Tag Archives: China

Flattered Trump achieves little in Asia

By Rafiq Raji, PhD

Donald Trump, the American president, concludes his 5-country Asian trip in The Philippines today (14 November). Heralding his arrival in Beijing a week earlier – his third stop after earlier ones in Japan and South Korea – was a reminder of China’s trade surplus with America, data for which came out at US$26.6 billion for October; about US$223 billion thus far this year. And if he thought his trip would make China buy at least as much American goods and services as go the other way, he was a tad disappointed. Of course, there was much pomp about the US$253.4 billion in deals signed between the two delegations. But much of these were not substantive. And some were actually just old deals. The extent of the divergence in the views of the Chinese president, Xi Jinping, and President Trump, would become writ large in Da Nang, Vietnam, at the Asia-Pacific Economic Cooperation (APEC) summit, where they both headed afterwards. They provided sharply contrasting visions on trade in their speeches to the gathering of Asian-Pacific leaders. While President Xi espoused multilateralism, openness, and globalisation, Mr Trump was unapologetically insular in his views. Brief incidental interactions with Russian president, Vladimir Putin, at the APEC summit, in place of a much anticipated formal meeting, did not yield much either. Because even though the Kremlin published a joint statement on the crisis in Syria, there was not much there that was new; a missed opportunity. It did not help of course that the controversy over alleged Russian meddling in the 2016 American presidential elections would not just go away; no doubt made worse by Mr Trump’s equivocation on the matter. In fact, what little progress that was made during his time in Asia was actually on matters antithetical to his agenda. A deal was reached by the 11 countries remaining in the Trans-Pacific Partnership (TPP) trade agreement he ditched, for instance; albeit there were a few hiccups here and there before that came about.

Playground rhetoric
Mr Trump came out a little bruised on the North Korean matter as well. After initially striking a somewhat conciliatory tone towards the communist regime, urging it to do a deal over its nuclear weapons programme, he adopted an aggressive posture shortly afterwards in his address to the South Korean legislature; defiantly telling the volatile man up north not to test America’s might. Unsurprisingly, the North Korean regime replied with insults, calling Mr Trump an ‘old lunatic’, ‘warmonger’ and ‘dotard.’ Not one to take such expletives lying down, the American president threw back a few of his own, suggestively referring to Kim Jong-un, the North Korean leader, as ‘short’ and ‘fat’. Even so, if there is a slight chance of some deal with the communist regime, Mr Trump’s unusual style probably makes him best-placed to make it happen. China remains crucial to any potential progress, however. Unfortunately, they did not offer more than they already had on the matter.

Flatter to naught
The Japanese were more gracious at least; they imposed additional unilateral sanctions on North Korea. Not that this could necessarily be attributed to Mr Trump’s powers of persuasion: North Korea fired missiles over Japan in mid-September. And this was despite Mr Trump’s taunts at prime minister Shinzo Abe: He went on unabashedly about how the Japanese were inferior to Americans and wondered aloud why the Japanese did not shoot down the North Korean missile, suggesting how if they had American-made weapons, they would have been able to do so easily. (The Japanese are officially pacifist but have a military for self-defense purposes.) Little wonder then his Japanese trip turned out to be a failure somewhat. He did not get much from them on trade; a major issue for him. (Like China, Japan also maintains trade surpluses with America; albeit at 9 percent of the total American trade deficit, it pales in comparison to China’s 47 percent.) As if to buttress the point, the Japanese ruled out a potential Free Trade agreement (FTA) with the Americans, Mr Trump’s preferred route to dealing with trade imbalances. Instead, Japan led the effort to ensure a deal was reached on the so-called TPP-11. The Asians were all smiles but gave him little.

Also published in my BusinessDay Nigeria newspaper column (Tuesdays). See link viz. http://www.businessdayonline.com/flattered-trump-achieves-little-asia/

Advertisements

What is the point of Trump’s Asian trip?

