Structural Features and Implications of Ethiopia–China Trade and Foreign Direct Investment Relations (2000–2024)

Abstract

Ethiopia–China relations constitute one of the strongest China–Africa ties and is an example of emerging South–South cooperation in the contemporary global context. This study examines the structural features and implications of Ethiopia–China trade and foreign direct investment (FDI) relations since 2000. It used a convergent-parallel mixed research approach and case study design. Data were collected from both primary and secondary sources. Data were analyzed through a combination of descriptive statistics (percentages), thematic analysis, document analysis, and discourse analysis. The study indicated that Ethiopia’s foreign trade and FDI climate are highly dominated by China. Bilateral trade is marked by an asymmetrical structure: Ethiopia exports primarily agricultural and mineral products, while imports are largely manufactured goods. Chinese firms in Ethiopia are predominantly concentrated in the manufacturing sector and prefer wholly owned investments over joint ventures. Ethiopia–China economic relations benefit Ethiopia through market access, infrastructure development, establishing industrial parks (IPs), and employment opportunities. The partnership also facilitates investments at a competitive rate, access to affordable goods, and diplomatic support in the regional and international affairs. On the other hand, Ethiopia’s high dependence on China in trade and FDI, wide and sustained trade deficit in favor of China, and risk of debt sustainability remain concerns, highlighting the significance of policy measures to improve the export base, diversify trade partners, and assess the effectiveness of foreign projects in line with the country’s development goals.

Keywords: Ethiopia, China, Trade, FDI, Structural Features, Implications