East Asia (2023) 40:175–194

[Link]

The Sustainable Development and Economic Impact

of China’s Belt and Road Initiative in Ethiopia

Mukesh Shankar Bharti1

Received: 13 September 2022 / Accepted: 16 February 2023 / Published online: 1 March 2023
© The Author(s), under exclusive licence to Springer Nature B.V. 2023

Abstract
The purpose of this research is to assess the economic growth and sustainable devel-
opment of Ethiopia. To what extent does the Chinese investment contribute to the
overall economic development of Ethiopia after the Belt Road Initiative (BRI)? What
are the main focus areas for development in the region and how does the BRI initia-
tive connect people in the country? This research examines the development process
through the use of a case study and discursive analysis to know the result of the inves-
tigation. The study is deeply elaborated and the technique adds analytical and quali-
tative methods. Furthermore, this research attempts to highlight the key approaches
and concepts of Chinese engagement in Ethiopia as it attains development in several
sectors through the BRI. The BRI is successfully pioneering transport systems, roads,
railways, small industries, automotive sectors, and health development programs in
Ethiopia. As result, the Chinese investments bring changes to the country after the
successful launch of the BRI. Furthermore, the study concludes that there is a need
to initiate numerous projects to improve human, social, and economic life in Ethiopia
because the country is suffering from many internal problems and China has to work
to eradicate recurring problems in the country. As an external actor, the role of China
gains importance in Ethiopia in the context of the New Silk Road economic engage-
ment in the African Continent.

Keywords BRI · China · Ethiopia · Sustainable development · Economic growth ·

New Silk Road

JEL Classification F13 · F53 · P45 · Q01

* Mukesh Shankar Bharti

[Link]@[Link]
1
Centre for European Studies, School of International Studies, Jawaharlal Nehru University,
New Delhi 110067, India

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Introduction

This study elucidates the Belt and Road Initiative (BRI) and its effects on land-
locked Ethiopia’s sustainable development and economic transformation. The main
motto of the BRI is to connect and increase economic cooperation among multiple
countries that are spread throughout the world; mainly, these countries are from
Asia, Africa, and Europe. The BRI projects are involved to improve connectivity
and cooperation on a transcontinental scale through the development of highways,
maritime ports, railways, oil and gospelises, power grids, and other concern multi-
purpose projects. After the economic rise in China, President Xi Jinping started to
explore the world market in 2012–2013 through the inception of the “One Belt One
Road (OBOR).” China’s strategy is an attempt to reshape the “Old Silk Route” into
new ambitious economic engagement around the world. China’s diplomacy towards
the African continent is one of the key engagements in the context of the BRI. This
article also elaborates on China’s Maritime Silk Road Initiative (MSRI), a major
OBOR/BRI component, in the context of connecting Ethiopia and the rest of Africa
as well. The foreign ministry of China expressed that the BRI will engage with
African countries and is the most important approach for China [1]. China’s MSRI
initiative is the sea route corridor component of the BRI. The MSRI is the “belt” of
China’s flagship BRI project. This initiative is associated with complementing the
Silk Road Economic Belt (SREB) in the maritime domain across the global level.
China’s intention through the MSRI is to invest in Africa, the South Pacific Ocean,
Southeast Asia, Oceania, the South China Sea, and the Indian Ocean Region (IOR).
“The MSRI complements China’s String of Pearl’s geopolitical theory, which
asserts that China is attempting to build bases in the Indian Ocean Region (IOR) in
order to expand their power and secure the Strait of Malacca from potential block-
ade during the war” [2, 3].
China’s economy has matured with real GDP growth dropping from 14.2% in
2007 to 6.6% in 2018. The International Monetary Fund (IMF) has projected China’s
economic growth of 5.5% by 2024 [4]. The Chinese external affairs policy has been
involving the expansion of BRI across the continental level to accelerate economic
growth. In this context, China has expedited the BRI projects in African countries.
There are many Chinese projects of BRI involving developing countries in their fold
to bilateral engagements in African countries [5]. China covers more than 65% of
the population in the world through these economic initiatives and dominates over
40% of the world’s gross domestic product (GDP). Due to regional engagement,
China can engage with more than 80 countries on all continents [6, 7].
The BRI connected the world communities with China. Regional imbalances
come in the way of development and the rate of production is continuously
increasing after the BRI projects in Ethiopia [8]. Chinese President Xi proclaimed
that BRI shapes the way of economic cooperation in the world. He announced
that the “Silk Road Economic Belt” and “Maritime Silk Road” will be known as
the new name of the BRI in 2013 and is also called the One Belt, One Road Ini-
tiative (OBORI). The BRI project is connecting the world from the land route to
the sea route around the world [9].

