December 06, 2015
The context is Nigeria’s economic relationship with China. The NYT complains to readers that China is providing goods at a lower cost than other other countries or the country’s domestic industry.
“Chinese goods are so dominant that consumers have few other choices.”
The article points out that the goods are of varying quality and some, in the case of electronic items, may pose safety problems. Of course, the reason that consumers have few other choices is that the Chinese products sell for much lower prices than the goods produced by competitors.
The piece also complains that China’s firms are willing to accept a lower return on investment in Nigeria:
“The risks [associated with investing in Nigeria] have prompted Western companies to demand very fat profits before putting money into the country — returns on the order of 25 to 40 percent a year. Their Chinese counterparts have been willing to accept 10 percent or less.”
The piece points out that low cost Chinese imports have displaced hundreds of thousands of manufacturing workers in Nigeria. While this is likely true, this is an entirely predictable outcome of the removal of trade barriers, a process that the NYT usually celebrates in both its opinion and news pages.
The standard argument is that the gains from consumers in the form of lower prices easily exceed the losses to the workers who lose their jobs. There may be an issue of redirecting some of these gains to help the unemployed workers, but the country as a whole still gains. It is striking that the NYT seems reluctant to accept economic orthodoxy on trade when it comes to China’s role in Nigeria and the rest of Africa.
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