Opinion
Between China And Its Neighbours
Thinking of opening a textile mill in Kampuchea? A shrimp farm in Vietnam? Or anything at all in Laos or Myanmar? Then think fast and act, as China is increasingly dominating is Southeast Asian neighbours’ economies.
Doubting Thomases should have a look at the document released last month by China’s National Development and Reform Commission, Ministry of Foreign Affairs, Ministry of Finance, and the Ministry of Science and Technology.
Blandly entitled, “Country Report on China’ s Participation in Greater Mekong Subregion Cooperation I,” the study delineates in detail Beijing’s interest in the Greater Mekong Subregion (GMS) nations of Myanmar, Laos, Thailand, Cambodia and Vietnam, lying along the Mekong River, the world’s tenth longest river, which originates from the Tanggula Mountain Range on the Qinghai-Tibet Plateau in China and runs 3,050 miles southwards through six nations before debouching into the South China Sea.
Beneath the leaden prose, however, is information that all potential southeast Asian investors should take cognizance of.
The report’s Section Two begins, “Since the third GMS summit in 2008, and especially since the establishment of the China-ASEAN Free Trade Area, bilateral trade between China and the other GMS countries has demonstrated a momentum of greater development with a further improved trade structure and fast increase in bilateral investment. China has also participated, in the form of joint ventures or wholly Chinese-invested enterprises, in the development and construction of economic and trade cooperation zones in Cambodia, Thailand and Vietnam, and has thus boosted local economic development.”
The report then delineates China’s bilateral trade with other GMS nations.
In 2010, bilateral trade between China and Kampuchea totalled $1.44 billion, up by 27.4 per cent over 2008.
In 2010, bilateral trade between China and Myanmar reached $4.44 billion, up by 68.8 per cent over 2008, hardly surprising, given China’s interest in the country’s hydrocarbon resources.
Bilateral trade between China and Thailand in 2010 was $52.95 billion, a 28.4 per cent increase over 2008 figures.
As for Vietnam, bilateral Sino-Vietnamese trade in 2010 was worth $30.09 billion, up by 54.6 per cent over 2008 statistics, again, like Myanmar, because of China’s interest in Vietnam’s oil exports.
Bottoming out the GMS league is the Lao People’s Democratic Republic, whose 2010 bilateral with China was a paltry $1.05 billion, but up by 150 per cent over 2008.
It is the fine print of the report’s bilateral trade figures that is most fascinating. In 2010, China’s exports to and imports from Kampuchea were worth $1.35 billion and $90 million respectively, a massive imbalance more than 13 to one in favour of China. China’s main imports from the Kampuchea included natural rubber, sawn timber, logs and agricultural products.
In other words, raw materials, while Chinese exports to Kampuchea were textiles, electromechanical products, hi-tech products, garments and steel-value added finished products.
In 2010, Chinese exports to and imports from Myanmar were worth $3.48 billion and $9.6 million respectively, a grotesque trade imbalance more than 300 times in China’s favour. Myanmar’s exports included agricultural products, natural gas and logs, while China exported textiles, hi-tech products, rolled steel, motorcycles and automobiles.
As for Thailand, given its relatively well developed manufacturing base, in fact ran a significant trade surplus with China, whose exports in 2010 were worth $19.75 billion. Chinese exports included electromechanical products, hi-tech products, textiles and farm produce, while Thai exports, worth $33.2 billion, consisted of electromechanical products, hi-tech products, natural rubber and farm produce.
China’s exports to Vietnam in 2010 were worth $23.11 billion, consisting primarily of electromechanical products, textiles, hi-tech products, rolled steel and agricultural products while Vietnam exports to China totalled $6.98 billion, a trade imbalance more than 300 per cent in China’s favour. Vietnamese exports to China included electromechanical products, coal, hi-tech products, agricultural products, textiles, crude oil and natural rubber.
As for the Lao People’s Democratic Republic, Chinese exports there in 2010 were worth $480 million, consisting of electromechanical products, textiles, garments, hi-tech products, automobiles and motorcycles. Surprisingly, like Thailand, the Lao People’s Democratic Republic ran a slight trade surplus in its exports to China, which was worth $570 million, but the trade imbalance is in fact hardly surprising, as Laotian exports consisted of copper ore, rolled copper, farm produce, sawn timber and natural rubber, all to feed China’s omnivorous factories.
The long and short of all this is that China, through the GMS, has a massive head start on regional investment, while it proclaims, “since the third GMS summit in 2008, the Chinese government has continued to provide financial support to GMS cooperation as its capability permits,” it has no qualms about running up massive, lopsided trade surplus with its GMS neighbours, despite its stated policy of “realizing common prosperity and affluence with its neighbours.”
In the West, any country facing a 3,000 per cent trade imbalance would have its politicians screaming for protectionist tariffs, but given China’s increasing economic and political clout in Southeast Asia, the legislatures there are mute.
But therein lays the potential advantage for investors from outside the region. Astute foreign companies, if they can refrain from relentlessly pursuing buccaneering capitalist business practices to maximize profits at all costs and instead deal with GMS countries on the basis of respect and relative equality, then they are certain of finding a warm welcome for promoting more equitable trade practices than their giant “neighbour to the north.”
Just don’t expect an invitation to tea from the Chinese ambassador in Phnom Penh, Naypyidaw or Hanoi.
