AERC Scoping Study on the Chinese Relation with Sub Saharan Africa: The Case of Ethiopia

"In this study an attempt to give the scope of Chinese engagement in Ethiopia is made. We have attempted to look this issue through the vectors of cooperation agreements between the two countries as well as their linkage through investment, trade and aid. We found that in the last five years the Ethio-Chinese relation has grown quite strongly. This is found to be,in particular, important in the areas of road construction, supply of manufacture goods from China, telecommunication and installation of big electric power stations by Chinese companies. The success of Chinese firms in this areas is explained by the political ties their government created with the government of Ethiopia, low initial bidding price offered by Chinese firms in bidding for such projects, the self financing options (sometimes referred as ‘vendor financing’) that they give to the Ethiopian government owing to the support they get from the Chinese government, as well as the relatively lower level of skilled Ethiopian personnel (in terms of negotiation,technical and managerial skill) as well as poor institutional capability of the Ethiopian experts in various ministries who are dealing with the Chinese firms."