Ethiopia- China Economic Cooperation

Dec. 26, 2023

Introduction

Ethiopia and China established the first official diplomatic relations in 1970 and opened embassies in Beijing and in Addis Ababa. After a year, in 1971, the two nations signed the first economic and technical cooperation framework agreements.

At the beginning, the cooperation of the two nations was focused on livelihood support and   capacity buildings. However, later it improved into a holistic approach such as financing development projects and programs, foreign direct investment (FDI), trade and construction.

Since October 2023, the cooperation of the two countries further developed from Comprehensive Strategic Cooperation Partnership to all weather Development Cooperation which People Republic of China (PRC) has such partnership only with few countries.  

The cooperation is getting stronger.

The Ethiopian and Chines economic cooperation strategically focused on the development of infrastructures such as railways, highways, telecommunication, airport terminal, industrial development, construction of electric power generating, distributing and substations. In this respect our development priorities have been directly coherence with Chines government development initiatives, Forum on China Africa Cooperation (FOCAC) and Belt and Road Initiative (BRI).

Since 2006, Ethiopian has undertaken over 70 mega projects with these China initiatives. In order to implement those projects, the Chines government and financial instituted allocated about 14.83 billion USD loans, from 2006 to 2018.

The other focus areas of cooperation are investment in industries and trade. In this respect several Chines companies invested in the industrial sector and other businesses. Among these investments,  ESTERN industrial zone, Huajian industrial park, Dire Dawa industrial park and others investments generated huge amount of foreign currency and revenues in terms of tax for Ethiopia.  Currently Chinas foreign direct investment reached about USD 4 billion, and 1844 Chines projects are operating in Ethiopia.     

The construction sector is the other area of involvement that cooperation is strengthened.  The chines companies played pivotal roles in the construction and built several mega projects of the country. Many railway lines, express roads and highways, suspension bridges, skyline buildings, industrial parks, sugar factories, hydro power dam, wind power plants, substation and transmission line, the Addis Ababa riverside park and many other projects in Ethiopia have been constructed by chines companies.     

Conclusion

Ethiopia used all financial resources from china to develop those mega projects. For instance, among the 70 projects 57 of them are infrastructural projects which costed about USD 12.2 billion (82.2 Percent of all loans from China).  More specifically, 22 projects are transport and communication sector projects, 35 projects are power sector projects, and the remaining 13 projects are sugar factories and urban water supply projects.  

Thus, Ethio- China economic cooperation is comprehensive and strategic highly contributed to Ethiopian growth and development.  In today’s Ethiopia, the contributions of People Republic China government and people have a paramount value.

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