Relationship between China and Nigeria has been on a rise in recent years in terms of trade and development finance. Chinese loans to Nigeria have also increased from about zero a decade ago to $1.3 billion as at June 2015. Evidence of this can be seen in the quantum of Chinese funded projects littered across Nigeria, 40 by our estimates. They are constructing roads, rail, handling water projects and also providing the technological backbone for our telecoms and power sector.
Trade relationship between Nigeria and China has also in the last five years showed tremendous growth. According to available data,trade between Nigeria and China has risen from about $2 billion in 2002 to about $13 billion yearly.
It’s not all good news if you look deeper into the official trade data made available by the National Bureau of Statistics. As the data above depicts, Nigeria has imported goods worth about N4.2 trillion from China between 2013 and 2015 compared to an export of N547 billion within the same period. This means the Chinese has exported to us 8x more than we have exported to them in the last two and half years. Despite the currency crisis Nigeria is facing, the country has imported about 10x more than what it had exported to China in the first three-quarters of 2015. In fact, the figure is 18x and 15x respectively for Q2 and Q3.
The Central Bank may have placed restrictions on purchase of dollars to fund some transactions, the data all the same confirms that Nigerians are still importing heavily from China. Chinese goods are cheaper and flood Nigerian markets with or without restrictions. Analysts have pointed to this fact suggesting that the time has come for the CBN to increase its hoard of the Chinese currency Yuan. China also views Nigeria as an important trading partner in Africa and also a destination to channel a lot of its excess capacity.
The heavy trade imbalance between Nigeria and China should posse serious concerns to policy makers who believe Nigeria should be importing less and patronizing made in Nigerian products. Data like this shows it will take a lot more effort to reverse the trend. Chinese goods are cheaper to make even if they are products borne out of home made Nigerian concepts and ideas. Authorities need to seek creative means of protecting the local economy without restricting competition and stifling substitutes. How the government does that in an economy where price matters over pride will be interesting to see.