed to offer preference to Chinese oil firms for oil exploration contracts in the Chad Basin and the Niger Delta. In 2006 decided to grant a loan of $1 billion to Nigeria, which would help in modernizing and upgrading its railway networks.
China has also promised to invest $267 million to construct the Lekki free trade zone near Lagos. However, this flooding of Chinese goods in the Nigerian market has become a sensitive political issue. (Hanauer & Morris P 54).
When combined with the European second-hand products that are imported to Nigeria, it has greatly affected the domestic industries mostly in textile, and this has led to the closure of 65 textile mills and the sucking of 150,000 textile workers within a decade. Chinese workers and projects in the Niger Delta have received attack threats from the Nigerian militants. Nigeria was in 2011 the 4th biggest trading partner of China in Africa and it became 3rd in the first eight months of 2012
FINANCIAL IMPLICATIONS
When we at commerce, trade and social areas In Nigeria, there has been increased competition in the internal markets for the manufacturers who are domestically-oriented. Another competition is in the external markets for the industries that are export-oriented. The trade balance always favors China. This is because local merchants and industries in Nigeria have been hit hard by the flooding Chinese of retails and wholesale shops which are used to establish networks to sell goods. Moreover, the producers of Africa can never compete with Chinese companies even in African markets because Chinese based manufacturers have low market prices and production. This has negatively affected Nigerian economy because some industries like the textile industry in Nigeria were closed leading to unemployment of many people.
The effects of China in the economy of Nigeria are not only limited to competition (Eberling P 23) The increasing flow of goods from China has led to labor practices conflict and the market strategy has also become an important issue. The Chinese have been hiring their nationals instead of Nigerians. This has negatively affected the economy because Nigerians are not benefiting in any way. The Chinese managers also expect very long working hours, and this has caused conflicts with local labor cultures and laws. Besides there is a discontent caused by Chinese company's practice in the communities who hold the idea that Chinese companies are not committed to increasing local employment and to strengthen the local economy. The quality of Chinese goods has also led to conflicts. This is because the Chinese goods are of better quality, and they are cheaper than the locally produced goods
When we focus on the human capital in Nigeria, it is evident that cultural differences and language barriers weigh heavily against the transfer of education and technological skills from the Chinese to the Nigerian citizens (Eberling P 23). This is mainly because cheap Chinese labor is normally used. The large industrial projects also rarely transfer skills to Nigerians. This means that Nigerians will not be in apposition to depend on their own and so their economy will remain stagnant or can even be negatively affected.
Evidence has shown that radically underperforming even after the strong revenue flow from exports of high-priced crude oil (Sutter P 34). Lack of strong institution and various bureaucratic obstacles have led to constrained progress in areas of agriculture, infrastructure and technology transfer. Similarly, the wide spread corruption brought about by the Chinese government has not allowed the transfer of wealth to the lower classes. This has stifled foreign direct investment in the nonpetroleum sector. Until Nigeria can establish accountable, credible and transparent institutions, a market system that encourages diversification, investments and competition are not likely to emerge
However, the economic agents that include consumers, producers, and government have benefited from Chinas transformational investment in Nigeria. This mainly occurs in the area of social amenities and infrastructure (LEE & NDULO P 13). The adequate infrastructure in Nigeria which has come due to Chinas financial resources has improved the welfare and the investment climate of Nigeria. Improved export, output, and employment are evident in Nigeria. The creation of Chinas, export processing zone, has increased foreign exchange and has also promoted export activities. The gains are based on the condition that no project is left uncompleted, and there is no corruption or white elephant projects in the whole process
It’s evident that just like any other bilateral relationship, the China-Nigeria investment relation has some advantages and disadvantages on the economy of Nigeria. This states that optimum outcome of the relationship depends on institutions and policies put in place by Nigeria to minimize the competing effects and to maximize the complementary effects. China is almost everywhere in Nigeria, but information concerning its engagements and activities are fragmented (LEE & NDULO P 13). A need, therefore, arises to develop a coordinating body on China. This body will be empowered to evaluate and scrutinize memoranda, agreements and other articles of association between the two countries.
The main objective of this proposed body is to reveal the cost and the benefits of Chinese proposed programs and projects. This is the same as what a legal department would do to an agreement before signing it (Sutter P 34). This committee needs to have taken into consideration the resources that are domestically available which includes the skills. The committee should also make sure that the agreements content is high enough not only for generating employment for Nigerians but also to positively impact on the economy.