OBINNA ASOGWA. Education NIGERIA CHINA TRADE RELATION AND INDUSTRIAL DEVELOPMENT IN NIGERIA MADUFOR,CYNTHIA C

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1 OBINNA ASOGWA NIGERIA CHINA TRADE RELATION AND INDUSTRIAL DEVELOPMENT IN NIGERIA Education MADUFOR,CYNTHIA C Digitally Signed by: Content manager s Name DN : CN = Webmaster s name O= University of Nigeria, Nsukka OU = Innovation Centre

2 CHAPTER ONE INTRODUCTION The contemporary world order need a total transformation in alliance patterns, production relation and refocus to economic issues rising to prominence in the calculation of every nation (Agbu, 1994) in fact, the growing integration of the worlds economy drive by the globalization process and controlled by the international capital which is domiciled largely in western industrialized countries has opened up most countries of the world and promoted greater freedom in trade and capital flow. According to Knanashi (2007) trade liberalization is the key to logic of the current global strategy for growth driven by neo-liberal. Indeed, Nigeria political leadership have responded positively to these global demands and hence extend the country s economic alliance to the Asian giant-china. Generally China s first contact with Africa was in the early 15 th century when some Chinese traders explorers landed along the coast of Africa, this foundation was laid by Zheng, He is the famous navigator of China s ming Dynasty who led the then largest fleet in the world to visit more than 30 countries in Asia and Africa. He lived from 1371 to 1435, undertook the African expedition with around 200 ships and peoples. All this took place almost a hundred years before Europe Discovered and Colonised Africa. Nigeria established diplomatic relation with China on 10 th February 1971, Before this, the country s contact with China unofficially began in the 1950s, and it was through Egypt it is on record that China commercial officer in the Chinese Embasy in Cairo established unofficial trade links with Nigeria, along with Ghana, Ethiopia and Tanzania in 1957.

3 During the colonial era it was taboo for Nigerians to have anything to do with the communist world which China belonged to, some Nigerians like Fumilayo Ransome Kuti and frontier Nigerian political and social activist worked much to the chagrin or the colonial authorities secretly visited Berlin and Beijing in the 1980 s to attend meetings. Her application for the renewal of her passport was turned down scholarships from under closed source and Nigerian trade union leader, all contact with the Eastern block countries and China were prohibited. All Nigerian students who obtained benevolent who attended international conference in those countries has to be smuggled out through Ghana. But this situation was reversed in 1958 by the Nigeria Prime Mister Tafawa Belewa in a policy statement in parliament which stated in part we shall of course endeavour to remain in friendly with every nation which promised and respects our sovereignty (Momoh, 2009). However, Nigeria s first official contact with the People s Republic of China came in 1960 when China was invited to Nigeria s independence celebration, China s delegation delivered congratulatory message from Zheu Enlai and the late Vice Premier, Marshall Chen Yi, in the massage. The Chinese leaders acclaimed the great victory won by Nigeria people in their struggle against colonialism The delegation then toured parts of the country before returning to China, Nigeria reciprocated this gesture when on gaining admission to the United Nations Organization (UNO) later that year she supported China s membership in the world body. This she did by voting against the anti China American procedural motion on 8 th October However, it was immediately after the Chinese cultural revolution and her admission into the security council of United Nation in 1971 that Nigeria and many other African countries responded to these development by recognizing China as

4 major world power and accordingly entered into diplomatic and trade relation with China in the spirit of non alignment. In the post cold war era, political relation between the two countries increased rapidly, this was accompanied by improved trade and investment relations, In this study we shall examine trade and investment relations between the two countries and how it have impacted on Nigeria industrial development. STATEMENT OF PROBLEM In recent years, with rapid economic development of both China and Africa continent the interaction between the two parties which used to centers on political sphere, is now featuring co-operation in various areas especially in the economic development. 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 (Ogunsanwo, 2007) Indeed, Chinese economic and political activity in sub-sahara Africa is growing at an exponential rate (Tajlor, 2006, Tull, 2006, Taylor 2004). In fact China is now Africa s third largest trading partner ahead of the United Kingdom and only behind the United State 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 market (Taylor, 2006:2008) interestingly Nigeria is taking a fair share of the Chinese economic activities in the African continent. Although formal relationship between Africa and China started in 1956 when China commenced full diplomatic relationship with Egypt, Nigeria and China established formal diplomatic ties on February with an understanding to abide by a set of fire principles material respect for each other s sovereignty and territorial integrity, mutual non-aggression, non interference in each others internal

