By: WILLIAM ANAEBONAM of Newswatch Times in Nigeria
The world may have come to terms with the fact that China
has become the largest economy, especially on the basis of global purchasing
power parity, which further confirms the relatively low cost of Chinese goods
that have come to be accepted worldwide in spite of their disputed quality.
China has been able to achieve this through trade expansion and conscious
efforts to diversify and help needy African countries, especially in areas
where the West is reluctant to help. In this write up, WILLIAM ANAEBONAM takes
a look at Africa–China relationship and its implications on Nigeria and the
larger continent.
According to the International Monetary Fund (IMF), China
just overtook the US to become the world’s largest economy. Basically, the
method used by the IMF is to adjust for purchasing power parity, which simply
means that prices aren’t the same in each country: A shirt will cost you less
in Shanghai than in San Francisco, so it’s not entirely reasonable to compare
countries without taking this into account. The fact that China has overtaken
America as the largest economy in the world has a far reaching effect on the
Africa and Nigeria economy. China has risen to become one of the biggest
trading partners as it even ventures into lifting Nigerian oil after America
has said it will slow down on Nigeria oil.
China has beaten the
western world by expanding its trade across the world. It had virtually
established bilateral relationship with any country that matters. China is the
country which actually has the strongest economy today. But it’s easy to
explain because of goods they make and sell. Almost everything we see in shops
is made in China. It brings a lot of money and also the work force over there
is cheap. Quality of Chinese goods is another question. But prices are
affordable and that is why so many consumers all over the world buy what’s made
in China. That’s the point which keeps Chinese economy on top already for many
years. Even consumers with low income who use cash in advance from time to time
can still buy products, clothes and other goods produced in China. In any case,
it’s a good example to other countries and it shows how much condition of the
economy depends on the trade.
For years, business
in Africa was hampered by poor transportation between countries and regions.
Chinese-African associations have worked towards ending this unproductive
situation. China provides infrastructure funding and workforce in exchange for
immediate preferential relations including lower resource prices or shares of
African resources. As a secondary effect, this infrastructure allows Africa to
increase its production and exports, improve the quality of life and increase
the condition of millions of Africans, who will one day become as many millions
of potential buyers of Chinese goods.
The recent Sino-Angolan association is illustrative. When a
petroleum-rich area called for investment and rebuilding, China advanced a $5
billion loan to be repaid in oil. They sent Chinese technicians, fixing a large
part of the electrical system, and leading a part of the reconstruction. In the
short term Angola benefits from Chinese-built roads, hospitals, schools,
hotels, football stadiums, shopping centers and telecommunications projects. In
turn, Angola mortgaged future oil production of a valuable, non-renewable
resource. It may turn out to be a costly trade for Angola, but their needs for
infrastructure is immediate and that is precisely what China provided when no
one else is willing to do so. And thus, Angola has become China’s leading
energy supplier. China also plans to establish five special economic zones in
Africa, zones where “the Chinese government will create the enabling
environment into which Chinese companies can follow”.
Economic relations between China and Africa,as one part of
more general Africa–China relations, began centuries ago and continue through
the present day. This includes the ongoing move by the People’s Republic of
China to secure highly needed natural resources through Chinese-African trade and
diplomatic relations.
The quest for key
resources in Africa targets areas rich in oil, minerals, timber, and cotton,
such as Sudan, Angola, Nigeria, and South Africa. Many African countries are
viewed as fast-growing markets and profitable outlets for the immediate export
of cheap manufactured goods, and the future export of high-end products and
services.
Large-scale structural projects, often accompanied by a soft
loan, are proposed to African countries rich in natural resources. China
commonly funds the construction of infrastructure such as roads and railroads,
dams, ports, and airports. These amenities aid the movement of natural
resources back to China, and provide China with leverage to obtain exploration
and drilling rights. While relations are mainly conducted through diplomacy and
trade, military support via the provision of arms and other equipment is also a
major component.
In the diplomatic and economic rush into Africa, Taiwan, the
United States, France, and the UK are China’s main competitors. France and the
UK were once the primary commercial partners in Africa, but China recently
became the largest trading partner, with trade of US$90 billion in 2009. The
United States ranked second, with $86 billion. Although Africa has seen
economic growth through commodity exports to China, critics argue that Chinese
exports to Africa—as well as Chinese business practices—have impeded aspects of
African development, but much better than little to no growth coming from the
US or Europe. China continues to expand its influence in the region on
diplomatic, cultural, and commercial fronts, while working to secure and
stabilize the region for long term gains.
Chinese banks
The Export-Import Bank of China (Eximbank) is a government
bank under direct leadership of the State Council, acting both in China and
overseas. For its oversea actions, EximBank has hundreds of offices across the
world, with three key representatives in Paris, St. Petersburg, and
Johannesburg. The bank is a major force in Chinese foreign trade, aiming to
catalyze import-export initiatives.
Eximbank offers enterprises and allies a complete set of
financial products. Low-rate loans and associations with skilled Chinese
building companies are guided towards building or rebuilding local infrastructure,
equipment, and offshore stations which meet a dual Chinese and African
interest. EximBank can provide loans for roads, railroads, electric and
telecommunication systems, pipelines, hospitals and various other needed
facilities. It is the sole lending bank for Chinese Government Concessional
Loans entrusted by the Chinese Government.
