A NULL connection is a connection established without a database name and
without any user credentials (user name + password).

Here is a short example demonstrating how to mix embedded SQL & CLI in the
way you want:
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#include <stdio.h>
#include <stdlib.h>
#include <sqlca.h>
#include <sqlcli.h>

int main()
{
   SQLRETURN rc = 0;
   SQLHENV envHandle = SQL_NULL_HANDLE;
   SQLHDBC dbcHandle = SQL_NULL_HANDLE;
   SQLHSTMT stmtHandle = SQL_NULL_HANDLE;

   EXEC SQL INCLUDE SQLCA;

   EXEC SQL CONNECT TO TEST;
   if (SQLCODE) {
       printf("Connect failed. rc = %d\n", (int)SQLCODE);
       return EXIT_FAILURE;
   }

   // get env & dbc handle
   rc = SQLAllocHandle(SQL_HANDLE_ENV, SQL_NULL_HANDLE, &envHandle);
   if (rc != 0) {
       printf("Alloc environment handle rc = %d\n", (int)rc);
       goto cleanup;
   }
   rc = SQLAllocHandle(SQL_HANDLE_DBC, envHandle, &dbcHandle);
   if (rc != 0) {
       printf("Alloc connection handle rc = %d\n", (int)rc);
       goto cleanup;
   }

   // establish "null connection", i.e. derive the CLI connection from
   // the connection established with embedded SQL before
   rc = SQLConnect(dbcHandle, NULL, 0, NULL, 0, NULL , 0);
   if (rc != 0) {
       printf("CLI connect rc = %d\n", (int)rc);
       goto cleanup;
   }

   // execute some statement in CLI
   rc = SQLAllocHandle(SQL_HANDLE_STMT, dbcHandle, &stmtHandle);
   if (rc != 0) {
       printf("Alloc statement handle rc = %d\n", (int)rc);
       goto cleanup;
   }
   rc = SQLExecDirect(stmtHandle, "CREATE TABLE x ( a INT )", SQL_NTS);
   if (rc != 0) {
       printf("CREATE TABLE rc = %d\n", (int)rc);
       goto cleanup;
   }

   EXEC SQL COMMIT WORK;

 cleanup:
   // cleanup must be done here

   EXEC SQL CONNECT RESET;

   return rc == 0 ? EXIT_SUCCESS : EXIT_FAILURE;
}
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You don't allocate a connection handle by providing a connection handle.
The dbc handle is allocated off the env handle.