5 affairs, sovereign equality and peaceful co-existence (Musa, 2007) subsequently, Nigeria and China have in relent time established a strong trading link. It has culminated in the signing of a bilateral trade agreement (BTA) in 2001, a strategic partnership agreement signed in 20s a memorandum of understanding on investment cooperation between the federal ministry of commerce of Nigeria and ministry of commerce of China in 2006, economic cooperation agreement between Nigeria and Guandon Xinguang international group of China in Meanwhile, China s foreign and external relations have actually been influenced by many factors which include: (a) China has the cultural tradition to support the weak neighbours to resist their powerful enemies (b) China s convictions in its ideological choice and the value-laden anticipation to extend this model to the other areas. (c) China s own environment and political needs in the international system. Basically, the mainstream policy-orientations in China s foreign aid also aim to meet the strategic goals in China s foreign affairs as to keep the world peace, ensure the ultimate advantage of China; safeguard the national security; enhance China s status in international communities; and further develop a peaceful international environment. It also aims at safeguarding the sovereignty of the recipient countries; help the developing countries to develop their economy with the aim to gain maximum economic and social benefits; and the principle of serving for the overall external relations ( for more on this, see Daopeng, 2003). Similarly, Nigeria s foreign policy orientation aims at creating the necessary political and economic conditions in Africa and in the rest of the world which would foster Nigerian national self-reliance and rapid economic development. It also

6 promotes equality and self-reliance in Africa and the rest of the developing world (Briggs, 2005:6). Arising from the above is that the basic principle of Nigeria s external relations is remarkably similarly to that of China; even though the levels of development are wide apart. Nevertheless, Akinterinwa (1994:138-9) noted that there are two main periods in China-Nigeria relations: and The first period corresponded to the era of informal relationship, conflict of interests, and mutual neglect. Again, the period was characterized by comparatively formal relations but little cooperation. Akinterinwa (1994: 140) observes that: The relationship was characterized by an exchange of official visits during which different cooperation agreements were signed.in the areas of agriculture, trade and industry.. In the area of economic sector, Sino-Nigerian cooperation has been mainly in the areas of agriculture, small scale industries, and bore-hole construction. In the terms of Sino-Nigerian trade, the volume and value has been increasing. Added to the above is the third and present phase China-Nigeria relations characterized largely by frequent high profile official visits by both countries, exponential increase in the volume of trade and investments; and remarkable aid from China (Utomi,n.d:3).. Meanwhile, existing scholarship on Sino- Nigeria economic relations are divided between two seemingly opposing views in the ends of China s economic relations with Africa, particularly Nigeria. Some scholars proposed the China threat theory and hence pointed that China s aid to Africa has interrupted the due economic development and social stability in these countries (Xiagdon, 2006, Giry, 2004). Indeed Giry (2004) remarked that China s activities in Africa has impaired America s long-term strategy and efforts to promote democracy in this area; to put it

7 mildly, China s interference will complicate the process of democratization in Africa; or China will eventually destroy America s global anti-terrorism strategy and lead to the nuclear weapon proliferation. Other scholars who shared the pessimistic view on Sino- African relations include: Wilson, 2006; Wenping, 2006 etc. None the less, Akinterinwa (1994); Agbu, (1994), Oche, (1997); Comelissen, (2000); Daopeng (2003) et cetera argue on the contrary. They believe that China s diplomatic policy in Africa is as a result of mixed agenda as it s economic demand to involve Africa into the global system so as to contribute to its own modernization process; and its political need to have Africa s support in the international organizations to resist the pressure and interferences by the West on Taiwan and human rights issues; and the stand on anti-hegemonism in international relations. Particularly, Oche (1997: 65) was concerned that the success of the Chinese model may inform the on-going quest for economic reform and development in Africa. Similarly, Agbu (1994: 219) observes that it is in Nigeria s overall interest to consciously improve her relations with China, especially in the areas of agricultural production and adaptation of appropriate technologies since it is obvious that previous efforts from other sources yielded little or no benefits. However, we have to observe that economic alliance between the two countries have far-reaching consequences. Indeed, existing literature however tends to emphasis two main channels through which economic alliance between the two countries impact particularly on Nigeria s economy: (i) trade and (ii) investment. For a developing country like Nigeria there is the need to go beyond trade and investment as Nigeria s engagement with China goes beyond these two channels to also encompass: Trade in goods and services