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East Asia (2023) 40:175–194 177

In 2013, China unveiled the initiative that prima facie focuses on Asian countries.
China has been spreading the BRI in the African countries and the Global South.
China expedited the economic cooperation which gets support from other coun-
tries and regional groups. China has signed agreements on mutual understanding to
accelerate intergovernmental cooperation and people-to-people connections among
the BRI countries [10]. The BRI in the African continent paves way for high-level
investment opportunities for China including various Chinese projects running in
eastern African countries including Ethiopia. China’s Justin Lin Yifu, the former
Vice-President of the World Bank and an economist, is supporting Chinese eco-
nomic engagement and initiatives in African countries [11, 12].
According to the prominent Chinese scholar Wenping, BRI projects on the Afri-
can continent are supported and promoted by South-South cooperation which ben-
efits China and African countries as well. The inclusion of African countries in the
BRI projects has unlocked the development roots of these countries. The Forum on
China-Africa Cooperation (FOCAC) which was held in South Africa in 2015 has
pioneered Sino-African cooperation in mutual benefits and opportunities. This coop-
eration shapes China’s footprint in African countries as a solid foothold for eco-
nomic cooperation between countries [7, 13]. Thus, various literature are discussed
about the BRI on African Continent. Several BRI corridors have been created in
many African countries including Ethiopia. Therefore, this article tries to highlight
the BRI projects and their implications in Ethiopia. This research uses data from
sources like published articles, books, literature available online, government data-
bases, think tanks, and research institutions’ published data as a form of primary and
secondary resources. Also, this research highlights the major economic and other
institutional development in Ethiopia in the context of BRI projects.

Theoretical Background

The Chinese BRI is deeply linked with the “theory of soft power.” The People’s
Republic of China (PRC) is exploring soft power standards to expand BRI initia-
tives across the globe [14]. According to Nye [15], “Soft power uses persuasion and
non-aggressive means to gain desired outcomes.” Furthermore, Nye describes that
“people and nations can change their opinions due to carrots and sticks” [15]. Nye’s
understanding of soft power can be used in the context of the Chinese BRI in Ethio-
pia. China is trying to set up many BRI projects across the world, which is a soft
power endeavor. The BRI is truly changing its impression on cooperation and deep-
ening trade and investment in African countries [16].
Rahman discusses that “the BRI’s trade and exchange programs allow it to manifest
soft power” [17]. Nye argues that soft power has three main components to use in
making cooperation, i.e., culture, foreign/domestic policy, and political values. Rah-
man [17] points out that the BRI would link China to many countries across the world.
It is a suitable marketplace where China can spread its culture, education, knowledge,
and experiences [16]. Thus, with the expansion of BRI in Ethiopia, Chinese brands
have been spreading in the country. Apart from this, commercial goods, cultural
goods, and companies are strengthening the BRI’s extensive infrastructural projects.

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Soft power has the strength to achieve the goal at the national and international levels:
“Power is based on the particular material capabilities that a state possesses” [18].
Power matters in modern geopolitics and geoeconomic exercise with a distinction
in the degree of intensity. It works with command, as opposed to alternative power.
Co-optation and coercion are the main components for shaping the preferences of
others: “Co-optive power is the ability of a country to structure a situation so that
other countries develop preferences or define their interests in ways consistent with
its own” [19]. Soft power is also seen as an alternative to military power, i.e., the
armed forces within the framework of a state’s foreign policy. Soft power consists
of the country’s internal and external mobilization capacities and an international
approach to dominate in terms of geoeconomics [20]. In this context, Xi Jinping
emerged as the pioneer of the BRI and this flagship project extends to all continental
levels. The Horn of Africa has become China’s strategic location. Due to the success
of the BRI in this region, the first Chinese military (Chinese People’s Liberation
Army) presence has been established in Djibouti outside the national territory.
According to Nye [15], “soft power is the ability of its possessor to get favour-
able outcome through persuasion instead of coercion.” In other words, soft power
is calculated as another kind of power in international politics. It is not linked with
only culture, including political values which dominate international relations.
Legitimacy is another core component of soft power politics. Nye asserts that there
are three main sources at the primary level where soft power is strengthened. Cul-
ture is an essential component of the soft power that supports engagement through
commerce. Chinese tourists have flocked to many places where BRI projects have
been launched. The exchange program is an important part of cultural and busi-
ness exchange. Trade can also attract investors, job seekers, and visitors to explore
knowledge. Thus, China is using soft power tools to strengthen its flagship BRI in
Ethiopia and other African countries [21].
China has a countrywide-specific policy for the expansion of BRI. Ethiopia is
a key country of China’s BRI in the Horn of Africa region. Chinese entrepreneurs
have political and economic support for Ethiopia’s development cooperation priori-
ties. The BRI is a flagship economic project of China and has been strengthened on
a broader level using soft power approaches [22].

Methodology and Data

The qualitative nature of the study is deeply focused on BRI and its related pro-
jects in Ethiopia. This research relies on empirical analysis to discuss the economic
and trade cooperation of Ethiopia with China. The study focuses on Ethiopia and
its gradual development process and transformations that have occurred after the
launch of BRI in the country. In Ethiopia, the plethora of projects initiated under the
BRI either is about to be completed or is still in progress. This research is based on a
qualitative approach to explore the research questions and an empirical study of the
economic development of Ethiopia. The study setting has many BRI-related enter-
prises operating in several areas of the economy and trade cooperation with China.
Furthermore, this research flourished in the sectors of cooperation under BRI, i.e.,