By Rafiq Raji, PhD

Donald Trump, the American president, arrived Beijing today (8 Nov), the third stop on his 5-country Asian trip, after earlier stops in Japan and penultimately, South Korea. Heralding his arrival was a reminder about China’s trade surplus with America, which came out at US$26.6 billion for October; making it a total of US$223 billion thus far this year. President Trump would like the reverse to be the case. Unfortunately, it would continue to be a source of frustration for him, and in fact any other American leader who desires that China buy at least as much (if not more) American goods and services as go the other way. Incidentally, China is already making headway in the sophisticated industries that America may have once relied upon to stay ahead; which often are in partnership with American companies in China itself. And even as Mr Trump tries to bring back American companies back home from places like China, with jobs in tandem, the economics still favours them staying abroad; albeit not necessarily in China but in cheaper Southeast Asian countries. Turns out, Mr Trump is scheduled to address the 2017 ASEAN summit on 14 November in The Philippines, where bashful and often uncouth president Rodrigo Duterte may be just the ideal host for his similarly mannered American counterpart. And such is the importance the Americans attach to it that Mr Trump’s itinerary was extended by a day to accommodate the ASEAN speech. He would not be leaving China empty-handed, though. At least US$9 billion in deals are expected to be made between chief executives of American companies on Mr Trump’s entourage and their Chinese counterparts, commerce secretary Wilbur Ross is reported by CNBC to have said. (Another official is reported to put potential deals to be signed at US$250 billion.)*

Rocket man
With a belligerent leadership at the helm and reckoning by the Russians that in two to three years, it could have missiles able to hit America, North Korea remains a thorny issue. On his first day in Seoul (7 November), Mr Trump struck a somewhat calm tone on the great matter; urging the North Korean regime to come to the negotiating table and do a deal. Next day, while addressing the South Korean legislature, it was the reverse; defiantly telling the communist regime up north not to test America’s might. These are all very well; but fact is, Mr Trump achieved nothing there. And the elements came up against him en route to the demilitarized zone between the two Koreas, as his chopper could not risk an unanticipated fog. The Japanese, who he visited (5-7 November) before the Korean leg, tried to be gracious at least; they imposed additional unilateral sanctions on North Korea. Not that this could be attributed to Mr Trump’s persuasive powers: North Korea fired a missile over Japan in a show of strenght recently. Of course, Mr Trump could not stop himself from taunting prime minister Shinzo Abe on why the Japanese did not shoot down the missile. Ever the salesman, he did not forget to make a pitch for how American weapons would be able to easily do just that, though. (The Japanese are officially pacifist but maintain a handful of troops, supposedly for self-defense purposes.)

Emperor’s new clothes
Of course, Mr Trump did not see how ill-fitting it was to boast about American might to the face of Mr Abe; going on unabashedly about how the Japanese were still second fiddle to Americans. Little wonder then his Japanese trip turned out to be a failure somewhat. He did not get much from them on trade; a major issue for him. Like China, Japan also maintains trade surpluses with America; albeit at 9 percent of the total American trade deficit, it pales in comparison to China’s 47 percent. As if to buttress the point, the Japanese ruled out a Free Trade agreement (FTA) with the Americans, Mr Trump’s preferred route to dealing with trade imbalances; as opposed to the now 11-country Trans-Pacific Partnership (TPP) trade agreement that he ditched but which the Japanese are keen on, for instance. An FTA with the Japanese would have been hailed by Mr Trump as a victory. A highly likely meeting with Russian president, Vladimir Putin, on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Vietnam, his next stop from China, would no doubt be overshadowed by ongoing investigations back home into Russian links of Mr Trump’s associates during his presidential campaign. In the meantime, he should enjoy some relief at his current stop: the Chinese reportedly plan to treat him like an emperor. That is not usually a compliment.

*Trump & Xi announced US$253.4B in deals on 9 Nov 2017; albeit a significant portion is not substantive, as they are simply MoUs and so on.

What about the 2017 BRICS summit?

By Rafiq Raji, PhD

The BRICS group of five emerging economies (Brazil, Russia, India, China and South Africa) held its 9th summit in the Chinese city of Xiamen this year (3-5 September). Originally just an idea by former Goldman Sachs (an investment bank) executive Jim O’Neill in a 2001 publication dubbed “Building Better Global Economic BRICs”, BRICS countries today constitute almost a quarter of global output. They have not proved to be as inspiring since those heady days, though. Since its first substantive summit in June 2009, only China (GDP: US$11.2 trillion) and India (GDP: US$2.3 trillion) have proved to be consistent good performers, albeit China has since 2015 adjusted to a new normal of below 7 percent growth. India is forecast by the IMF to continue powering on above 7 percent, though; over the next two years, at least, after a 7.1 percent headline in 2016. But that is where the good story ends. Brazil (GDP: $1.8 trillion) only emerged from a 2-year recession (the longest in its history) in the first quarter of 2017. And South Africa (GDP: $0.3 trillion) exited a relatively short-lived one in the quarter afterwards.