8 Investment flows Aid/technical assistance/debt Analysis of these channels suggests that trade and investment are the main channels. These channels complement each other in terms of China s goal in the relationship with Nigeria. With its relative strong population and endowment of natural resources especially crude oil, Nigeria becomes a natural market for China s exports and for imports in its quest for raw materials to sustain its remarkable growth (Ogunkola, et al 2008:8). The growing trade and investment relationship between China and Nigeria has been accompanied by a wave of economic migration to Africa by state-influenced construction teams and mining and oil workers, as well as private traders. Immigration and emigration of Nigerians and Chinese have been limited by sociocultural factors especially language barriers A framework for the analysis of the transmission channels through which the rise of China impact on other countries as proposed by Kalipinsky (2008, cited in Ogunkola, et al 2008:8) involves two major types of impacts: complementary and competitive with each of them characterized by direct and indirect effects. This framework examines different elements of the main channels for their complementarity and/or competitiveness of Nigeria s interest and development strategy with that of the China Meanwhile, in contrast the top 30 import commodities from China are all manufactured goods. Also 50% of top 10 imports are made up of textile materials of HS About 37 % of the top 30 imports from China belong to HS Chapter This ranking explains partly the present misfortune of Nigeria s textile sector. This suggest that import surges of textile products occurred but were not monitored and

9 combated with safeguard mechanism. The prohibition that was imposed belatedly could not be fully monitored for full implementation due to governance related problem that include porous borders, corruption and inadequate enforcement capacities. 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 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. We shall therefore attempt to fill this gap noted in the literature. In the light of the foregoing we state the following research questions: i. Has Nigeria-China trade relation enhance industrial development in Nigeria. ii. iii. 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.

10 OBJECTIVES OF 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 it s 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 trade relations on Nigeria industrial development Specifically, the study has been designed to achieve the following detailed objectives. This study aim at achieving the following objectives: i. To determine the implication of Nigeria China trade relation on Nigeria industrial development. The specific objective of the study is ii. To ascertain the impact of China direct investment on the rate of unemployment in Nigeria. iii. To evaluate the reason behind China s policy choice of going global.

11 SIGNIFICANCE OF STUDY The significance of this study can be viewed form both theoretical and practical angles. Theoretically, this work is designed to open up new vitas on the study of Nigeria-China trade relationship 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. LITERATURE REVIEW In this section, effort shall be made to study, understand and explain the issues of Nigeria-China trade relation by reviewing the works of scholars that have dealt with the subject matter. Basically, the literature review shall be three fold in focuse. It shall explore plausible answers to the three research questions and thus we shall conduct the review under the following brad sub-themes bearing in mind the focus of the research question as following. a. Nigeria-China trade relation and manufacturing sector. b. China s direct investment and incidence of unemployment. c. Nigeria-China relation and policy choice.

12 The review will briefly highlight the Sino African relation date back to centuries, it is on record that before the Europeans set their foot on the African soil Chinese traders and explorers had already landed on the continent and were doing a lot of things in common with the Africans (see Ogunsanwo, 1974; Agbu, 1994; Chibundu 2000; Onuoha 2008) in Nigeria s case Ogunsanwo (1974: 37) noted that the countries first unofficial contact with China was through Egypt. According to him the initial contact between China and Nigeria was struck when after the establishment of Chinese Embassy in Cairo in (1956) the commercial officer in the embassy Mr. Chan Hiang Kong established link with Nigeria as well as Tunisia, Libya, Ghana, Ethiopia and Tanganyika in Nigeria s first official contact with China was in Nigeria s first official contact with China was in According to Owoeye (1986:294) this took place when China was invited to Nigeria s independence celebration, China s delegation delivered congratulatory massage from Zhou Enlai and the late vice premier marshal Chen Yi in their message. The Chinese leader acclaimed the great victory won by the Nigerian people in their struggle against colonialism, the delegation then toured part of the country before returning to China Owoeye argues that Nigeria reciprocated this gesture when on gaining admission into the United Nations (UN) later that year. She supported China s membership in the world body. This she did by voting against the anti China American procedural motion on 8 th October NIGERIA-CHINA BILATERAL TRADE RELATION China Nigeria bilateral trade and investment relation got a boost even during the period of informal ties between the two countries. By 1958 China s export to Nigeria was put at 1.4m it increased to 1.86m in 1959 by Nigeria was the