London-based Dr. John C.K. Daly wrote this piece for Oilprice.com
John Daly
From all indications, Nigeria possesses enough human and material resources to become a true economic powerhouse in Africa. According to the National Population Commission (NPC, 2023), the country’s population has grown steadily within the last decade, presently standing at about 220 million people—mostly young, vibrant, and innovative. Nigeria also remains the sixth-largest oil producer in the world, with enormous reserves of gas, fertile agricultural land, and human capital.
Yet, despite this enormous potential, the country continues to grapple with underdevelopment, poverty, unemployment, and insecurity. Recent data from the National Bureau of Statistics (NBS, 2023) show that about 129 million Nigerians currently live below the poverty line. Most families can no longer afford basic necessities, even as the government continues to project a rosy economic picture.
The Subsidy Question
The removal of fuel subsidy in 2023 by President Bola Ahmed Tinubu has been one of the most controversial policy decisions in Nigeria’s recent history. According to the president, subsidy removal was designed to reduce fiscal burden, unify the foreign exchange rate, attract investment, curb inflation, and discourage excessive government borrowing.
While these objectives are theoretically sound, the reality for ordinary Nigerians has been severe hardship. Fuel prices more than tripled, transportation costs surged, and food inflation—already high—rose above 30% (NBS, 2023). The World Bank (2023) estimates that an additional 7.1 million Nigerians were pushed into poverty after subsidy removal.
A Critical Economic View
As an economist, I argue that the problem was not subsidy removal itself—which was inevitable—but the timing, sequencing, and structural gaps in Nigeria’s implementation.
- Structural Miscalculation
Nigeria’s four state-owned refineries remain nonfunctional. By removing subsidies without local refining capacity, the government exposed the economy to import-price pass-through effects—where global oil price shocks translate directly into domestic inflation. This was not just a timing issue but a fundamental policy miscalculation.
- Neglect of Social Safety Nets
Countries like Indonesia (2005) and Ghana (2005) removed subsidies successfully only after introducing cash transfers, transport vouchers, and food subsidies for the poor (World Bank, 2005). Nigeria, however, implemented removal abruptly, shifting the fiscal burden directly onto households without protection.
- Failure to Secure Food and Energy Alternatives
Fuel subsidy removal amplified existing weaknesses in agriculture and energy. Instead of sequencing reforms, government left Nigerians without refinery capacity, renewable energy alternatives, or mechanized agricultural productivity—all of which could have cushioned the shock.
Political and Public Concerns
Prominent leaders have echoed these concerns. Mr. Peter Obi, the Labour Party’s 2023 presidential candidate, described the subsidy removal as “good but wrongly timed.” Atiku Abubakar of the People’s Democratic Party also faulted the government’s hasty approach. Human rights activists like Obodoekwe Stive stressed that refineries should have been made functional first, to reduce the suffering of citizens.
This is not just political rhetoric—it reflects a widespread economic reality. When inflation climbs above 30%, when purchasing power collapses, and when households cannot meet basic needs, the promise of reform becomes overshadowed by social pain.
Broader Implications
The consequences of this policy are multidimensional:
- Inflationary Pressures – Food inflation above 30% has made nutrition unaffordable for many households.
- Rising Poverty – 7.1 million Nigerians have been newly pushed into poverty (World Bank, 2023).
- Middle-Class Erosion – Rising transport, rent, and healthcare costs are squeezing household incomes.
- Debt Concerns – Despite promises, government borrowing has continued, raising sustainability questions.
- Public Distrust – When government promises savings but citizens feel only pain, trust in leadership erodes.
In effect, subsidy removal without structural readiness has widened inequality and eroded social stability.
Missed Opportunities
Nigeria’s leaders had the chance to approach subsidy removal differently:
- Refinery Rehabilitation – Ensuring local refining to reduce exposure to global oil price shocks.
- Renewable Energy Investment – Diversifying energy through solar, hydro, and wind to reduce reliance on imported petroleum.
- Agricultural Productivity – Mechanization, irrigation, and smallholder financing could have boosted food supply and stabilized prices.
- Social Safety Nets – Conditional cash transfers, food vouchers, and transport subsidies could have protected the most vulnerable.
Instead, reform came abruptly, leaving citizens to absorb all the pain while waiting for theoretical long-term benefits.
Conclusion: Reform With a Human Face
Fuel subsidy removal was inevitable, but Nigeria’s approach has worsened hardship for millions. True reform must go beyond fiscal savings to protect citizens.
Economic policy is not judged only by its efficiency but by its humanity. A well-sequenced reform could have balanced fiscal responsibility with equity, ensuring that ordinary Nigerians were not crushed under the weight of sudden change.
Nigeria has the resources, population, and resilience to lead Africa’s economy. But leadership requires foresight. It requires policies that are inclusive, humane, and strategically sequenced.
Reform without equity is displacement of poverty, not development. If Nigeria truly seeks progress, its policies must wear a human face.
References
- National Bureau of Statistics (NBS). (2023). Poverty and Inequality Report. Abuja.
- National Population Commission (NPC). (2023). Population Estimates. Abuja.
- World Bank. (2023). Nigeria Development Update. Washington, DC.
- World Bank. (2005). Fuel Subsidy Reforms: Lessons from Indonesia and Ghana. Washington, DC.
- OPEC. (2023). Annual Statistical Bulletin. Vienna.
By: Amarachi Amaugo