Belt and Road in Ethiopia and China’s African Ambition

Abstract

China–Ethiopia economic cooperation in the period of 2000–2020 is marked by the convergence between the industrial policy of Ethiopia, the orientations of the Forum on China–Africa Cooperation (FOCAC), and the infrastructure development strategy which is the cornerstone of China’s Belt and Road Initiative (BRI). China, the largest foreign investor in Ethiopia during this period, has had a major role in terms of investment and financing in the energy sector and the transportation infrastructure: Addis Ababa Airport, roads, railway, seaport terminal, and gas pipeline. The flagship project — the Addis Ababa–Djibouti Railway — connecting Addis Ababa to Djibouti City and Djibouti’s Doraleh Container Terminal, inaugurated in 2018, provided landlocked Ethiopia with a good connection between the hinterland and the seaport: the economic corridor accounts for more than 95% of Ethiopia’s foreign trade. The development of Ethiopian Industrial Parks on the model of Chinese Special Economic Zones (SEZs) was the second pillar of the strategy of development of an export-oriented manufacturing sector. Chinese companies operating in Ethiopian Industrial Parks in the textile and leather industries have been pioneering this activity contributing to Ethiopia’s participation in the Global Value Chains (GVCs). Ethiopian government is also planning the development of agro-industrial parks specialized in added-value agricultural products such as coffee or cut flowers exported to Europe via Addis Ababa Airport and Ethiopian Airlines Cargo. Ethiopia’s main challenges in that direction are the necessity to go up the value chain to further penetrate European markets and, most likely, to identify the products or services which could be integrated into the African markets in the new context of the African Continental Free Trade Area (AfCFTA) agreement that entered into force in January 2021.