13 third largest market for Chinese export in Africa after UNR and Morocco. However, whether it was China that was unwilling to patronize Nigeria goods or Nigeria had little to offer China trade wise. The relevant point here is that the benefits of China- Nigeria trade were accruing to China rather than Nigeria, It is also pertinent to point out here that China actually needed such a windfall as a way of building up external reserve for industrial purchase in Europe. Accordingly the need for Nigeria to be close to China because of trade during this period was out of the question (see Ogunsanwo, 1990). During the Nigerian civil war period the country continued to be a good market for Chinese goods. For instance China s export to Nigeria stood at 5.4m in 1969, as against 3.7 in In 1970, the figure rose to 7.03 million rising again to Liom in 1971 after this period however sobriquet years experienced a progressive decline in trade volume, for instance while the value of trade was put at N 35.7m in 1981 it declined to N17.8m in 1982 plunged further to N8.0m and2.6 in 1983 and 1981 respectively this falling trend could be attributed to the bowstring measure of the Nigeria government that brought about the import restriction during this period the commodity composition of Nigeria s exports to Chinese shows that China imports mainly cocoa, beans and cashew nuts from Nigeria while Nigeria imported only light, industrial goods and chemicals from China. However the balance of trade was in China s favour. The problem of trade imbalance between Nigeria and China attracted concern as far back as 1974 during brigadier Shehu Yar Adua visit to Beijing, According to not of understanding of subsequently released on the issue China pledged to purchase in addition to cocoa and cashew nuts substantial quantity of cotton and palm kernel as a step toward bridging the trade gap nonetheless the trade imbalance he persisted (Owoeye 1986: Chibundu 2000).

14 The volume of trade and investment between Nigeria and China continued to grow at law level until rapid growth turned China in 1993 from a net exporter of crude oil to the second largest importer of crude oil in the World, with China s voracious demand for energy to feed her booming economy, the volume of trade between her and China have increased in the recent time, once the largest exporter of oil in Asia China become a net importer of oil in 1993, by 2015, China is projected to depend on imported oil for her 45 percent of her energy needs. The country therefore need supplies form relatively low cost African countries. (Ezirim 2007:52: Utomi: 2008:40: Onuoha 2008:306) the forgoing situation has made China to embark on the strategy of going out and accordingly trade and investment relations between her and Nigeria, China has signed a number of bilateral trade investment agreement to offer each other most favoured treatment. in line with this, the Chinese government has adopted various measures to promote trade and investment relations between Nigeria and these measures include. A) Taking positive measure to facilitate African product to enter China market and to give zero tariff treatment to part of export from lest developing countries in Africa to enlarge the trade scale and optimize the trading structure. China has signed free trade agreement or regional trade assignment with African countries and regional organization. B) Africa is one of the regions that China government encourages enterprise to make investment, Chinese government formulate perfect related policy, simplify investment procedures, enhance guide and service and support powerful enterprises to invest in Africa, she will continue to sign and carry out bilateral agreement to encourage and guarantee investment and avoiding double taxation to safeguard the legal right of investors.

15 C) Encouraging China s financial institutions to setup branches in Africa to provide effective financial service for China African trade D) Strengthening information service system to create conditions to exploit African market (Onuoha 2008: 303). The forgoing measures have been responsible for the recent increase in the volume of trade between China Nigeia bilateral trade and investment for instance the volume of trade between Nigeria and China increase from US $ 17$ million in 1996 to US $ 1.44 billion in December 2001, the trade figure for 2002 was US $ 1.16$ billion and it rose to US $1.85$ billion in in 2004 the figure rose to US$ 2 billion and stood at US $2.83 billion in 2007 China is one of Nigeria s top ten trading partners and it has set up 30 companies (some Soley owned, some jointly owned with Nigerians) in Nigeria this companies are involved in construction, oil and gas, technology, service and education sector of the Nigeria economy, China, have signed oil exploration contracts worth over N4 billion and it involvement in the oil sector is tied to its building power generating station that would add sustained megawatts of electricity to Nigeria power sector (Monoh. 2009) From the foregoing it is obvious that China-Nigeria bilateral trade and investment relation got a major boost during administration however, the balance of trade have been in favour of China (Ezirim ) There are complex and multifaceted dynamic and challenges in Sino-Nigeria trade relation, this is however expected in the relationship involving two countries that have different orientation despite the Chinese contant talk of having the some political experience with Nigeria, it might be in the light of this that some scholars have argued that Nigeria and China share a lot of in common with possibilities for mutual cooperation and the sharing of experience. According to these scholars, both