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trade, services, number of projects, education, and other industries in the country
[23]. The analytical approach of the study also concentrates on infrastructure and
trade promotion in the Horn of Africa. The systematic approach and coherent study
are employed throughout this research design and implementation to assess the
research result. Moreover, the data used in this research are from the various official
governments and institutions’ websites and secondary literature.
China has started the investment in Ethiopia in various sectors to uplift human
resource development across the country. In 2019, China promoted higher educa-
tion for African students, and over 200 scholarships were awarded to Ethiopian stu-
dents [24]. The Ethiopian Prime Minister visited China to accelerate the common
understanding between both countries. The Chinese government provides funds
to Ethiopian researchers and professors to participate in short-term research pro-
grams, symposiums, conferences, and training courses apart from the degree pro-
gram. During a dialogue in Addis Ababa, the Chinese Ambassador pointed out that
Human Development is the prime agenda of the BRI projects in Ethiopia. In Addis
Ababa during the China-Ethiopia dialogue, both governments agreed to expedite
the economic cooperation and a Memoranda of Understanding (MoU) was signed.
It can play an important role to strengthen the economy of Ethiopia vis-a-vis Chi-
na’s BRI expansion in the African Continent. Earlier, Chinese President Xi Jinping
said that the BRI projects in African countries are based on the win–win possibil-
ity for each other. This agreement accelerates the manufacturing capacity in the
country. The production capacity does increase for small and medium enterprises
(SMEs). According to the Ethiopian agencies, the MOU accelerates the economic
commitment of both countries to work on the development of small and medium
enterprises [25].
The railway line between Ethiopia to Djibouti was modernized by the Chinese
agency. This railway line is the livelihood of both countries and is 752 km long
and costs USD 4000 million for its renovation. China’s Exim provides 70% of the
total cost to modernize the railway line [26]. The BRI projects are also associated
with proper sustainable development. There is a need to create employment oppor-
tunities for the younger generation after a Bachelor’s degree in Ethiopia. More
business and trade between both countries can generate an abundance of oppor-
tunities for younger educated degree holders. This intra-continental collaboration
can lead the social stability in Ethiopian society. Since 2013, China is the leading
economic and trade partner with Ethiopia, more than any other global actor from
the world. China is overtaking European investment in African countries. China’s
national strategy towards Africa is to accelerate trade and economic cooperation
among African countries. Through the BRI, China wants to gain market access
across the continent [27]. Chinese companies are building the Djibouti-Ethiopia
pipeline and the largest free trade zone on the African continent. Ethiopia as the
second largest populous country in Africa has been integrated into China’s flag-
ship project BRI through the adoption of a China-oriented agreement for social
and economic development [28].
The Chinese government is strictly expanding BRI projects across the world.
China’s foreign policy is always keen to emphasize projects that are easily launched
without any political restrictions. The BRI initiative is a full economic component to

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connect the world. The world’s gross domestic product (GNP) is affected by China’s
BRI projects by about 55%. The BRI projects are connecting the world’s people by
around 70% [29]. Building political and economic cooperation among the nations
causes de facto trade and investment. Thus, investment ties grow smoothly between
the host government and the country of investment. Despite the various problems
in disseminating the Gross Domestic Product (GDP), China has been involved in
the economic partnership with Ethiopia. China has large-scale foreign exchange
reserves of around USD 4 trillion. China wants to seize the opportunity of investing
in various countries to become a giant in the economic race in the postmodern world
[30]. In East Africa, Ethiopia is surrounded by many countries and is a landlocked
nation. The sea trade route improves the connectivity for export and import as 90%
of Ethiopia’s trade and investment come from port uses in Djibouti. The newly con-
structed railway line facilitates business and investment between China and Ethiopia
[31].
In the sense of the language barrier in Ethiopia, it is not difficult for foreigners
because English is a commonly understandable language in Ethiopian society. In
recent years, the country’s internal political and social harmonies are well estab-
lished. Ethiopian society lives full of joy, prosperously, peacefully, and coopera-
tively. The Chinese authorities are accelerating the manufacturing structure to shape
the well-formed small and medium enterprises in the country. Earlier, in Ethio-
pia, China set an ambitious vision for 2025. The textile and clothing industries are
key focal points to develop these projects in the country. The Chinese companies
are coordinating with their Ethiopian counterparts to lead the tremendous growth
through the development of the apparel industry. The younger generation is being
trained by Chinese experts. Nowadays, Ethiopia is an emerging potential manufac-
turing hub for the textile and apparel value chain in the African continent [32].
The Maritime Silk Route Initiative (MSRI) is connecting Ethiopia for greater
possibilities of Chinese investment in the country. Ethiopia has heavily participated
and created better opportunities and is the home of the Chinese MSRI from the Afri-
can continent. Ethiopia is the highest-profile of African countries and an integral
part of Chinese economic initiatives. The Chinese Rail Engineering Corporation
(CREC) and China Civil Engineering Construction Corporation (CCECC) are con-
structing the standard gauge rail (SGR) projects in the country. This rail route is
becoming important to connect with the sea business route [33]. The Hawassa Park
has been built by CCECC at the cost of USD 250 million. It is strategically impor-
tant for manufacturing and gaining strong position around the African continent.
The Chinese interest in the context of trade and commerce in the African continent
surpasses that of the other economic powers of the world. The MSRI is connecting
African countries at a broader level and it is a success story of China’s BRI beyond
the continental boundaries [34].
Energy is a key sector for mutual cooperation between China and Ethiopia. Both
countries agreed on extensive work to boost and shape the strong foundation of the
gas pipeline and power liquefaction industry in Ethiopia with the help of Chinese
companies. Apart from this cooperation, the Chinese are keen to establish high-volt-
age transmission lines on various routes. Furthermore, there is a common consensus
on the establishment of hydroelectric and wind projects in the country [35]. Apart

