Caution in dealing with China

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Usman Bello, a trader in fabrics at the popular Kanti Kori market in Kano, shared his frustration with me the last time I visited his store for my Sallah shopping. “The Chinese have taken over our market” he lamented. “They now import these fabrics in large quantities from Mali, where they have acquired huge commercial farms to grow cotton”. The reality, in what used to be the biggest fabrics market in West Africa largely run by indigent people, is that all these folks now work for the Chinese. The Chinese have not only dominated the wholesale segment of the market, they are now taking over the retail space.

China has in the last three decades remarkably grown in economic size and global influence to the point in which they are now considered a major threat to America’s strategic interests around the world. More so, China, through its Belt and Road policy is now leading what geo-political strategists describe as the ‘New Scramble for Africa’. From roads to railways, hospitals and bridges, the presence of China in Africa is ubiquitous and undeniable.

President Buhari, like several other African leaders, has celebrated the recent loan of $328 million from China, which was secured at the ongoing African-China summit in Beijing. Much as we like to applaud the partnership with China, it is imperative to be cautious about this. Nigeria suffers a trade imbalance with China in a ratio of 20 per cent – 80 per cent (meaning that we only export 20 per cent of the total volume of traded goods to China and import a staggering 80 per cent). In fact, most of our exports to China are raw materials extracted by Chinese companies, using Chinese labour.

First, over 90 per cent of Chinese businesses are either state-owned or are being subsidised by the state. This makes it almost impossible for locals to compete with the Chinese, consequently leading them to close shop. Outside the resources they extract from African states, most Chinese businesses also depend on supply lines outside the countries they manufacture in, creating little value for the local economy of their hosts. In our instance, it is therefore necessary that imported consumables must have their manufacturing base in Nigeria, and engage local labour. In that light, goods not manufactured in Nigeria must be imported only by local businesses.

Second, the Chinese populate most of their businesses operating within Africa with their citizens, leaving only very low skilled jobs for people in places like Nigeria. Hence, there is need to ensure that at least 80 per cent of local labour for major infrastructural project are handled by Nigerians.

Third, the Chinese hardly adhere to global standards of safety in their operations in African countries; they depend on extractive resources without serious consideration for the impact of their extractive activities on the environment. In the end, they leave behind chaos in their host communities.

Also, the Chinese have continued to increase the debt burden of African countries, leaving them with very little choices in negotiations over this. Consequently, the Chinese take over critical and strategic state-owned asset from defaulting governments, in lieu of payments on the loans.

What then can we do?

The only way to deal with the Chinese, knowing that they have a much stronger, experienced and skilled diplomatic corp, is to route our negotiations with them through global institutions like the World Trade Organisation (WTO), which will compel the Chinese to uphold certain standards. Under my presidency, we will regularise and conform to WTO standards and endorse the Transport Facilitation Agreement that will regulate not just trade with China, but also with other important foreign partners.

More importantly, we must engage the Chinese through the build, operate and transfer principle. This way, for whatever infrastructure the Chinese intend to build in Nigeria, they must have Nigerians in the front row seats. This way there will be the opportunity for skills exchange. Furthermore, the Chinese must also operate these infrastructures alongside Nigerians over a period of time, until such a time where the entire structure can be handed over to the government.

We should remember that every country sets up a foreign policy to pursue their own interests, with other countries coming only as distant seconds. China is not here to rescue us, they are here to further their own interests and we must remain vigilant about this.

Source: BusinessDay