Ethiopia: Ethio-China Dynamic Economic Relations –

Photo: Wang Ye

Chinese President Xi Jinping holds a welcoming ceremony for Ethiopian President Mulatu Teshome.

Ethiopia and China started economic relations about 100 B.C when the Han dynasty of China and the Axumite empire of Ethiopia had trade exchanges. The two countries had made official relationship when they opened embassies in their respective capitals beginning from 1972. This relationship has reached a greater level over the past two decades.

Currently, the bilateral relations is multifaceted and keeping the economic growth of both countries promising. On the other hand, many Chinese companies are engaged in several development projects in Ethiopia. Road, railways, and telecommunications are among the major projects that the Chinese companies are involved in.

Chinese investors are being attracted to invest in Ethiopia from time to time. This year alone, Ethiopia has attracted companies with projects worth 14.5 Billion Birr. And Chinese companies are on the leading position in terms of capital and in manufacturing industry engagement followed by India and Turky. Over the past six months, 121 investment projects have been set operational and 45 are Chinese with a capital worth more than 3 billion Birr, According to Mekonen Hailu, Communication Directorate Director of the Ethiopian Investment Commission.

Observing the nation’s stability under the state of emergency, ten giant Chinese companies have also decided to invest in Ethiopia. From these ten, five of the companies are licensed to invest in textile and garment.

He said though most of the companies are interested in investing in textile, garment and leather products, there are still untapped major areas of opportunity like agriculture, livestock, manufacturing, tourism, mining, hydro power and social services.

Mekonen said since industrialization is going to take over the nation’s economy from agriculture to industry-led, the Ethiopian government has given due attention for the manufacturing sector. In this case, it provides special incentives for investor who are willing to be engaged in the sector. These incentives include export incentives, custom duty exemption, income tax holy days, and provision of land at competitive lease price.

According to the Chinese Ambassador to Ethiopia La Yifan, the previous year has been phenomenal for Ethiopia in terms of economic growth. Yifan said despite of all the difficulties related with the global fluctuation of commodity price, the price of coffee in particular, this country managed to achieve eight per cent growth. This is among the highest not only on the continent but also in the world. He noted that the implementation of GTP II is moving steadily ahead in terms of infrastructural development, electricity generation, employment and also industrialization.

Speaking of trade with Ethiopia, he said that China has consistently enjoyed trade circles with the amount of 3 billion USD. “But, we have to try our best to raise Ethiopian exports to China and 97 per cent of the goods produced here are exported to China free from Quota and tariff,” he noted.

In terms of people to people exchange programmes, Ethiopia is one of the largest from Africa in terms of getting Chinese government scholarships. More than 4,000 Ethiopians have been offered such scholarships in China over the past ten years, he noted.

The Chinese president Xi Jinping has also introduced the new One Belt and Road Initiative in the fall of 2013, which aimed at enhancing complementary and synergy of development strategies and promote common progress of participating countries through closer international cooperation. The Initiative has incorporated more than 100 countries including Ethiopia and other East African countries.

According to Chinese State Councilor Yang Jiechi, the Initiative has made good progress in various cooperation and won warm response and active participation over the past three years. The Initiative is expected to create a cooperation that will facilitate long term development and benefit of the people and usher in a better future for all. It also aims to promote common development and win win cooperation, according to an overview of the state councilor.

There are lots of ways for Ethiopia to benefit from the Belt and Road Initiatives, says Yifan. The Djibouti-Addis Ababa railway is one result of the Initiatives. Highway system is under construction to link Ethiopia with neighboring countries. It’s not only in infrastructural but also policy coordination, promotion of trade and people to people relationships that the Initiatives can benefit all countries involved.

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