Mostly about China
The 2017 meeting was somewhat overshadowed by coincidental negative global geopolitical happenings; top among them being the firing in late August 2017 of an intercontinental ballistic missile (ICBM) over Japan by the communist North Korean regime of Kim Jong-un. China, which consititutes more than 60 percent of BRICS output, was called on by world powers to reign in the North Korean regime, which depends a great deal on it for sustenance. Naturally, the key headline from the final communique was related to the crisis. In any case, BRICS has become a veritable platform for China to project power and influence, as it seeks to have more say in international affairs. (As the second largest economy in the world, China would like the IMF to be more representative of the new global economic order, for instance.) And judging from the paltry US$80 million funding commitment ($76 million for an economic and technological cooperation plan and $4 million for projects by the group’s development bank) China made at this most recent BRICS summit, the group probably serves no greater purpose than that; especially when you consider its US$124 billion funding commitment in May 2017 to its ambitious Belt and Road initiative or so-called new Silk Road plan. (It did pledge $500 million for a South-South cooperation fund, though.) As a counterweight to recent American insularity, China used the occasion to once again make the case for globalisation and climate change; two major global issues the Americans have been reluctant to show leadership on under its current president, Donald Trump. Specifically, Chinese president Xi Jinping posited the group “should push for an open world economy, promote trade liberalization and facilitation, jointly create a new global value chain, and realize a global economic rebalancing”. 

BRICS plus
The 2017 summit had one major distinction though. It was its largest gathering yet, with non-BRICS countries like Guinea, Mexico, Egypt, Thailand, and Tajikistan in attendance as observers. Their presence was informed by a so-called “BRICS-plus” initiative proposed by China, which could see the current 5-member group include more countries, although this was not formalized at the summit. Of course, it is not too difficult to see why Mexico might be interested in more global outreach, as it faces an imminent dissolution of the North American Free Trade Agreement (NAFTA), which if successful would see it lose lucrative market access to America. Considering it is a major campaign promise of President Trump, it is probably only a matter of time before this happens. Mr Trump desires that America get more from NAFTA, which he believes is currently lopsided in favour of neighbours like Mexico. In any case, China indicated it was interested in entering into a free trade agreement with Mexico; in line with a trend where it now increasingly fills the gap left behind by a less-ambitious America. One of the observer African countries, Guinea, got something as well: it secured a US$20 billion loan over about a 20-year period from China in exchange for mining concessions on its bauxite deposits. Structurally, it did not seem like a bad deal, as revenues from projects the loan would fund would be used to service it. They include a planned alumina refinery and two bauxite mine projects. Roads, a power transmission line and a university are other projects earmarked. Still, considering how shrewd the Chinese are, it is not likely the Guineans got the better side of the deal; especially as the Chinese would get to keep any potential gains down the line, often beyond that which could be reasonably valued at the early stages. Like its other international trade and foreign policy initiatives, the ulimate beneficiary of BRICS is China itself.

Also published in my Premium Times Nigeria column. See link viz. http://opinion.premiumtimesng.com/2017/09/08/what-about-the-2017-brics-summit-by-rafiq-raji/

Itinerant Nigerians

By Rafiq Raji, PhD

It is almost always true that when abroad and you sight a black man, it is well worth taking the risk that the person is Nigerian. You’d be surer if in response to polite entreaties, the passerby is deliberately snubbish. It depends on the setting though. Wait long enough, there would soon be the occasional irritation, the response to which would almost definitely confirm his origins. One out of every five blacks on planet earth is Nigerian. And no matter how much he feigns the perfect British or American accent, his archetypal Nigerian mannerisms are hard to conceal. Some argue we travel a lot because of our chaotic situation back home. Not necessarily. Yes, a lot seek the good life. Most are just curious. But a lot really travel just to show off. Take away the pictures of them at popular foreign landmarks, showing how ‘they are enjoying life,” some Nigerians might consider the trips a waste of money. Even the uber wealthy ones want to show how much ‘jollofing’ they are doing, posting pictures of themselves in their first or business class plane cabins or seats on social media. And these are the ‘small boys’. Big boys fly their private jets, with our stolen foreign exchange neatly tucked in their luggage it turns out – pictures of their vanity never include those for sure. You’d think with that much wealth they wouldn’t need the phony gratifications that soon pour afterwards. Nigerians are very curious and vain cats. We want to know: Where is it? What is it? What do they do there? Who runs things? (That curiosity, unfortunately, has not extended to science, innovation and progress. And it is not because of a lack of capacity for hard work. We are rarely slothful. In that vanity that we all seem to share perhaps lie the answer to our continued suffering, well-hidden under forced but outwardly believable smiles.)