16 countries have strategic and geopolitical important in population and economy, have ancient tradition manifested in affects treatment all over the world and both share the national trait which promote self reliance even in the matters of political development and social engineering. These scholars also argue that both countries have a lot in common as both support South cooperation. Nigeria support one Chin policy while China supports Nigeria Non Alignment policy. (Agbu: 1994:247 chibundu 200: 1 Ezirim 2007P65 Akinterinw It might have been in the light of the forgoing that Nigeria and many other Africa countries are today increasing turning to China instead of their traditional partners (Europe and United State) Writing on this Ding (2006:200) has observed that whatever reservation may have been expressed about China s mercantilist driven push into Africa, Africa countries have generally found their development partnership with China more concretely beneficial and more satisfying than their experience with the western donor countries, those donors appear to be experiencing profound is quiet over China growing influence in Africa attaches no strings in the face of issues such as human right. It is viewed as offering for more practical and concrete kind of support such as infrastructure development but has been neglected by traditional donours, China funds or undertakes project decide by Africa countries rather than dictating priorities and is quicker to deliver on aid promises than Western countries. However, despite Nigeria and other African country s increasing trade and investment with China, many scholars have observed sadly that the balance of trade has remain and will continue to remain in favour of China, according to them, the trade imbalance will increase as China tries to achieve a greater surplus in her African trade in order to balance the heavy imports from the industrialized countries, thus there is visible determination by the Chinese to offset their trade deficit with the west by striving to maintain trade supplies with their non Western trading partners moreover Africa countries trade regime still remain post colonial with very little attempt being

17 made to change the situation fundamentally, this is why African s trade with China has continue to be in deficit (Ezirim Onuoha 2008). In addition to investment on trade, Onuoha (2008:307) writes that China has engaged in aim deal with African government as a foreign policy tool China does not have the same human right concern as the united state and European countries. He will sell military hardware and weapon to nearly anyone. Indeed, Beijing see Africa as a growth market for its military hardware, China s advice exploration of oil source in Africa also leads to a need to ensure security around them. And this has led Beijing to send Chinese military trainers to help their African Counterpart what this suggest is that Africa will remain a bedrock of arms conflict and crisis region. It is true that China s bilateral relationship with Nigeria is getting better by the day unlike the situation during the immediate post colonial era, however many Nigerians are skeptical and worried the trade relation, many Chinese goods especially textiles are floating the Nigerian market on a daily basis most of this cheap goods which work membership is often poor, would many Nigerian of accusing China of dumping cheap Chinese product into the local market. On it part, China also has some complains over doing business in Nigeria because of problems of insecurity arising form armed robbery and violence/lawlessness. And two the high cost of operation due to inadequate power and water supply, the bad state of telecommunications and infrastructure, poor police work in crime investigation and so on (Bukarambe 2005: ). From the literature above, I observed a gap regarding China Nigeria trade and industrial development in Nigeria, it is this gap that I want to fill in the existing literature.

18 CHINA S DIRECT INVESTMENT AND INCIDENCE OF UNEMPLOYMENT In the world of globalization, Nigeria can not be a part if she does not improve her Economic fortune and productive capacity. This can not be attained unless Nigeria participate in the competition for foreign direct investment (FDI). According to Arremu (2005) foreign direct investment is defined as the creation of enterprises abroad or the acquisition of substantial stakes in existing enterprises by foreign owners. Policy magazine (August :16) observed that Foreign investment is an investment means mobilization of foreign capital in the form of foreign direct investment into the economic sectors of the host country. Foreign direct investment is an investment behaviour when an individual or industrial firm has expanded asset resources from one country to the other in compliance with the legislation or the host country. Foreign direct investment is an investment behaviour when an individual or industrial firm has expanded asset resources from one country to the other in compliance with the legislation of the host country (Aja 2002) foreign direct investment therefore means foreign private investment into the economic sector of host country either solely by the foreign investor or in partnership with local representatives with the sole aim of making profit. Okolie (2006) noted that the liberalization of trade and investment potentials remains the hallmark of globalization. He maintains that the world is an interdependent entity and bilateral and multilateral relations must be encouraged. That Nigeria political leadership must participate actively in the global political economy by strengthening their manufacturing capacity improving on productive materials and modernizing the existing mode of production.

19 Nobert (2000) noted that foreign investment have become incorporated in the developmental plans of developing countries and the need to guard exploitative operation of foreign investors is clear. Lumumba-Kasongo (2007) noted that over the last 10 years there has been a very rapid increase in FDI. According to him, the stock of the Chinese FDI in Africa in 2005 was 8.6 billion, representing only three percent of the Chinese total FDI, in similar contribution, Onuoha (2008) noted that in 2004, Chinese direct investment in Africa reached $135 million on with 77 additional Chinese companies doing business in the region. Konings (2007) posits that while China s principal interest in Africa is access to natural resources, the continent also provides new market and investment opportunities to China s growing economy. Direct Chinese investment in Africa has risen substantially following the government s Government or Go-global strategy initiated in 2001 which focuses on active state support and encouragement for domestic firms to pursue investment abroad. Ogunsanwo (2007) posits that China is rapidly becoming one of Africa s main source of investment. According to him, by the end of 2005, China had established more than 800 enterprises in Africa involving a total investment of 6 billion dollars. In Nigeria, the past president of the country Olusegun Obasanjo, publicly invited foreign investors including China to come into the Nigeria economy promising to create a business friendly environment. No doubt in the past 20 years, China has been able to attract FDI was not less than 40 billion dollars, annually this investment have however been focused and monitored by the Chinese government (Ogunsanwo, 2007).

