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The purpose of this paper is to analyze the economic relation between China and Nigeria in the area of foreign direct investment (FDI).

The study employed the use of quantitative (descriptive analysis such as ratios, percentages and correlation as well as cross tabulations), qualitative (key informant interviews and surveys) and case studies – for example the railway transport project handled by the Chinese. The use of surveys assisted the study to generate firm‐level data that allowed the analysis of China‐Nigeria investment relations with respect to concerns such as the employment effects as well as the competitive and/or complementary effects of Chinese firms to local firms. The use of content analysis of relevant documents and reports obtained from various sources was equally involved to corroborate the results obtained from primary data.

The findings reveal that the major characteristic of Chinese investment in Nigeria is its concentration in a few sectors that are of strategic interest to China, especially in the extractive industries which are carried out largely by state‐owned enterprises or joint ventures. In addition, the analysis clearly shows that the engagement with China, just like any bilateral relationship, has some advantages and disadvantages and that optimal outcome of the engagement will depend on the policies and institutions that are put in place to maximize the complementary effects and to minimize the competing effects. However, there is need to ensure implementation of laws and regulations in Nigeria and to ensure compliance by the Chinese investors.

This is the first study to carry out an empirical analysis of the China‐Nigeria relation. The study was able to establish the sectors where the incoming FDI from China is directed and the extent at which Chinese FDI is bundled with inflows of aid. The study was also able to show that the incoming Chinese FDI are in resource seeking, and the output targeted at the external market. The study will be of value to academia and to policy makers who are interested in studying the China‐Africa relation.

The aim of this paper is to assess the impact of China’s trade agreement and foreign direct investment (FDI) flows to Nigeria with special reference to the manufacturing sector utilizing the following key economic performance indicators: inflation, unemployment, income and gross domestic product, to name a few. Since the turn of the millennium, China has enjoyed a substantial presence in the African continent. In fact, the country has signed bilateral agreements with Angola, South Africa and Sudan to name a few. Recently, China established its West African trade hub in Lagos, the economic capital of Nigeria, to be strategically positioned. The results of the study revealed conclusively that although China’s investments over the years have benefited the Nigerian economy and its various firms in the manufacturing sector, the agreement signed by both countries ultimately needs to be reexamined to ensure equity.

To thoroughly analyze the effects of China’s investments in Nigeria, this study was carried out in two phases. The first analysis of this study is anchored on a “before/after” framework based on descriptive statistical analysis of the selected economic performance indicators chosen from selected cross-national data. Accordingly, the time frame for this study runs from 1993-2012 which roughly corresponds to the era when China commenced significant investments in Nigeria. Second, employees, policymakers and individuals in the manufacturing/textile industries were interviewed. Furthermore, participation from federal as well as local government agency staff members was solicited using the Delphi technique.

Empirically, the results conclusively reveal China’s dominance in the manufacturing and textile sectors in Nigeria. In other words, at face value, China’s investments are ultimately good for the Nigerian economy. However, at a micro-level analysis, the researcher examined the human factor, that is, the families of former and current employees, abandoned businesses/factories and a decaying textile industry that was once vibrant.

To the knowledge of the researcher, this is the first study attempting to assess the impact of the rise of China on the Nigerian economy by combining key economic performance indicator in tandem with face-to-face interviews and the Delphi technique.