Act, not bicker
So, imagine the anxiety of itinerant Nigerians when the nightmarish campaign promises of now American president, Donald Trump – especially on immigration – began to become reality. In the typical Nigerian fashion, our officials – when they are not busy behaving like we don’t exist – took to bickering over jurisdiction. The presidential adviser (‘senior special assistant’) on foreign affairs and the diaspora, the ever dynamic Abike Dabiri-Erewa – whose long-earned reputation for candour and palpable compassion from her days as a government-employed journalist is well-known – in her characteristic way, took to her first constituency, the media, advising Nigerians to re-consider non-essential travel to America, after a number of Nigerians were detained upon arrival at American airports and subsequently returned; even as they had valid visas.

You would think the Nigerian foreign minister, Geoffrey Onyeama, a meek personality, would be a little pleased. He was not amused. Ordinarily, there is usually a power-play of sorts between presidential advisers and ministers. In most cases, the advisers prevail; because they often have the mandate of the chief of staff, who functionally acts for the president in most administrations. One does not know if Mrs Dabiri-Erewa consulted Mr Onyeama before going on air about her concerns. Bear in mind, the American incidents came not too long after the most recent xenophobic attacks on Nigerians by South Africans. Considering how slow the wheel of governance turns in the public service, I would not be surprised at all if what actually transpired was that the no-nonsense Mrs Dabiri-Erewa finally lost her patience. And quite frankly, she is a more credible figure. After spending an entire career exposing untruths, advice coming from her is instantly credible. By his own admission to a local radio station, Mr Onyeama did not have a conference with her before his ministry issued a counter-advisory asking Nigerians to ignore her advice. The stakes are much too high for such pettiness. Mr Onyeama is a gentleman. But leadership requires dynamism as well.

Between getting an American visa, purchasing a ticket and so on, a Nigerian would have parted with at least a million naira (more than US$3,000), never mind the unbelievable stress in between. And upon getting to the American airport, the Nigerian typically has to endure myriad questions by security officials. With the Trump administration’s anti-immigrant stance, however, this scrutiny has taken on gargantuan proportions. So is the Nigerian better served by being told to travel only just to be served the bitterness of the many indignities Africans tend to endure at foreign airports? Or is it better to wait till one is sure all that toil ahead of the trip would not come to naught at just the time when one was beginning to sing praises? Surely it makes more sense for Mr Onyeama to focus on addressing the latter concern.

Give more than hope
There are numerous tales of woe by Nigerians, who upon reaching a foreign airport, are made to go through all sorts of screening. And this scrutiny is even more enhanced in Asian airports. Some candour here though. It is said Asians have difficulty differentiating African faces, hence why if you land in a Chinese airport, say, they single out Africans for more ‘enlightening’ pictures. At least that was my experience at the Shanghai airport some years back. Most Nigerians would ordinarily bear this (not that we are left with much of a choice) – as did I – if at the end of it all, with their documents deemed valid, they are allowed to go about their legitimate business. The uncertainty that comes with the possibility that even after all these, one may be ‘returned’ is hard to imagine.

Could it be that Mr Onyeama, a blue-passported minister, has so soon forgotten the experience of what it feels like to be a Nigerian abroad? Perhaps it is true then that not until our leaders compulsorily experience our daily challenges, they might not be more sensitive to our plight: our undeservedly pampered government officials must now ply the Abuja-Kaduna expressway, after the forced closure of the Abuja international airport for repairs. Needless to say, the road has become virtually anew overnight. Regardless of what motivates Mrs Dabiri-Erewa, the passion with which she does her duty is refreshing. Undeterred, she gave South African politicians covertly encouraging xenophobic attacks against Nigerians a piece of her mind only this past weekend. Stars just shine. Those who can’t bear the glare should shut their eyes.