20 In response to this, Kwanshie (2007) stated unequivocally that the level of absorption of foreign direct investment (FDI) has also grown rapidly. In addition Alli (2007) explained that Chinese investment in Nigeria which has equally risen sharply is also now estimated to be worth a staggering figure of not less than 5 billion naira. According to him, the Chinese have made investment in virtually all sectors of the Nigeria economy including oil, energy, rail way, construction, pharmaceutical, textile and others. Scramble for foreign direct investment has become the order of the day by developing nations. Investment models have shifted from public investment to private sector driven investment. Market liberalization and the opening up of the domestic frontier for investment brings appreciable FDI performance. According to Eze. (2008) the contribution of FDI to National development of host countries are enormous, according to him, they includes, capital formation, technology transfer, increase in productivity through improved efficiency and value addition provision of managerial and technical competence encourages competition, development of domestic industries, increased profitability, opportunity for skills acquisition, employment generation and research and development capacity building. According to Aja (2002) foreign direct investment promote international flow of capital and financial ties among and between countries, the agents of FDI are mainly the multinational corporations (MNC) they possess the monopoly of world capital, technology and market ideology. However, Onuoha (2008) argued that economic aid had been China s most important and influential instrument of foreign policy in her relations with Africa countries, according to him, most African state developed their relation with China in

21 the context of the aid war between China, the Soviet Union and the United State Peace Corps. Accordingly, Soludo (2006) noted that China has the highest level of FDI funding in emerging markets. It stood at US & 52.7 billion in 2002 from the period of 1997 to China accounted for an average of 32.5% of total developing world s FDI and 55.5% of that of the whole of Asia. In 2005 about 45% of China s exports were founded by foreign funds and capitals. It is the third largest trading bloc after the United State of America and Europe. It s market accounted for more than 20% of increase in world trade in According to Nwachukwu (2009) the Olusegun Obasanjo years witnessed major Chinese investment. Some of them includes the following, China National Overseas Oil Company Limited (CNOOC) 45 percent stake in OPL 246 worth $2.7 billion in offshore deepwater oil field operated by total the French oil giant. He noted that this investment is reported as the CNOOC s largest foreign investment ever. CNOOC paid $424 million for financing, operating and capital expense. Oil production commenced in 2008 reaching a peak of 225,000 barrels a day. Similarly, Sinopec, a Chinese company, signed a three year contract to develop OML 64 and OML 66 jointly with NNPC. The Borno State government also awarded six major contracts to Chinese construction and engineering firm to stem the wave of flooding, drainage, construction and to also curtail mosquito infestation. According to him Chinese firms are Geo Engineering Corporation (GEC) and ECC and they worked in collaboration with a Nigeria construction company. According to Ezirim (2007: 150). Trade and investment have made China a major player in African economic development. Two-way trade has quadrupled in the last five years to reach $40 billion in 2008, making China Africa s third largest trading partner

22 after the European Union and the United State while China s voracious demand for commodities has driven investment priority. It is diversifying into the apparel, food processing, and telecommunication and construction sector. At $ 1.2 billion, Chinese FDI in Africa is small compared to the $29 billion total recorded last year, but if the influx of Chinese firm is any guide ten-fold increase since Future capital inflow likely will multiply. From the forgoing, many scholars and commentators have seriously worked on the Chinese direct investment rate in Nigeria and the sectors they have occupied in Nigeria Economy, but enough attempt have not be really made to underscore how this investment have responded to the problem of unemployment Nigeria. As a result of this we will endeavor from our findings to fill this gap in the literature. NIGERIA-CHINA RELATION AND POLICY CHOICE Immediately after the chine cultural revolution and her admission into the Security Council of United Nation in Many African counties responded to these development by recognizing China a major world power and entered into diplomatic relation with China in spite of non-alignment. According to Onuoha (2009), from 1978 when China initiated its four modernization program which evolves around de-emphasizing direct macro management of the economy and unleashing the laws of market values. The attitudes of African countries towards China underwent noticeable change, on frequency of economic exchange increased. According to him to adapt to new development in external and internal conditions, the Chinese government began to reform its foreign aid policies in 1995 to make the process more efficient. It was from then on that the Chinese government began to encourage and even help domestic enterprises to invest in Nigeria and set up plant there.

