…As analysts predict CBN intervention likely By Olabisi Olaleye A new market sensitivity analysis report has revealed how local banks’ exposure in the $1.2 billion (about N377.4 billion) syndicated loan granted Etisalat Nigeria by a consortium of 13 Nigerian banks worsened their loan books over the last few years. The report shows, for instance, that…
•How govt lifted 12.4m out of poverty in one year
By Ikenna Emewu
Next year would be 40 years of China’s economic miracle called the Reforms and Opening Up era. The quantum leap this nation made in the period has become the world’s paramount economic record. Prior to China’s rise and up till now, there is no record of any country’s economy growing at sustained pace of 7.5 per cent for 40 consecutive years.
So far, this is 39 years of the opening up and reforms and even if its economy dwindles to zero growth next year, China would still have sustained an average growth of about 9.2 per cent, quite unprecedented, and little wonder the country stands out as the world’s most vibrant economy. China’s economic growth at a rate of 6.7 per cent last year, the same rate as in 2015, has placed it above every known economic growth record in history. Yet, these few years are called the slow era of the country’s economy that at a time between the mid-1980s and late 1990s sustained a blistering average of about 12 per cent. And, so far, predictions of a hard landing for the economy after the slowdown started in 2014 have remained unfounded even when the country still boasts of contributing about 33 per cent of the global economic pool due to its vast foreign direct outbound investment. Last year, the country grossed about $165bn FDI, which is partly a way of tackling the overcapacity challenge it faces in so many sectors, especially automobile, cement, iron and steel, where China produces 49 per cent of the world’s total volume.
As the annual Chinese political ritual holds, called the Two Sessions (Lianghui) comprising the sitting and policy-making process of the National People’s Congress (NPC) and the China People’s Political Consultative Congress (CPPCC), Premier Li Keqiang briefed the nation on the political development of last year and also announced the agenda for the current year on March 5, 2017.
He noted that: “In the past year, China’s development has faced grave challenges posed by a great many problems and interwoven risks and dangers, both at home and abroad.
However, under the strong leadership of the Central Committee of the Communist Party of China, with Comrade Xi Jinping at its core, we the Chinese people have risen to the challenge and worked hard to press ahead, driving forward sustained, healthy economic and social development.”
Regarding the economy of China, one of the most important to the world and the most influential to poorer countries, including Nigeria, with the upswing of China’s assistance to them, Premier Li assured that: “The economy has registered a slower but stable performance with good momentum for growth.
“GDP reached 74.4 trillion yuan, representing 6.7 per cent growth, seeing China outpace most other economies. China contributed more than 30 per cent of global growth. The CPI rose by 2 per cent. With an 8.5 per cent increase in profits, industrial enterprises reversed the previous year’s negative growth of 2.3 per cent. Energy consumption per unit of GDP fell by 5 per cent. Economic performance improved markedly in quality and returns.”
At the micro-economy level, he explained that: “Employment growth exceeded projections. A total of 13.14 million new urban jobs were added over the course of the year.”
The number of college graduates finding employment or starting businesses reached another record high. The registered urban unemployment rate stood at 4.02 per cent at year-end 2016, the lowest level in years. For China, a large developing country with a population of over 1.3 billion, attaining this level of employment is no easy task.
Furthermore, “breakthroughs were made in reforms in major sectors and key links, and initial success was achieved in supply-side structural reform. New measures were introduced for opening China up, rapid progress was made in pursuing the Belt and Road Initiative, and a number of major projects and industrial-capacity cooperation projects with other countries were launched.”
Also, the Chinese ambassador to Nigeria, Dr. Zhou Pingjian, told Daily Sun that China’s achievements came in diverse forms and entrenched stability in growth though that has been lower than the previous years of boom and mega growth.
He noted that: “China achieved a good start last year in its full implementation of its 13th Five-Year Plan on National Economic and Social Development (2016-2020). Under this context, this year’s Two Sessions are in the spotlight globally.”
