By Charles Onunaiju
Amidst the global trade turmoil and wider economic uncertainty triggered by the U.S administration of President Donald Trump’s cynical tariff war and geo-political manoeuvre exists an opportunity for countries like Nigeria to recalibrate and rebalance their economic structure with a view to diversify both its outlook, orientation and even international partnerships. In fact, what the United States of America itself could not do, to undertake profound structural reforms to realign its economy to more advantageous international competition, is what it is encouraging other nations to do and the message is more apt and instructive for Africa and especially Nigeria to forge closer ties with its foremost trading partner, the People’s Republic of China.
There has been already an extensive mechanism and process providing considerable impetus for Nigeria to scale up her bilateral trade and economic relations with China, but Washington’s disruptive geo-political manoeuvre disguised as tariff wars has generated an added momentum to engage more productively. China’s irreducible policy of wider and deeper opening up and incrementally qualitative reform process gives guarantee to countries adjusting their economies for greater productivity and output, an international partner with a steady, stable and reliable policy environment that is not easily vitiated by the shifting idiosyncrasies of leadership temperaments as Washington is prone to.
Having reserved the most incendiary rhetoric of tariff hike against China, it has become more obvious and discernible that the Washington plot to disrupt international trade and wider economic intercourse is to contain and constrain China’s development while surreptitiously lining out countries in the world for the same purpose.
The structural disequilibrium at the heart of U.S international trade disadvantage cannot be resolved by Washington’s intimidation of the international community but by radical domestic reforms most likely to hurt the U.S oligarchs but will have ramifications for economic recovery and broader and shared prosperity for the American people in general.
However, amidst what appears like the proverbial breaking of an egg, a sumptuous omelette is appearing on the horizon in the shape and form of new opportunities for China and Africa and particularly Nigeria to up their game in economic and trade cooperation.
At a recent media briefing, the Chinese Ambassador to Nigeria Yu Dunhai said “China and Nigeria are key trade partners, with bilateral trade consistently reaching about $22 billion, among the highest in Africa”. The envoy further state that “following last year’s agreement on Nigeria’s peanut export to China, China remains open to further expanding imports of Nigerian goods signalling broad prospects for future economic cooperation”.
The prospect of expanding imports of Nigerian commodities into China’s huge market has considerable significance for Nigeria’s economic diversifications, beyond its current structure of mono-cultural economy where a single item accounts for over 90% of the country’s foreign exchange earnings. And the single item in question, crude oil is associated with volatilities in the international market, with the country in no position to guarantee its stable demands and prices.
The debate for economic diversification as a deliberate strategy to leverage the country’s other resources has been in the mainstream of Nigeria’s economic discourse and the opportunity of China, with consistent offer of concessional access to its huge market responded in practical and tangible manner to the Nigeria’s long standing policy incubation of economic diversification. Since the summit of the Heads of State and government of the Forum on China-Africa Cooperation (FOCAC) in 2018 in Beijing, China established the permanent mechanism, the China-Africa Economic and Trade Expo, has held every two years since then to expose to the Chinese market, Africa’s produce and services and vigorous exchanges at the Expo have so far, shown that the African products have huge potentials in the Chinese market.
At the 8th Ministerial conference of FOCAC in 2021 held in Senegal via a video link because of the prevalent COVID-19 pandemic then, the Chinese leader, President Xi Jinping offered that with a view to advance trade promotion, “China will open “green lanes” for Africa agricultural exports to China, speed up the inspection and quarantine procedures and further increase the scope of products enjoying zero-tariff treatment for the least developing countries having diplomatic relations with China, in a bid to reach $300 billion in total imports from Africa.”
While China has remained Nigeria’s source of reliable foreign direct investments, Nigeria has not yet explored in a deliberate and systematic way, China’s large domestic market, which can provide a niche for Nigeria’s non-oil export and consequently accelerate the country’s economic diversification.
As the Chinese ambassador to Niger noted in his recent media briefing, “China is a reliable partner for Africa – trustworthy, mature and steadfast. China’s development and commitment to high level openness will bring much-needed stability to an increasingly uncertain world”. China has the relevant and reliable policy instrument that ensures an economic space of predictability and certainty on which partners can anchor a credible stream of interaction and cooperation, without fearing somersault and disruptions.
Nigeria can cultivate a policy to encourage domestic expansion of outputs with an eye on a fairly stable international market outlook, thereby consolidating on the structural reforms of economic diversifications. The current economic challenges in Nigeria consisting of foreign exchange fluctuations can be addressed through achieving stability both in the short and long term by concerted export drive and China has offered some low hanging fruits through concessional access to her huge market of Nigeria’s agricultural products and commodities.
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While China to a considerable extent provides the external guarantees for Nigeria’s long overdue economic diversification, the government will have to create the enabling environment through relevant policy instrument, to incentivize the target sectors in the drive for domestic diversification of the economy.
On the trade disruptions and wider turmoil of the global economy instigated by President Trump, China will ride out the storm and emerge not only stronger but with greater credibility and integrity as major country discharging her responsibility for global stability. With an unwavering support of her people, a vast market if 1.4 billion consumers and a comprehensive industrial value chain, China is already primed to absorb disruptive shocks, especially one that is politically motivated. Having contributed around 30% to global economic growth in the past several decades and a 5.4% growth in the first quarter of this year, the highest of any major economy in the world, the country’s economic fundamentals are firmly rooted and not likely to be shaken by a perfunctory trade and tariff drama performed for its mere effects. Already China’s firm pushback at Washington’s tariff outrage has mitigated its excesses and won for many countries targeted, a 90 days’ reprieve to negotiate more favourable terms with Washington.
China has repeated that her door is open as far as the framework for engagement is devoid of intimidation and bullying. With American industries operating offshore in China and other Asian countries for reasons of lower cost of production, lower taxes and less stringent regulation faces bankruptcy for reasons of potential dry-up of the American market because of the tariff walls Trump is erecting, it is likely that common sense will prevail in the White House enabling a pragmatic outreach to other countries for amicable resolution of what the U.S claimed is her disadvantageous trade with the rest of the world.
Although that Beijing knows that this will not be the last attempt by Washington to contain and constrain her development trajectory, China will not hesitate to help put out the fire now while crafting the pillars of her strategic resilience for the next Washington’s perennial trouble shopping.
•Onunaiju, is director of an Abuja-based Think Tank.