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from these initiatives, China’s eyes are on the agricultural sector because Ethiopia
has large areas of agricultural land that can be exploited which is probably the rea-
son why China has included irrigation as one of the key agendas of the economic
engagement in Ethiopia. Moreover, the light rail project and renovation of the air-
port are also key characteristics of Chinese investment in Ethiopia [36]. China has
multiple economic engagements with Ethiopia in several sectors and Chinese invest-
ment is supporting the various projects in the countryside.
The MSRI is associated with two main positive affairs in Ethiopia. In light
of these factors, the country is growing in the economic sector. Firstly, Ethio-
pia accepted Chinese economic cooperation in the country. The country’s leaders
warmly welcomed and wholeheartedly embraced the Chinese initiatives. Ethiopian
companies benefited in the form of loans, aid, and other assistance from China’s
economic support. The Ethiopian ambassador in Beijing stated that China is provid-
ing aid to bolster the transport system in the country. It is also providing support and
finance to build up welfare schemes and the telecommunication sector. Furthermore,
now the Ethiopian power grid is operating at full scale and has export capacity.
The manufacturing sector is expediting at a large scale with support from Chinese
companies. Ethiopia is engraved by China’s special economic zones (SEZs) and
industrial settlements in specific areas which have been calibrated to generate tax
revenues and create employment for skilled and trained people. It has tremendous
potential to get foreign reserve exchange and provide the roadmap of technology
transfer as well [37].
Apart from this assistance from China, China is fulfilling the aspiration of Ethio-
pia’s manufacturing powerhouse in Africa. Ethiopia is ambitiously growing fast due
to economic assistance from the BRI projects. The power sector is also getting a
boost through the development of the MSRI [38]. China Communications Construc-
tion Company Limited (CCCC) is constructing the electrification work between
Woldiya and Mekelle rail projects. It also established the industrial park which is
140 km east of Addis Ababa. Ethiopia is gradually developing the market in the
country with the help of Chinese investors. The Ethiopian government’s ambition is
to become a regional giant in the field of manufacturing. For this achievement, the
country needs to be transparent and have infrastructural support to boost the econ-
omy. Ethiopia is getting infrastructural support from the BRI projects but there is a
need to improve the hard groundwork to get success in this field [39].
The joining of the BRI projects by the Ethiopian government is also strength-
ening further economic cooperation as well in advance. Socio-economic devel-
opment is not Ethiopia’s only key agenda within BRI. Ethiopia seems to be the
dominant power in African countries through its economic advancement—one of
the reasons why Ethiopia is focused towards the tourism sector. The Ethiopian gov-
ernment is cementing the Chinese-African economic cooperation in Africa. Now,
African countries are becoming ideal economic partners of China. African devel-
opment spirit expedited the Sino-African economic engagement and new concepts
were created as a form of South-South cooperation [40]. China’s Outward Foreign
Direct Investment (OFDI) is strengthening the sustainable development process in
Ethiopia since the BRI projects were initiated in the country. African Union’s (AU)
agenda for 2063 and its blueprint are transforming Africa into a future powerhouse.