Also published in my BusinessDay Nigeria column (Tuesdays). See link viz. https://www.businessdayonline.com/itinerant-nigerians/

Time for Hailemariam to lead

By Rafiq Raji, PhD

With an economy set to grow by more than 7 percent over the next few years – after about 10 percent on average over the past five, Ethiopia is a bright spot on a continent beset by stagnation as commodity prices remain tepid. Its growing success in replicating China’s manufacture-for-export model is a source of hope for peers and partners who desire an Africa that adds more value to its resources. Cheap labour, ample power generation capacity in view, and generous investment incentives are major attractions. Still, much of what Ethiopia has been able to achieve can be traced to its stable polity, held so by an autocratic leadership that has little tolerance for the slightest dissent. Erstwhile forceful leader, Meles Zenawi, was able to hold things together, because of his credentials. He led the rebellion that freed his countrymen from the much loathed Derg military regime. Under a more genteel leader, Hailemariam Desalegn, that model has become increasingly tested. Most recently, albeit intermittently hitherto, an uprising by the Oromo and Amhara tribes – about two-thirds of the population – over land and basic human rights threatens to unravel the country’s economic miracle. It need not be so. The most recent casaulties of the face-off with authorities are more than 50, adding to about 400 believed to have been killed since 2015 under similar circumstances. About 40,000 jobs are now at risk, after protesters attacked foreign-owned establishments. For Ethiopia’s economic success to continue, the politics can no longer be ignored. Room has to be made for the quite diverse polity. Mr Hailemariam has a chance to do this. But to succeed, he would need to be his own man.

Address the concerns
The Oromo and Amhara peoples feel marginalised by the ruling minority Tigray tribe, about 7 percent of the population, which dominates the government and military. The authorities have met their agitations with brute force. This approach worked in the past, on the surface at least. Not this time: this recent unrest was triggered precisely because of the authorities’ heavyhandedness to what are widely believed to be legitimate concerns. The troubles this time could be potentially more damaging than past ones: foreign investors are being targeted. Lingering terrorist threats from neighbours are daunting enough; add unrest by a majority of the population, and you have a combustible mix. And the protests are growing nationwide; these are not isolated and distant pockets of dissatisfaction. It is widespread. And they could spread even more. Solution then? Address the concerns. The Oromo want more self-determination. The Amhara likewise. Authorities might be quick to point out that the country operates a republic of semi-independent states, with enormous leeway guaranteed them in the Constitution, including the right to secede. That is not the case in reality. There needs to be more inclusion. A devolution of actual powers to the regions might be a good start.

Allow more room for dissent and political expression
It was always going to be a huge task for Mr Hailemariam to fill the shoes of his larger than life predecessor – Mr Zenawi had a force of personality that is palpably missing in his successor. Already perceived to be weak, he likely fears those views could become entrenched if the current unrest is treated with kid gloves. Still, Mr Hailemariam has an opportunity here. It is in time of crisis that leaders often emerge; tested at least, in a manner that cements their authority to the point where they are able to make bolder moves. The longer the Oromo and Amhara protests and deaths continue at the hands of the security forces, the more hardened the protesters would get. And now they may have caught on to the one thing that would get the attention of the ruling elite: targeting foreign investors. If there is anything that has made the autocratic leadership tolerable, it is the veneer of stability it has engendered, the type investors crave. They have shown that confidence with their pockets, pouring money into manufacturing and agriculture. Ethiopia has the only other light railway mass transit system in sub-Saharan Africa outside of South Africa. And only just recently, it opened a Chinese-built railway to Djibouti, whose seaport it relies on. Its development-before-democracy paradigm faces its toughest test yet. Just as foreign investment gains have come about by the authorities’ strong grip, their reluctance to adopt a more democratic approach may be what unravels them. And frankly, a desire for equity by a genuinely aggrieved people is not farfetched. Land sold to foreign investors should be well compensated for. Locals should be given greater consideration in employment. And there should be a preference for dialogue over coercion. The Oromo and Amhara are too numerous and determined to be put to rest by force. The authorities must engage them and find a solution that is acceptable within the bounds of reason.

