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Ethiopian - China Relations

The People's Republic of China (PRC) is active in Ethiopia in a number of sectors, most notably infrastructure development and telecommunications. China adheres vigorously to its policy not to get involved in "internal" African conflicts and therefore will distance itself from mediation efforts on such issues as the Ethiopia-Eritrea border dispute. It does not appear that the Chinese are under restriction for capacity building. All construction and telecom work is performed by Chinese workers with minimal training for Ethiopian workers.

At a hail and farewell on 19 August 2008 for Chinese Economic and Commercial Counselor Liu Yunbiao and his replacement, Qian Zhaogang, Ethiopian State Minister for Trade and Industry Tadesse Haile extolled the close and growing commercial relationship between China and Ethiopia and said "We have to sustain high (economic) growth so we can be like China. We're following your (China's) model."

China maintains a mil-mil relationship with the ENDF and has engaged in dialogue with ENDF officials on a range of issues including, but not limited to, procurement of Chinese military equipment to proposed training assistance. The ENDF's outdated military equipment is primarily Russian, which has complicated Chinese attempts to arrange purchases of Chinese military equipment. Ethiopia buys weapons and equipment from China. North Korea, engaged in a primarily mil-mil relationship with Ethiopia, provides an additional source of competition for military sales.

The Chinese are clearly focused on business sales fueled by loans from China, as well as cheap arms sales (guns, jeeps, ammunition). The main selling point by China is a "no conditions" clause, except for repayment of loans. There are no human rights restrictions or other stipulations.

Fan Changlong, Vice Chairman of China's Central Military Commission, agreed 22 November 2016 with Ethiopian President Mulatu Teshome and Minister of Defense, Siraj Fegessa, to strengthen the two countries' cooperation in the military arena. The military relations between China and Ethiopia are currently advancing, and they made fruitful exchanges and cooperation through personnel training, military medical care, frequent high-level visits, the United Nations peacekeeping and others, said Fan at his meeting with Mulatu.

Noting that China is Ethiopia's most important and reliable strategic partner, Mulatu said the two countries have strong common interests and similar development model and China's great development achievements have provided good reference for Ethiopia. The president expressed his country's keen interest in working with the Asian country to enhance political trust, boost economic and trade ties, and push bilateral military relations to a new level.

Soft Chinese credits have played an enormous role in enabling the GOE to continue its ambitious plans for improving infrastructure and accelerating economic growth amid declining aid flows from Western donors. China is Ethiopia's second largest import source and export market. Ethiopian exports to China doubled after 2005 following the elimination of Chinese tariffs on certain Ethiopian goods.

The Chinese have a number of commercial interests in Ethiopia, with particularly heavy involvement in telecommunications and road construction. Though the Chinese maintain an embassy staff of only 3 dozen, by 2007 there were over 5,000 nationals working in road construction and telecommunications. There were also about 50 volunteers assigned to Ethiopia.

Some diplomats at the Chinese Embassy have a relationship with the National Intelligence and Security Service (NISS). It is unclear if this relationship is limited to security issues, or if elements of the Chinese intelligence services have an official intelligence liaison relationship with NISS. It is presumed that Chinese intelligence officers assigned to Ethiopia engage in clandestine informational collection against Ethiopia and other targets.

There is some indication that the GOE recognizes the risk that China's provision of technical equipment and access to ETC equipment risks China's technical intelligence collection efforts against Ethiopia's communications infrastructure. Consequently, the GOE has made some efforts to diversify the countries with whom it engages on telecommunications procurements issues.

Senior Ethiopian officials, including Foreign Minister Seyoum, cultivated closer ties with both China and India, in part as a hedge against volatility in Ethiopia's relations with Western powers stemming from human rights problems following Ethiopia's disputed 2005 elections. Representatives of the Chinese Communist Party were reportedly invited to the ruling EPRDF's annual meeting in late 2005, while no European or American officials were invited.

Prime Minister (PM) Meles co-chaired the November 2006 China-Africa Cooperation Forum meeting in Beijing. The PM also held bilateral meetings with President Hu and Premier Wen in November 2006 during the China-Africa Summit. He has emphasized to a visiting senior USG officials in January 2007 that China offers African leaders attractive assistance and credit packages with no strings attached. In a widely-read paper that Meles presented to a development conference in the UK in 2006, the PM identified China as a positive role model for African states because China's "developmental state" had administered consistent policies over time, featuring a strong state role in the economy, that had overcome market failures and delivered rapid development for its population.

China was developing several model farms to introduce techniques to increase yield and improve food security in Ethiopia. PRC loans to Ethiopia over the three years 2005-2008 to support these activities total, at a minimum, in excess of USD 2 billion, including a USD 1.5 billion loan agreement between Chinese firm Zhong Xing Telecommunication Equipment Company Limited (ZTE) and the state-owned Ethiopian Telecommunications Company (ETC). Public sources state that Beijing gave at least USD 708 million in development loans to Ethiopia in 2007, including a USD 208 million line of credit to finance a new power station and expand a cement factory. Chinese firms dominate road construction, holding by one estimate more that 60 percent of the contracts. In addition, approximately 70 percent of tenders funded by the World Bank in Ethiopia are awarded to Chinese companies.

Chinese contracted projects in Ethiopia totaled more than USD 1.7 billion as of 2007 (up from USD 800 million in 2005). China was invested in more than 360 different projects in Ethiopia. Bilateral PRC-Ethiopia trade totaled USD 860 million in 2007, a 20 percent year on year increase. In March 2008, China announced that it would finance through its USD 5 billion China-Africa development fund (created at the 2006 Beijing Summit of the Forum for China-Africa Cooperation) the construction of a private industrial zone on the outskirts of Addis Ababa. The project cost is estimated to be in excess of USD 700 million and up to 80 Chinese firms involved in textiles, leather manufacturing and manufacturing of construction equipment are expected to participate.

According to the Ethiopian Investment Commission (EIC), Chinese companies, with close to 379 projects that were either operational or under implementation in 2012-2017 period, are on top of Ethiopia's investment landscape, both in number and financial capital. Among these companies, 279 were operational in Ethiopia with projects that worth over 13.16 billion Ethiopian birr (over $572 million) during the reported period, while the remaining 100 are under implementation. In terms of employment creation, Chinese companies have created more than 28,300 jobs in various sectors in Ethiopia during the reported period, of which over 19,000 were created in Ethiopia's manufacturing as it is the leading sector in attracting companies from China.

The Sino-Ethiopia relationship is bilateral in the sense that the countries trade between themselves. China contributes to about a quarter of total foreign direct investment (FDI) in Ethiopia and buys 240 million dollars worth of goods. But, it comes with a price tag of a $3.8 billion dollar export bill. For Ethiopia, China is largely measured in terms of the goods that have flooded the country and, of course, development in infrastructure. This past fiscal year alone, China disbursed over half a billion dollars for Ethiopia - an unsurprising amount given the various pledges throughout the years. And as of 2015 - according to China Africa Research Initiative at Johns Hopkins School of Advanced International Studies - Ethiopia has accepted over 13 billion dollars in loans from China since 2000. Contrast this to the less than three billion dollars fund put aside for global aid in 2015.

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Page last modified: 15-02-2018 16:37:36 ZULU