23 According to David Zweig and Bi Jianai wrote in an article, China Global Hunt for energy, in the September October 2005 issues of foreign affairs, China s manufacturing sector has created enormous demands for aluminum, copper, nickel, iron ore and oil. Zeigh and Bi maintained that China has been able to adapt its foreign policy to its domestic development strategy to an unprecedented level by encouraging state controlled companies to seek out exploration and supply contracts with countries that produce oil, gas and other resources. At the same time, Beijin aggressively courts the governments of those countries with diplomacy, trade deals, debt forgiveness and aid packages. Onuoha noted that the strategy is working, that China has gained access to key resources around the world from gold in Bolivia and coal in the Philippines to copper in Chile and natural gas in Australia and of course oil from Africa. He maintained that an important influence on Chinese foreign policy that has especially affected China interpretation of world event has been ideology both Marxist Leninist and maois. The ideology components of Chinese foreign policy, which influence has varied over time have included a belief that conflict and struggle are inevitable a focused on opposing imperialism throughout the world. According to Wilson (1997) one of the most basic aspects of China s ideological worldwide has been the assumption that conflict, though not necessarily military conflict, as omnipresent in the world. According to Marxist Leninist analysis, all historical development is the result of a process of struggle between classes within a nation themselves or between broader forces such as socialism and imperialism. A basic tenet Chinese lenders hold is that the international situation is best understood in terms of the principal contradictions of the time. Once these contradictions are understood, they can be exploited in order to, as Moa said win

24 over the many, oppose the few and crush to enemies one by one. Spence J. (1990) Branco, l (1971) Libeberthal, K. (1995). This became the driving components of Chinese bilateral and multilateral relation with outside worlds. In November 2001, China joined the world trade organization, and stepped into a new phase of reform, and opening up to the outside world. Today, China take Africa as one of the major regions to practice its market diversification and going out strategy. According to Onuoha, China and Africa are economically complementary, since the beginning of the new century China and Africa is being considered as playing a vital role to achieve the dream of NEPAD. Based on strategy considerations geared towards the 21 st century, the Chinese government has attached strategic important to its relation with African countries, it announced that economic and trade cooperation with Africa is a major part of China s overall diplomatic strategy. According to Nwachukwu (2009), the basis of China Nigeria relation can best be summarized in the speech at the organization of Africa unity, by the former Chinese president, Jiang Zemin, when he announced that China is willing to consolidate and develop a long term stable cooperation relationship with Africa countries in 21 st century. Under the five principles of peaceful coexistence principle of sincerity, friendship, equality, mutual benefit and common development. According to Trofimov (2007) China issued a comprehensive policy statement which elucidate the principles and scope of its policy in Africa. It emphasis China s usual non-interference policy and the five principle of peaceful coexistence, since then, China has provided debt relief and cancellation to Africa. He noted that in the third forum China provided $3 billion preferential buyer credits and instituted the $5 billion China Africa Development fund to facilitate investment in Africa. In the

25 fourth forum, China provided as $10 billion preferential loan to Africa to support infrastructure and social development projects, and another $1 billion to the China Africa Development fund, in the first and second forum, China cancelled $1.3 billion debts in the third forum, China cancelled all debts relating to interest free government loans that matured at the end of 2005 for the most indebted and lealtdeveloped African countries with diplomatic relation to China similarly debt cancellation were announced in the fourth forum. One policy action according to Trofimov (2007) that has followed from these forum is the establishment of special economic zone in Africa, for China, special economic zones play a crucial role in its recent astonishing economic performance conceived to be an effective policy to promote the manufacturing sector and employment in Africa, China has assisted some African countries in developing their own special economic zone and encouraged Chinese companies to invest in them. The first special economic zone established under this initiative is in the Chambishi copper belt region in Zambia. Despite its potential benefits to the Africa economies, China s involvement in this Africa special economic zone is not without critics (UNCTAP, 2010b) and Trifimove. China s investment in Africa has also positively been affected by the Going Global or Stepping out strategy adopted by the Chinese authorities in the new millennium, for example, the 2002 issue of the almanac of China s foreign economic relations and trade discuses the effort to implement vigoriously the Going Global According to Lieberthel K. (1995), this policy represents China s concerted effort to encourage investment in overseas market to support economic development and sustain economic reform in China. As a sequence, China s overseas investment