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Its policy is working to strengthen the strategic development blueprint for economic
development, political stability, protection, social prosperity, and regional integra-
tion in Africa. Furthermore, the African Union (AU) and China agreed to remove
the poverty, malnutrition, and security threats. The BRI projects also got support
from AU and have signed MoU for economic cooperation. The African continent
is working to be drug-free, and breaking human trafficking, crime, and corruption
from the African continent. The AU is also keen to restrict organized crime and any
kind of criminal activity. The illicit trade is also a big question and the arms race and
its proliferation need to be restricted. Attempts are being made so that foreign inves-
tors will easily come to invest in the continent without fear [41].
This study is a deep enquiry into how Ethiopia’s overall development has geared
up after the BRI projects came into force. The Ethiopian economic growth has been
increasing since Chinese investment in the country. There are several infrastructure
development programs accelerated to an unprecedented level. Thus, wide-ranging
areas tremendously emerging in Ethiopia include industry, transport, energy, and
manufacturing. These sectors have been transformed after Chinese companies suc-
cessfully worked in Ethiopia. Ethiopia’s average GDP reached a growth rate of about
8% after economic cooperation with China. In 2018, Ethiopian economic growth was
also recognized by the World Bank. Ethiopia is the only African country whose GDP
rate is the fastest among African countries [42]. The relationship between China and
Ethiopia is rooted at a high level. This economic partnership is based on win–win
possibilities for each other. But Ethiopia needs to improve its economic condition and
China will seem to dominate over the other economic power in the region.
China has a bigger interest to get economic cooperation with Ethiopia. The Chi-
nese authority is broadly thinking to spread their trade and commerce across the
continent. China is also showing the proper development path to its Ethiopian coun-
terparts in the countryside. China adopted an economic policy called “Going Out.”
It is China’s strategy to expand its economic cooperation at the global level. That is
why Ethiopia engaged with China for the country’s development. Since the BRI pro-
jects were launched in African countries, African countries were unable to get the
largest recipient of China’s investment in the region [43].
Ethiopia and China’s bilateral partnership becomes a lesson for other countries
from the Horn of Africa. This relationship is shaping the various development sec-
tors of Ethiopia. The multidimensional coalition is developed by both countries and
the strengthening of the relationship in business to business, government to govern-
ment, and people to people. The Ethiopian party also seems to shape a strong part-
nership with China. Thus, in terms of capital, Chinese companies set up a cement
factory in Ethiopia. China’s investments in Ethiopia and cement factories are getting
much more successful since its establishment. Two Chinese companies are working
on cement production in Ethiopia with a capital of USD 358 million. One of these
companies is Sino-Saudi Joint Investment Cements PLC and the second company is
C. H. Clinker Manufacturer PLC with a capital of USD 268 million [44].
China’s capital flow is expediting the active work and expansion of power
plants in remote parts of the country. The electrification work is being updated
by the Chinese companies in the rural town of Ethiopia. There are renowned
Chinese companies that are actively shaping electrification work. To name a few,

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the responsible companies are the China General Chamber of Commerce (CGCC),
Wamboo, and Tributyl Tetradecyl Phosphonium Chloride (TTPC) involved in
electrification work. These companies are associated with other partner companies,
i.e., Tis-Abay, Fincha Rivers, and Tekeze [45]. The Ethiopian Prime Minister
openly supports the economic development of the country with the help of Chinese
investment through the BRI initiatives in the country. He believes that Ethiopia will
emerge as a manufacturing powerhouse in Africa. Thus, Prime Minister Desalegn
understands that China’s support for Ethiopia is a great vision to become a stronger
nation among the African countries [46].
As a result, China is the largest trading and business partner of Ethiopia and the
biggest foreign investor across the world since 2013–2014. The Chinese companies are
mainly associated with textile and garments, sugar and sugar-coated industry, metal,
and engineering. Apart from these sectors, there are other fields where the Chinese are
becoming a strong competitor for other companies in the world. The pharmaceutical,
leather products, and agricultural processing are areas where Chinese investments are
growing rapidly in recent years. The Chinese companies invest in the construction of
highways, rail connectivity, telecommunication, electrification, and the establishment
of power-sub stations in the country. China focuses on strength of the manufactur-
ing sector in Ethiopia. Despite political and economic relations between both coun-
tries, Ethiopia has more Chinese diplomats than the rest of the other African countries.
Nowadays, both countries share lots of common things to strengthen economic coop-
eration [47].

Discussion and Results of BRI in Ethiopia

Liu [48] discusses the China’s BRI projects have strengthened its regional coopera-
tion across the world, and China has become an economic powerhouse through good
governance and the implementation of infrastructure works. Today, the BRI initiatives
perform like international governance and regional engagement. The various literature
show that this research observed that BRI brought economic development to Ethio-
pia including Eastern Africa. The BRI projects create employment opportunities for
young skilled and non-skilled employees. Thus, the level of socioeconomic position of
people gained heights in Ethiopia [49]. Ethiopia is considered in the African continent
as another home of China’s flagship BRI. China is constructing road and rail connec-
tivity towards the Gulf of Aden which would become the lifeline of landlocked Ethio-
pia. China’s Exim Bank financed a loan of USD 4.2 billion to build this project [28].
BRI is engaged in multi-purposes with Ethiopia to facilitate socio-economic
growth. Moreover, China has to prioritize other sectors beyond economic engagement
to restore its global power in the African continent. China is accelerating several
sectors to become an international player in the context of MSRI. The Chinese
government also wants to surpass the other economic global powers in the African
continent. The United States (US), France, India, Britain, and Japan are investing in
many African countries but now China is ahead of these countries [26, 50]. There is
no doubt that Ethiopia benefits from China’s extensive economic engagement in the
context of BRI projects. The BRI has started wide-ranging economic cooperation

