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China and Nigeria: Neo-Colonialism, South-South Solidarity, or Both?

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Bilateral relations between China and Nigeria will likely take one of two paths in the long term: either China will remain the overwhelmingly dominant actor or Nigeria will become a regional superpower, evening out the playing field. If China remains the stronger player it will shape Nigeria in its own interests (commonly referred to as "Chinese Imperialism"). If, however, Nigeria rises to reach its economic and political potential, Beijing may one day find Abuja a potential rival in Africa.

China has only recently started to play an important role in Nigeria. During the first eleven years of its independence, Nigeria and China had no diplomatic relations. The Nigerian government's view of China grew especially sour after Mao officially supported the secessionist state in Biafra by supplying the Biafran administration with weapons. Throughout the 1970s and 1980s, China was not a trading partner of Nigeria, as its international trade was conducted primarily with European and North American countries.

During the period of General Abacha's military rule (1993-1998), Beijing's no-strings-attached development projects were increasingly well received. Nigeria's leaders grew resentful of Western conditions for aid and investment, and many Nigerians began to question what a generation of economic dependence on the West achieved for Nigeria.

Abuja subsequently adopted a new approach to international trade, balancing traditional Western partners and China. The evolution of Nigerian-Chinese relations mirrors that of China's relationship with other African states (such as Angola, Sudan, and Zimbabwe) that sought alternative forms of aid and development packages following the imposition of sanctions by Western nations based on alleged human rights violations.

Between 2000 and 2010 annual Nigerian-Chinese trade increased nine-fold, from $2 billion to $18 billion. Ten major bilateral agreements concerning commerce, agriculture, tourism and security were signed during that period. Nigeria imported more goods from China in 2012 than it did from the U.S. and India combined (Nigeria's number two and three import partners, respectively). Today, more than 200 Chinese firms operate in Nigeria. While in Beijing last week, Nigerian President Jonathan signed nine memoranda of understanding with the Chinese government. China agreed to provide Nigeria with a soft loan of $1.1 billion loan in exchange for Nigeria agreeing to increase its daily supply of oil to China ten-fold (from 20,000 barrels per day to 200,000) by 2015.

However, in spite of the skyrocketing growth of Nigerian-Chinese trade over the past decade, the U.S. remains Nigeria's top trading partner. Total Nigeria-U.S. trade reached $38.6 billion in 2012, and France (Nigeria's number nine export partner) is a larger export partner of Nigeria than China. So China has a long way to go before it will replace Western nations as one of Nigeria's main trade partners.

Economics is the obvious driver of Beijing's agenda in Nigeria, but China recently embraced a new foreign policy in West Africa that contrasts with its traditionally passive approach to the spread of Islamic terrorism and extremism in Africa. Last year a Chinese diplomat in Mali pledged support for the Economic Community of West African States (ECOWAS)'s military campaign to dislodge Al Qaeda-affiliate groups in northern Mali. In May of this year, Chinese Ambassador Li Baodong spoke before the UN Security Council and asserted that African nations should not combat extremism without foreign support. He noted that Beijing "resolutely supports" West African governments and international organizations (such as ECOWAS) in their battle against militant Islamist extremism.

While China's number one concern in West Africa is access to natural resources and new consumer markets - as it is in the rest of Africa and the world -- Beijing sees the rise of groups such as Al Qaeda in the Islamic Maghreb (AQIM) and the Movement for Oneness and Jihad in West Africa (MOJWA) as a threat to energy corridors and regional stability, and thus, a threat to vital Chinese national interests. As Nigeria is the dominant military force within ECOWAS, a growing partnership between Beijing and Abuja may be expected, and will clearly contain political undertones.

Yet several factors threaten the prospects for deeper ties between Nigeria and China. Although Chinese investors maintain a reputation for being less risk-averse than most, the conflict between the Nigerian military and Boko Haram increases political risk for all foreign investors there. The violence has thus far been contained to Nigeria's Muslim-majority regions in the north; the bloodshed has not yet spread to Lagos. If the turmoil spills into Lagos and other southern areas, Chinese investors may well adjust their calculus.

During the presidency of Ọbasanjọ (1999-2007), many "oil-for-infrastructure" contracts were implemented, yet when his successor (Yar'Adua) came to power, some of these were canceled or suspended, as the two administrations pursued different approaches toward China. While many Nigerians consider China's growing presence to be nothing short of a God send, others have raised concerns about Nigerian sovereignty, bearing in mind the impact Chinese trade and investment has had on other African countries. The Chinese model of importing its own workers to build infrastructure projects, for example, does not sit well with many Nigerians.

A number of Nigerians have also voiced objections to the "slave-like" labor conditions in Chinese-operated factories across Nigeria. Attention was first brought to these conditions when 37 Nigerian workers died after being trapped inside a locked Chinese-owned factory that caught fire in 2002. Nigeria's trade unions have similarly complained that the ramp up in Chinese imports have eliminated more than 350,000 manufacturing jobs, primarily in the textile sector. Much of the bilateral trade is also "off the record", given that many Chinese imports arrive in Nigeria via the porous borders that Nigeria shares with its neighbors. This exacerbates the already problematic level of corruption in Nigeria.

In spite of all this, Nigerian-Chinese economic ties can be expected to continue to grow. China's dependency on Middle Eastern oil and gas is a grave concern for Beijing, given the rising political uncertainty in the region, and rising political risks for foreign investors. In this context, a deeper partnership with Nigeria, the world's 13th biggest producer of crude oil, provides China with a more diverse set of options for acquiring oil and gas.

Despite all the concerns voiced by certain constituencies within Nigeria, most Nigerians recognize that China's growing presence is likely more beneficial than harmful. Western powers that claim a desire to help Nigeria develop are often perceived as insincere, with their own aid being viewed as an infringement on Nigeria's sovereignty, since it often comes with strings attached. In this respect, China is seen as non-hypocritical and more respectful of the African peoples' aspirations to manage their own affairs without fear of meddling by a foreign power.

The Nigerian government also understands that China's growing presence in the country will not inevitably provide solutions to the plethora of domestic challenges Nigeria faces, from grinding poverty to indigenous violent political movements. In the end, it accepts that China's number one objective is meeting China's strategic interests. At least China is up front about saying so.

An old Nigerian proverb states that "a man cannot sit down alone to plan for prosperity". The growing economic partnership with China provides average Nigerians with reason for optimism about their own plans for prosperity. It is President Jonathan's job to successfully direct the influx of Chinese money and resources to the benefit of Nigeria's masses, rather than to a powerful and influential few. His chances of doing so are not good, however, until the political culture changes in Abuja and beyond. But Beijing knows it has a strengthening relationship with one of Africa's most important countries. The bilateral relationship between the two may yet serve as a model for China's growing influence throughout Africa.

*Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk advisory firm, and author of the book "Managing Country Risk". Giorgio Cafiero is a research analyst with CRS based in Washington, D.C.