26 plays up the procurement of natural resources to meet its domestic demand induced by its strong economic growth. According to Corkin et al (2008: 2) the Chinese government employs two Policy Banks. The China Export and Import Bank and the China Development Bank to facilitate its economic activity in Africa, the China export and import bank provide trade credit and investment loans for long-term infrastructure, energy and mining project in Africa. The China Development Bank on the other hand establishes the China Africa (Wamg, 2007). A cursory look on the reviewed literature shows that there is still gap, as scholars are yet to address the motive behind Chinese policy thrust of going global.. It is this gap that we wants to fill in our study. THEORETICAL FRAMEWORK Nigeria has been trapped under the clutches of underdevelopment since independence in The reasons for Nigeria s underdevelopment even in the face of her abundant natural and human resources have been a major concern to both local and international commentators. Economic diplomacy particularly on trade and investment relations was governments perceived measure to get Nigeria out of her low level of development. Despite the adaptation of this foreign policy instrument Nigeria s relation was heavily pro-west from empirical evidence. The nation has not made significant progress since the 1980s when the policy was introduced. This might be as result of what the Marxist say that the internationalization of capitalism by Europe as to find overseas market of selling their surplus product and to have access to raw material whose prices are determined by themselves. The failure to economic relation with the western hemisphere to solve Nigeria economic predicament may have necessitated the shift towards China for rescue our

27 analysis is situated within the theoretical framework of liberal theory of the economic development and underdevelopment. The liberal theorist believes that interdependence and economic linkages between the developed capitalist economics and the less developed ones are beneficial to both the developed countries and the less developed countries. However, scholars have always anchored their analysis on the political economy, dependency theories which are a critique of the western capitalist nations and their relations with the developing world. The most concise and frequently quoted definition of dependence is that of Brazilian scholar, Santos (quoted on Gilpin 1987: 281). By dependence we mean a situation in which the economy of certain countries is conditioned by the development and expansion of another economy to which the former is subjected. The relation of interdependence between two or more countries and between these and world trade assumes the form of dependence when some countries (the dominant ones) can expand and can be self-sustainers while other countries (the dependent one) can do this only as a reflection, which can have either a positive or a negative effect on their immediate development. In the course of our work, the theory of complex interdependence will be adopted. This theory was developed by Robert Keohane and Joseph Nye, the ideas was that state and their fortunes are inextricably tied together. The concept of economic interdependence was popularized throughout the work of Richard N. Cooper with the analytical construct of complex interdependence in their critique of political realism. Robert Keohane and Joseph Nye go a step further and analyze how international politics is transformed by interdependence. The theory recognized that

28 the various and complex transnational of state and societies were increasing, while the use of military force and power balancing are decreasing but remain important. In making use of the concept of interdependence Keohane and Nye (1997: ) also differentiate between interdependence and dependence in analyzing the role of power in politics and relation between international actors. Complex interdependence is characterized by the characteristic involving. - The use of multiple channel of action between societies in interstate, transgovernmental and transnational relation. - The absent of a hierarchy of issues among issue. - Bringing about a decline in the use of military force and coercive power in international relation. However, Nye and Keohane, thus argue that the decline of military force as a policy tool and the increase in economic and other forms of interdependence should increase the probability of cooperation among states. The traditional critiques of liberation are often defined alongside critiques of political realism mainly that they both ignore the social nature of relation between state and social fabric of international society. Keohane have (2002: 2 9) recently define himself as simply an institutionalist. However, they subscribed to the view that an interdependence world economy characterized by free trade and international division of labour foster domestic development. They also agree that free flow of goods, capital and technology promote optimum efficiency in resource allocation and hence diffusion of growth from the developed world to the less developed world for them. Therefore trade and investment is the panacea for economic growth and development of the less developed countries.

29 They equally agree that the developed countries benefit from trade relations with the less developed countries because of access to cheap raw materials, availability of foreign market for capital and industrial goods. It is the conviction of the liberal school that through interdependence and trade relation, the key factors required for economic development steadily move from the developed capitalist countries to less developed areas, and that the rate and direction of the movement of these factors depend on the international migration of economic factors (i.e. capital, labour and skill). The volume, terms and composition of foreign trade and the nature of international monetary system. The position was justified by citing China, Japan and Taiwan as countries that have achieved remarkable economic growth and development using export maximization strategy while Latin America countries have failed largely because of their import substitution strategy. However, the theory recognized the inevitability of alliance, inter-state relations for material benefits as expected it hinges on the principle of comparative advantage, No doubt Nigerian and China are aware of their strength and limitations in the production of material value. The two countries are the most populous in Africa and Asia respectively and share similar though not identical historical neo-colonial experiences. Nigeria has Africa s and one of the world s congesting hydrocarbon deposits and China s economy is the fastest growing in the world currently, China requires Nigeria s oil to fuel its economic expansion while Nigeria seeks China s expertise, finance, technology and industrial goods as well as market for its bourgeoning non oil export with a population figuee of nearly 1.5 billon people, the Chinese market is an exporter s dream. Indeed it appears to be a relationship that suits the strategic interest of both countries.