Tough love by powers could help
Democratic reforms would be easier under Mr Hailemariam. But to fend off likely resistance from the Tigray elite that dominates the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF), his hand would need to be strengthened. He is not Tigray. Neither is he an Ethiopian orthodox christian. World powers have leverage: about $3 billion in aid. The United States has already raised significant concerns. Together with others – German chancellor Angela Merkel visits this week, they should engage the leadership, making the point that the protests provide a unique opportunity to finally embark on much needed democratic reforms. The Oromo and Amhara are likely to be less agitated if they believe they are able to participate in the democratic process. Not the charade midwifed by the authorities hitherto: how is it that not a single seat in parliament is occupied by an opposition party? Ms Merkel has refused an invitation to address the ‘lawmakers.’ She plans to speak to opposition parties though. Fact is, it is when people feel stifled and find no means to exert their opinions that they resort to insurrection. True, the minority Tigray worry if they did that, they could be overwhelmed. That is often not the case. And even so, they might have little choice now that more than half of the population has had enough. And in this age of instant news and social media, it would be foolhardy for the authorities to think that they could quell yet again another uprising with force. A state of emergency has been declared. Sadly, the authorities may yet learn a lesson.

Also published in my BusinessDay Nigeria newspaper back-page column (Tuesdays). See link viz. http://www.businessdayonline.com/time-for-hailemariam-to-lead/

Nigeria-China relations may work this time

By Rafiq Raji, PhD

This past week, Nigeria’s president Muhammadu Buhari was in China. He was given full honours by the Chinese government. Nigerian authorities are hailing the trip as a huge success. They point to the more than US$6 billion worth of investments agreed between Nigerian and Chinese businesses – earlier statements credited to Nigeria’s foreign minister, Mr Geoffrey Onyeama, by Reuters suggested a US$6 billion infrastructure loan was agreed, later debunked by President Buhari’s spokesman. In fairness to Mr Onyeama, he did not say a new agreement was signed. Quoting him in the 12 April 2016 Reuters article: “It won’t need an agreement to be signed; it is just to identify the projects and we access it.” With more clarity on what actually took place, it is now known that what President Buhari did was to re-negotiate loans already agreed with the Chinese by previous Nigerian administrations, especially that of President Goodluck Jonathan. Since that is the case, it seems the loans might actually be more than US$6 billion. As I recall in November 2014 amid much fanfare, China Railway Construction Corporation Limited signed a US$12 billion contract for the 1,402-kilometre Lagos-Calabar coastal railway – the line would be a significant boost for the Niger-Delta and Southeastern regions of Nigeria and is currently a source of divisions in the Nigerian legislature: southern lawmakers accuse their northern colleagues of deliberately removing the project from the 2016 budget, putting President Buhari in a bind somewhat as he reportedly threatened to withhold his assent of the budget until the railway project is put back into the bill – China’s largest single overseas contract at the time, probably still is. If you assume the typical 85 percent Chinese funding format for Sino-Nigerian infrastructure projects, we could say the loans President Buhari successfully re-negotiated might actually be at least US$10 billion for the Lagos-Calabar railway modernization project alone. And there are others. There is the US$8.3 billion Lagos-Kano railway modernization project (contract was initially signed in 2006); Chinese funding commitment using the same ratio would be about US$7 billion. Although some of the funding for these projects were provided by the Chinese government to earlier Nigerian administrations – and diverted to other means by Nigerian authorities to the dismay of their Chinese counterparts – there could be about US$13 billion (taking a median figure) in re-negotiated debt obligations for the Nigerian side. It is probably why Nigerian authorities might not want too much focus on the loans because they are likely more than has been reported. While I worry about Nigeria’s rising debt burden, what worries me more is that most of the borrowings usually end up being spent wastefully on recurrent expenditure. Only recently, Nigeria’s top scribe revealed US$3 billion (600 billion naira) is borrowed monthly by the government to pay wages, based on media reports. Still, if indeed the funds – Chinese or otherwise – are actually used for the designated infrastructure projects and are completed, it would not be overly concerning. Although Nigerian authorities have not revealed whether the local content of the infrastructure projects was re-negotiated as well, it is likely Chinese companies would still supply the labour, equipment and materials for them. Notwithstanding, if Nigeria gets the infrastructure in the end, it would be just as well.

