Abstract
A significant body of literature has held that Chinese interest in Africa is driven by a hunger for resources. This makes Ethiopia an important case study. Ethiopia experienced high rates of economic growth from 2003 onwards, thanks to rapid agricultural development. This period was also characterized by an intensification of Ethiopia–China relations. Bilateral trade between the two countries expanded rapidly, and China is currently the country's top trading partner. Ethiopia gained from China's zero-tariff policy on agricultural imports, and there was a dramatic growth in its sesame exports to China. China is also a major source of manufactured goods and machinery for Ethiopia. Despite being an agricultural exporter, it has attracted significant volumes of Chinese official financial flows and foreign direct investment (FDI). Chinese official finance is directed to building infrastructure, whereas Chinese FDI is directed to the manufacturing sector. This article concludes that the overall impact of China on Ethiopia is beneficial.
Highlights
Ethiopia is an important case study because it is a significant departure from the body of literature on China–Africa relations which has held that Chinese interest in Africa is primarily driven by hunger for resources
Its gross domestic product (GDP) grew at a rate of 10.9% from 2003 to 2013 as compared with 4% from 1993 to 2003.1 Ethiopia’s growth is largely led by rapid growth in agriculture, and there has been a remarkable growth in agricultural production from 2000 onwards
Chinese official financial flows are largely directed to building critical infrastructure in Ethiopia, whereas Chinese foreign direct investment (FDI) is directed to the manufacturing sector
Summary
Ethiopia is an important case study because it is a significant departure from the body of literature on China–Africa relations which has held that Chinese interest in Africa is primarily driven by hunger for resources. Ethiopia experienced high rates of economic growth from 2003 onwards and has outperformed most other African countries. Its GDP grew at a rate of 10.9% from 2003 to 2013 as compared with 4% from 1993 to 2003.1 Ethiopia’s growth is largely led by rapid growth in agriculture, and there has been a remarkable growth in agricultural production from 2000 onwards. The period of high growth rates in Ethiopia was marked by an intensification of Ethiopia–China economic relations. The article discusses Ethiopia’s trade with China, and Chinese development assistance and FDI in Ethiopia. Based on this analysis, the penultimate section discusses the impact of China on Ethiopia and the last section concludes. Finance and FDI in Ethiopia are from Aid Data (China.aiddata.org) and the CEIC database, respectively
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