Africa and Nigeria
Zhou brought the issue to how China’s economy and policies affect other countries: “In 2016, against a sluggish global economy, lower than the previous several years, but tops all other major economies, IMF’s World Economic Outlook shows that China contributed 39 per cent of global economic growth last year. Rapid growth in China has been a sustained, powerful engine for global economic stability and expansion. China created more than 13 million urban jobs, lifted more than 12 million rural residents out of poverty and attracted more than $130 billion foreign direct investment (FDI) in 2016. These are signs of better global confidence in China’s economy.
“Today’s China has become world’s second largest economy, second largest source of FDI, largest goods trading country, largest tourist market and largest trading partner of more than 120 countries and regions.
“Moreover, more opportunities exist in China in 2017 for Africa as China will oppose protectionism in all forms and guide economic globalisation toward more inclusiveness, mutual benefit, justice and equity. China will elevate its cooperation with developing countries and provide constructive plans to resolve global and regional hotspot issues.”
For 2016 alone, China made $170.1 billion outbound direct investment (ODI) and Chinese tourists made over 120 million overseas visits. Africa is among the main destinations of China’s investment and tourists. Since China is advancing its supply-side structural reform, there is a growing need for it to relocate its overcapacity externally, while Africa is resolving its undercapacity assiduously. This is an unprecedented opportunity for China and Africa to synergise development strategies and make Africa’s long-standing dream of industrialisation come true.
“Nearly half of the $60 billion funding support that China pledged to Africa has been disbursed or arranged. The Abuja-Kaduna Railway has been completed; the Lagos-Ibadan has been (kicked off). Steady progress is being made in a number of industrial parks or free trade zones across Africa.
“Responding to Africa’s needs, China-Africa cooperation is undergoing three shifts: from government-driven to market-driven, from trade in goods to cooperation on production capacity, and from engineering contracts to capital investment and operations. These three shifts will provide new momentum and opportunities for Africa’s sustainable development,” the ambassador said, adding, “As Acting President of Nigeria Professor Osinbajo stressed March 7, 2017, on the occasion of rhw Lagos-Ibadan Railway groundbreaking ceremony, “the Chinese government has always proved to be a reliable partner to Nigeria.”
Important to Nigeria
On what should be very important to Nigeria and Africa, China has sustained progressive action in poverty reduction over the years and works towards a target of totally eradicating poverty in 2020, a task that President Xi admitted in his address to the government of Sichuan Province on March 9, 2017, was really challenging. While he urged the government, down to the county level, to do more to actualise that dream, he noted that whereas the country lifted 12.4 million out of poverty last year, its target this year in the policy plan is 10 million citizens. Among them, close to one million would be relocated from their present abode adjudged inhuman and the cause of their poverty.
Prior to China’s economic reform policies starting 39 years ago, the country had over 760 million poor people, or about 65 per cent of the population, which has been scaled down to about 46 million, last year, and contributed to 92 per cent of the UN poverty reduction success.
It is the only country that met the UNDP MDG on poverty reduction in 2014.
Throwing more light on how China’s 2017 policies would impact global economy and diplomacy, the Foreign Minister, Wang Yi, in his address to the media on March 8, 2017, explained that: “In about two months’ time, we’ll hold the Belt and Road Forum for International Cooperation in Beijing. We foresee that the heads of state and government from over 20 countries, the leaders of over 50 international organisations, over 100 ministerial-level officials and around 1,200 delegates from different countries and regions participating in the forum. In addition to the Leaders’ Roundtable, there will also be a High-Level Dialogue and six parallel panel discussions on the connectivity of policy, infrastructure, trade, finance and people.
“Beijing will once again be the centre of global attention; the Belt and Road Initiative will continue to be a hot topic around the world.”
As the world watches China, the challenge is Nigeria’s in her relationship with the wealthy country that seeks to assist a country that is ready to tackle poverty and industrialise.