A currency swap agreement with the Industrial and Commercial Bank of China (ICBC) – that country’s largest bank – was also signed by Nigeria’s central bank during the trip; and has since been a source of controversy of some sorts. Most initially wondered why the agreement was not with the Chinese central bank, the People’s Bank of China (PBOC). News making the rounds is that both central banks actually agreed in principle on a currency swap – potential size of US$4-5 billion – with modalities still being negotiated. It is being reported in the media that the Central Bank of Nigeria (CBN) actually proposed a US$10 billion currency swap. A demurral by the Chinese is why about half of that is being considered as more likely. Still, it would be a relatively good outcome. As there are potential downsides, its significance should not be exaggerated however. A currency swap is a two-way instrument. Just like Nigerians would be able to buy Chinese goods using the naira – as opposed to first purchasing the US dollar and then converting to Chinese Yuan – the Chinese would also be able to buy Nigerian goods in naira. And what do the Chinese buy from Nigeria? Crude oil mostly. And since the naira is overvalued, Nigeria would lose significant value for that commodity in that case. That is in addition to the valuable US dollars the country would lose if crude oil sales come under the arrangement. Also bear in mind; the Chinese would be in possession of the US dollar equivalent of the Chinese Yuan Nigeria keeps with the PBOC as foreign exchange reserves. There are other concerns. With the swap, Nigeria’s net position would likely more often be negative. How so? China sells at least four times as much goods to Nigeria, mostly manufactures. And if Nigeria is looking to diversify its economy, it is not in its best interest to make it easier to import Chinese goods. Probably to put some modicum of dignity on the fact that Nigeria was actually in China with a begging bowl, the Nigerian president kept harping on the trade imbalance in favour of China – China accounts for more than 80 percent of its total trade with Nigeria. But is that the fault of the Chinese? You correct a trade imbalance by first building your own industries or say only importing as much as you export. Whereas China’s exports to Nigeria are largely manufactures – machinery, equipment, processed goods, etc. – and very diversified, more than 80 percent of China’s imports from Nigeria are crude oil and gas. In 2013 – most recent annual data available from the National Bureau of Statistics of China – China’s exports to Nigeria was US$12 billion (88 percent of total trade) and its imports were US$ 1.6 billion (12 percent of total trade), putting its total trade with Nigeria in that year at US$13.6 billion. Nigerian authorities put total 2015 trade with China at US$14.9 billion. In two columns in February 2016 – “Africa should renegotiate EPAs for manufactures’ trade parity” – I make a case for manufactures’ trade parity as a model for correcting the significant trade imbalances that exists between African countries and their western and eastern trade partners. So is there any advantage to the swap agreement? Oh yes. Nigerian banks are saved some hassle. And Lagos would effectively be the West African hub for Renminbi transactions. But in light of the aforementioned concerns, the CBN has to ensure that Nigerians are protected as it negotiates the terms.

So what does China get in return? China seeks influence primarily. In any case, it is not really giving much away. On 8 April 2016, acting on instructions from Chinese authorities, Kenya forcefully repatriated eight Taiwanese – charged and acquitted by a Kenyan court in a cyber crime case – to China, not Taiwan. It probably had no choice in the matter. Apart from the many Kenyan infrastructure projects being funded by China, Kenya is also currently negotiating a US$600 million Chinese loan. Nonetheless, the relationship with China is an excellent opportunity. China does not see the relationship as competitive. What Nigeria – and indeed Africa at large – could gain from China is what China is giving up. There is an opportunity in labour-intensive manufacturing as China ascends to advanced stuff. Still, power and infrastructure deficits are constraints. Even so, Nigeria could use special economic zones with designated infrastructure assets to get around them. Progress on this front has been slow, however. More importantly, the real potential gain from the China-Nigeria relationship is if it engenders the transfer of skills and technology from China. This is possible. China is helping Ethiopia in diverse ways in this regard – see my column on 22 December 2015: “East African countries seem to have cracked the Chinese code.” This should also be Nigeria’s emphasis. Fundamentally, China would be happy to help if it finds a Nigerian side that espouses some of the values it holds dear. Integrity and honesty are few examples. At this point, it is important to point out that there are aspects of Chinese culture that are not entirely pleasant. Racism is entrenched in Chinese culture and is at the root of its unpleasant labour practices in Nigeria and other African countries. Still, if the Chinese find honest Nigerian partners who fulfill their promises, there is no limit to the potential gains for the Nigerian side. In this Nigerian president at least, they may have found one such partner. That is also the impression one senses from the Chinese side.

Also published in my BusinessDay Nigeria newspaper back-page column. See link viz. http://businessdayonline.com/2016/04/nigeria-china-relations-may-work-this-time/