The bank officially aims to promote the development of
Chinese export-oriented economy, to help provide China with raw materials, and
facilitate the selling of Chinese goods abroad. EximBank helps to invest in
underdeveloped African countries, allowing them to both produce and export more
raw materials to Chinese industries, and to allowing African societies to
expand their own markets. In 2006, EximBank alone pledged $20 billion in
development funds for 2007 through 2010, more than all western funding. Several
other Chinese banks also provide African governments and enterprises with
similar agreements. China has shown itself to be more competitive, less
bureaucratic, and better adapted to doing business in Africa. Between 2009 and
2010 China Development Bank (CDB) and Eximbank publicly offered around US$110bn
worth of loans to emerging markets. Beating the World Bank’s record of offering
just over US$100bn between 2008 to 2010.
African exports to China
In the other
direction, China’s growing thirst for raw materials led African state-owned
enterprises to the country with natural resources, such as wood and minerals
(like those from the Gabonese forests). By the end of the 1990s, China had
become interested in African oil, too.
Over time, African laws adapted to China’s demand, laws
intended to force the local transformation of raw materials for export. This
led to a new kind of manufacturing in Africa, managed by the Chinese, with
African workers producing exports for Chinese, as well as European, American
and Japanese customers. African leaders have pursued an increase of the share
of jobs for local Africans. China’s oil purchases have raised oil prices,
boosting the government revenues of oil exporters like Angola, Gabon and
Nigeria, while hurting the other oil-importing African countries. At the same
time, raw material transformation both to add value to their exports and to
provide manufacturing China’s raw materials purchases have increased prices for
copper, timber, and nickel, which benefits many African countries as well.
While African growth from 2000 to 2005 averaged 4.7per cent
per year, almost twice the growth has come from petroleum-exporting countries
(2005: 7.4per cent; 2006: 6.7per cent; 2007: 9.1per cent) than from
petroleum-importing countries (2005: 4.5per cent 2006: 4.8per cent; 2007:
4.5per cent).
During the year 2011, trade between Africa and China
increased a staggering 33per cent from the previous year to US $166 billion.
This included Chinese imports from Africa equaling US $93 billion, consisting
largely of mineral ores, petroleum, and agricultural products and Chinese
exports to Africa totaling $93 billion, consisting largely of manufactured
goods. Outlining the rapidly expanding trade between the African continent and
China, trade between these two areas of the world increased further by over
22per cent year-over-year to US $80.5 billion during the first five months of
the year 2012. Imports from Africa were up 25.5per cent to $49.6 billion during
these first five months of 2012 and exports of Chinese-made products, such as
machinery, electrical and consumer goods and clothing/footwear increased
17.5per cent to reach $30.9 billion. China remained Africa’s largest trading
partner during 2011 for the fourth consecutive year (starting in 2008). To put
the entire trade between China and Africa into perspective, during the early
1960s trade between these two large parts of the world were in the mere
hundreds of millions of dollars back then. Europe dominated African trade
during these formative years of European decolonization process in the African
continent. Even as early as the 1980s, trade between China and Africa was
minuscule. Trade between China and Africa largely grew exponentially following
China’s joining of the World Trade Organization (WTO) and the opening up of
China to emigration (of Chinese people to Africa) and the free movement of
companies, peoples, and products both to and from the African continent
starting from the early 2000 onwards.
Recently former Information Minister, Labaran Maku called
for greater cooperation in information and cultural exchange between Nigeria
and China to further deepen the bilateral ties between the two countries. The
Minister made the call in Abuja when he received the Vice-Minister of
Information of the Peoples Republic of China, Li Wufeng on a courtesy visit.
Maku traced the relationship between Nigeria and China back
to 1971; saying inter-personal contact, exchange of knowledge and free flow of
information would solidify the bilateral ties.
According to him, the Ministry of Information will be
looking forward to greater cooperation so that the partners would build up the
relationship and have a lot more of Chinese programmes in Nigeria. He added
that the country is already benefiting through the ‘Star Times’ initiative, but
there is need for more of Nigerian programmes to feature on Chinese television
and radio stations. This, he explained will help the people of the two
countries to understand each other.
Maku stated that already the Star Times of China is
partnering with the Nigerian Television Authority (NTA) on digitisation and
satellite broadcasting in more than 18 cities across the country. He urged the
people of China to take advantage of the ongoing reforms, which have opened up
the Nigerian economy for investment in different critical sectors.
The Minister told the Chinese delegation that President
Goodluck Jonathan is modernising the Nigerian economy through such systematic
policies that have changed the nation’s deficits and challenges into
opportunities for investment.
He expressed delight that Chinese investors have availed
themselves of the economic opportunities in Nigeria and are now investing in
the power, railways and other sectors of the economy. Adding, the sound
economic relations have increased the volume of trade between the two countries
from about $2 billion in the last ten years to about $12 billion per annum
presently.
He was hopeful that in the next ten years, China would
overtake most of Nigeria’s traditional trading partners because of the interest
and confidence China has in the Nigerian economy.
Speaking earlier, the
Vice-Minister of Information of the Federal Republic of China, Li Wufeng called
on the Federal Ministry of Information to promote mutual understanding between
the citizens of the two countries as a deliberate way of strengthening their
economic and cultural relations.
He announced that his ministry has recently unveiled a
project captioned: “Experience China in Nigeria,” and equally donated a China
Gallery to the National Library of Nigeria so as to promote Chinese culture in
the country.
Li Wufeng stated that
the Chinese Ministry of Culture has also launched a cultural centre in Abuja.
Whilst giving gratitude for cooperation on the cultural projects, he expressed
hope that its activities would meet the expectations of the citizens of both
countries
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