Esprit Rock

Chapter One Introduction 1

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:
1. The diplomatic relations between Nigeria and China has enhanced
Socio -economic development in Nigeria.
2. 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.