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in Ethiopia after China’s flagship BRI projects. Thus, the Ethiopian public and
private sectors benefitted from these Chinese projects. The younger generation of
Ethiopian society is getting multiple aids and job opportunities [51]. The Chinese
companies are attracted by the Ethiopian government to invest in the country which
is a multidimensional achievement in the development sectors. China’s companies
have benefited to incorporate heavy production units because of the nature of cheap
labor availability in Ethiopia as it reduces production costs [52]. China’s investment
in Ethiopia boosted the relationship. Eastern African countries depend on Chinese
knowledge and technology, e.g., as part of infrastructure projects, maintenance
in general, and spare parts. In the case of Ethiopia, some significant projects are
spotlighted in the country, for example, the modern light tram system in Addis
Ababa. It is the first time in the Sub-Saharan region that a modern tram system has
been implemented [53].
Table 1 shows the Chinese investment in various sectors as Ethiopia continues to
expand its bilateral relation. Ethiopia provides all places to the Chinese companies
and the government solves the critical issues to invest in Ethiopia (Table 2). The
Ethiopian government appears to invite FDI and open up new sectors for invest-
ment from China as priorities. Thus, Ethiopia thinks to expand its developing sec-
tors across the country and invites foreign companies to pioneer a variety of sus-
tainable development programs. The Chinese government and its various companies
have been pioneering the real estate business in Addis Ababa, Ethiopia. In 2007, the
Chinese Lu brothers founded the Eastern Industrial Zone (EIZ) in Ethiopia. They
decided to establish a cement factory in the country. Ethiopia also provided govern-
ment support to launch the first industrial park in the country. Nowadays, the EIZ
is home to more than 95 small and medium factories and employs 20,000 people.
By and large, Chinese companies bring gradual economic development into several
fields, namely Ethiopia’s agricultural sector, information and communication tech-
nology services, and real estate business, opening the range of sustainable develop-
ment in the country. Thus, Chinese investors and companies are indulged to bring
sustainability politically and economically [54].
Figures 1 and 2 show Ethiopia getting heavy FDI in the manufacturing sector.
In recent years, Chinese companies have successfully shaped manufacturing
units in different industrial parks across the country. The construction materials,
cement production, and textile industries, and food processing units tremendously
attract the attention of global economic powers. China’s vision in African
countries is getting successful investment goals after the launch of BRI projects
in the country. Before the outbreak of COVID-19, Ethiopia gradually accelerated
the growth rate in the manufacturing and construction sectors. However, some
areas need to get more investment and are in a fragile position. Post-pandemic,
Ethiopia’s economic progress, sustainable development, and growth rate are
severely affected. Apart from these signs of progress, Ethiopia has a wide range
of debt from various entities including China, Middle Eastern countries, and the
World Bank. There is around USD 30 billion in total debt remaining for Ethiopia
[55]. The Debt Services Suspension Initiatives (DSSI) highlight that China
is getting much political support for the successful enhancement of the BRI
projects and it is rated a trustworthy creditor in Ethiopian society. The Ethiopian

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 Table 1  Industrial parks in Ethiopia built by China
Name of parks Site and location KMS from Addis Ababa Proximity to the Delimited land Phase I (hectare) Eligible industries Completion period
from Addis Ababa port (Djibouti) (hectare)

Addis Industry village Addis Ababa Addis Ababa 863 8.7 8.7 Apparel Operational
Bole Lemi I Addis Ababa Addis Ababa 863 156 156 Apparel Operational
East Asia (2023) 40:175–194

Bole Lemi II Addis Ababa Addis Ababa 863 186 186 Textile and apparel Operational
Kolento Addis Ababa Addis Ababa 863 337 337 Food processing, pharma- Operational
ceutical, furniture, house
appliance, electronic and
electrical
Hawassa South 275 998 300 100 Textile and apparel Operational
Dire Dawa East 473 380 1500 150 Textile and apparel, vehicle Operational
assembly, and food process-
ing
Kombolcha North-East 380 480 700 50 Textile and apparel, food Operational
processing
Mekelle North 760 750 1000 50 Textile and apparel, food Operational
processing
Adama South-East 74 678 2000 100 Textile and apparel, vehicle Operational
assembly, and food process-
ing
Bahir Dar North-West 578 985 1000 50 Textile and apparel, food Operational
processing
Jimma South-West 346 1098 500 50 Textile and apparel, food Operational
processing

Source: [Link]
185

13
 186

13
Table 2  Chinese investment projects by area, 2000–2020
Sector Number of projects Capital in Ethiopian Birr Total number of projects
(thousands) (including registered but not yet
operational)

Agriculture 3 13,771 11
Manufacturing 388 12,293,243 666
Mining 2 26,500 2
Education 1 530 1
Health 10 15,417 12
Hotels (including resort hotels, motels, and lodges) and restaurants 29 84,076 42
Tour operation, transport, and communications 7 19,721 8
Real estate, machinery and equipment rental, and consultancy services 86 693,213 124
Construction contracting including water well drilling 75 5,269,786 138
Others 9 56,000 4
Total 610 18,472,258 1008

Source: ODI report 2021

East Asia (2023) 40:175–194
East Asia (2023) 40:175–194 187

USD in million 500

400
300
200
100
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Year

Investment Linear (Investment) 2 per. Mov. Avg. (Investment)

Fig. 1  China’s FDI flows to Ethiopia. Source: MOFCOM (2021)

80

70

60
USD in billion

50

40

30

20

10

0
2014 2015 2016 2017 2018 2019 2020 2021
Axis Title

FDI flow in manufacturing sector FDI flow in Other sectors

Linear (FDI flow in manufacturing sector) 2 per. Mov. Avg. (FDI flow in Other sectors)

Fig. 2  Foreign direct investment (FDI) flows from 2014 to 2021. Source: ODI Report, [Link]
org/​media/​docum​ents/​BRI

government received a debt from China of around USD 8.7 billion, which is
32% of the total foreign debt of Ethiopia. The second-largest is the World Bank,
providing around 31% of the debt in Ethiopia [56].
Ethiopia has an external debt of 60% of the country’s total GDP. Ethiopia is
the 2nd largest country in Africa receiving borrower investments from China.
The Ethiopian authority is scared about the future course of the Chinese reac-
tion to debt [57]. Furthermore, the Chinese have a strong presence in Ethiopia
with considerable acceptability by the people as well. The economic relationship
between China and Ethiopia is assessed positively by political leaders and civil-
ians alike—one of the main reasons why China’s BRI achieved success in the
country. The Ethiopian society considers China a model of development and it
should be carried forward for further development of the country [58].

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188 East Asia (2023) 40:175–194

Both government and their agencies share a master plan for sustainable develop-
ment on the basis of the high-level investment. Chinese and Ethiopian counterparts
agreed to infrastructure development with full potential to expedite the economic
and productivity growth in the country. This research investigated those bilateral
relations which might become more viable for future economic cooperation between
China and Ethiopia. The Chinese favor structural development than the other sec-
tors, which is beneficial for socio-economic development. Several funding agencies
provided development aid and which has caused to remove poverty. Ethiopia is wel-
coming the traditional donor to make grants for the country’s health and education
sector as well. China’s diplomatic channel has successfully linked its strategies for
African countries in the BRI framework of cooperation with Sustainable Develop-
ment Goals (SDGs) and Africa’s Agenda 2063. Through the BRI, China provides
development funds to African countries, and Ethiopia is the largest recipient of Chi-
nese aid to run development programs in the country [59].
The development of China’s BRI projects in Ethiopia is a success story of
long-term investment. Now, the Chinese actors are in a win–win position in East
Africa including Ethiopia. The research investigation pointed out that if China is
in a losing position in any part of the country’s special project, that means that the
Chinese authorities will not break the investment. In this context, the Chinese are
seriously committed to doing something extra to counter the other economic pow-
erhouse on the African continent. China’s eyes are on building stronger capabilities
in entire African countries. China shows extra calibre beyond the continent for eco-
nomic cooperation at a broader level in the prism of BRI projects. The collabora-
tion between the China Development Bank (CDB) and the Development Bank of
Ethiopia (DBE) is operating lots of development schemes and is providing a training
program for thousands of Chinese-Ethiopian professionals under the China-Africa
Consortium for financial engagement [60, 61].
China’s BRI projects successfully expanded toward African countries. Before,
China was also connecting other parts of the world with New Silk Road Initiatives.
The countries of Central and Eastern Europe are also associated with BRI projects.
Moreover, Central Asian, South Asian, and Middle East countries gradually accept
China’s BRI and economic cooperation. Thus, the Eastern African countries suc-
cessfully accepted the Chinese proposal for economic cooperation, although China
has to work a lot for the betterment of many African countries. African countries
need much investment to exploit natural raw materials for manufacturing. The sus-
tainability of development projects needs to be expedited in several African coun-
tries. China has impacted limited economic transformation and development in
African countries. Ethiopia benefits far more than any other African country from
China’s flagship BRI projects in the country [62].
The economic cooperation between China and Ethiopia is the motto to achieve
strategic relations in MSRI and BRI projects. However, this research signifies the
Chinese interest in the African continent to dominate over the Quadrilateral Secu-
rity Dialogue (QUAD) member countries in the maritime business route in the
South China Sea to the Indian Ocean. China is circling India in the South Asia
region to restrict Indian expansion in the region. There is a rivalry between the
US and China for the strengthened sea route to promote the blue economy and

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East Asia (2023) 40:175–194 189

for domination in the oceanic silk route. That is why the study focuses on China
bringing the BRI projects to African countries rather than African countries’ ini-
tiatives for economic cooperation with China.
China’s BRI is connecting developing countries to shape infrastructural devel-
opment. The BRI projects are opportunities for skill development for the foun-
dation of the construction and manufacturing industries. It is an ideal platform
for third-world developing countries’ sustainable growth. Moreover, Ethiopia’s
dependence on FDI is paving the way for China’s economic intervention in the
country. Then the country will be able to nurture a master plan for sustainable
development. The flow of aid and investment comes from developed countries
when it needs proper economic transformation, like in a country such as Ethiopia
where development sectors need an economic boost for modernization [63]. In
addition, Ethiopia is a landlocked country and it is difficult to economically tran-
sition into the multidimensional development of the country. China’s BRI projects
engage several neighboring countries through economic cooperation. Thus, China
is reaching a landlocked country easily because its BRI projects already function
in neighboring countries. The BRI brings economic transformation and is useful
for alleviating poverty in the country [64]. The research investigates empirically
the BRI projects that involve the stimulation of sustainable development in Ethio-
pia [65]. By and large, the BRI brings China’s entrepreneurs to invest in Ethiopia.
The involvement of the Chinese government paves the way for Chinese compa-
nies’ entry into developing countries for the establishment of strategic locations
for China’s global economic power [66].
The BRI projects’ negative side is that there are many countries that have had trou-
ble paying back China’s massive loans. Some of their projects are not completed on
time which had been projected to be completed within the deadline. The COVID-19
outbreak across the world affected the global economy to slowing down that is why
many construction works were not completed on time. There is a lack of consensus
between the common people and the leaders of opposition in the country. Because of
this, a lack of trust emerged in China’s BRI in Ethiopia and other African countries
as well. “This backlash matters for several reasons. First, if opposition to BRI within
these countries grows too strong; leaders may be forced to scale back or halt projects.
Second, if several high-profile BRI projects are suspended, it may create an image
problem for China. Just as Chinese leaders are taking a higher profile role in global
affairs, they would not look kindly on suffering multiple setbacks” [67].
BRI projects in Ethiopia are also affected by corruption. This kind of approach
impacts China’s BRI negatively in Ethiopia and the rest of parts of the African conti-
nent. There were many construction site officials who complained of problems influ-
enced by corruption in Ethiopia. In Ethiopia, the issue is that development-related
decisions may be made to protect or establish economic and political power over
some groups to dominate others. The political elites and entrepreneurs’ nexus may
be legal in the country but such a kind of coalition of both groups is deeply involved
in corruption and this kind of ties between businessmen and leaders distorts deci-
sion-making. Both the effective groups have been establishing an unequal playing
ground in Ethiopia. Ethiopia’s corruption ranking has reached at ­107th position in

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190 East Asia (2023) 40:175–194

the corruption perception index and the BRI projects are not untouchable of corrup-
tion as well in the country [68].
There is huge criticism of China’s “debt trap diplomacy” which has created con-
sternation among countries across the world not only in Ethiopia. Civil society
activists and environmentalist groups are also criticizing the BRI-related projects.
There are criticisms from Western countries, the US, and India against China’s debt
trap policy [28]. “Despite being one of the most rapidly growing economies in the
world, ensuring it remains within prudent borrowing limits in the near future, China
has provided 30 per cent of Ethiopia’s total new public external debt over the past
five years” [69].

Conclusion

This research highlights the key issues which are related to the BRI and the Ethi-
opian government creating history to reconstruct the capital flows and FDI in the
country. Socio-economic improvement and human development have increased in
Ethiopia. The Djibouti-Addis Ababa railway line has become a lifeline for the Ethio-
pian people and is helping the economic progress of the country. There are dozens
of industrial park established by Chinese companies under the BRI projects. These
industrial parks created thousands of employment opportunities for local people in
the region eventually improving their economic position. There were some protests
organized by the local people against the Chinese companies but the issues were
later resolved by the agencies. These protests were organized in many areas because
the projects and new constructions destroyed the people’s residential and agricul-
tural lands. By and large, the foundation of BRI projects in Ethiopia is in a transition
position to construct the economy of the country. The Chinese companies seem to
force the manufacturing sectors to improve the capital flows and GDP of the country.
This research broadly investigates how Ethiopia achieves quasi-alleviating pov-
erty in the country. The skill-based education, training, and pharmaceutical courses
become the reality for Ethiopian students with the help of China. Various Chi-
nese educational institutes are providing scholarships for getting higher education
in China. Apart from these initiatives, the Chinese government itself provides lots
of scholarships under the Confucius educational program. The BRI projects bring
many facilities to the Ethiopian people under construction and industrial initiatives.
The research further suggests that Ethiopia needs much economic investment to get
proper multi-dimensional developments because lots of departments need financial
support to transform according to modern global systems. The tourism sector is
being developed by various agencies to bring more tourists to Ethiopia. And BRI
supports the construction of new modern buildings for various governmental depart-
ments in Addis Ababa.
The BRI is based on the principles of mutual cooperation, peaceful coexistence,
sustainable development, and mutual benefit. This economic initiative focuses on
free trade, policy coordination, people-to-people connection, and regional develop-
ment with deep connectivity. This research focused on China as a major investor
in Ethiopia. China has major challenges in Ethiopia from the US and the European

13
East Asia (2023) 40:175–194 191

Union (EU). Environmental and population displacement issues represent two major
challenges for China. Due to BRI’s several projects which is dangerous for the envi-
ronment and the ecosystem, there has been a protest against BRI projects in Ethio-
pia. China and Ethiopia, the two countries, need to address the issues that are to
contradict the BRI across the country. By and large, under the BRI framework of
cooperation, Ethiopia is responsible for infrastructural development strategy across
the country [70].
BRI has proven its potential in many areas: political, cultural, and environmental.
BRI’s multibillion-dollar initiative has created some good opportunities in Ethiopia.
It has produced jobs and fulfilment of sustainable development goals. BRI is help-
ful in reducing poverty, and in improving infrastructure across the country. Thus,
China’s various development projects create job opportunities. The connectivity
between the two countries has increased since 2017 and the educational exchange
program provides training and innovation to Ethiopian researchers and professors in
Chinese higher educational institutes. The study concludes that the Ethiopian assim-
ilation with the Chinese BRI in the country has brought about several infrastructural
developments.
Acknowledgements The author is grateful to the anonymous referees for their comprehensive review of
the manuscript and very useful suggestions. It was not possible without support of my brother Simant
Shankar Bharti and I am especially thankful to my friends.

Declarations
Conflict of Interest The author declares no competing interests.

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