China and Ethiopia: stories of a relationship


china-ethiopia relations

 

 

It may – or may not – take China either a short (as already predicted by experts, based on its purchasing power parity, the country will have surpassed US by end of this year) or long period (if its military might and its real GDP values have matched that of US, excluding per capita calculations) to replace the superpower status currently held by that so-called ‘the world’s policeman’, and now a slightly weakened one. While Western powers remain a strong foothold in global stage, particularly in Africa, China has gradually challenged their legitimacy, this time with their softer, more pragmatic approach in conducting their foreign relations. Firstly, both China and Africa are hardly democratic societies; they are ruled, oftentimes, by autocratic rulers, many of whom have their own problems. Secondly, unlike Western countries’ ‘human-rights-first’ consensus, China’s diplomats mostly adhere themselves to ‘non-interference’; they won’t make use of multilateral forums, and instead place strong pressure on bilateral agreements between China and those respective states. Thirdly, China welcomes everyone else who leads the government, be they liberal democrats, socialists, far-right, and what have you.

No great powers are totally great, I should be frank; US, and other European countries you name them (UK, France, Germany, so and so), as so-called the world’s guardians of human rights and democracy, supports dictators, intervenes militarily (frequently with gross violations they themselves commit), and usurps natural resources elsewhere with little regard to the people left behind. China? It can’t avoid itself from supporting autocrats, dictators, cronies, plutocrats, oligarchs, whatever, and all its agenda, or its final goals, are, business as usual, obtaining full control of these natural resources. But we should be objective with what they achieved so far: millions of people, thanks to their countries’ robust relationships with US, have successfully studied in the world’s best universities, returning home with huge intellectual awareness, and wider perspectives. China has brought with it huge investments in infrastructure, industrial production, and even new buildings for them to stay in. Each of them has ups and downs, and this is where we should assess them fairly and neutrally.

China-Ethiopia relations is one unique illustration in international relations, especially in the current, ongoing China-in-Africa discourse as seen on media nowadays. For years, Ethiopia has seen unprecedented levels of investment in its infrastructure, most of which is assisted by China. Dams, highways, power stations, telecom lines, and rail networks, almost all of which are built with Chinese loans and expertise. Ethiopia may have little natural resources to offer to China, but they have one huge asset they can make use of: human capital. With a population reaching 90 million, and the growth rate staggeringly high for long term, Chinese companies eye new opportunities in earning new profits. Some companies have permanently invested themselves across the country, set up factories, and employed local labor, bringing mutual hopes that such patterns will firstly not only benefit China’s businesses, but also the country’s manpower themselves.

Nonetheless, there remain huge concerns in regard to their bilateral relations. Many local businesses have been wiped out as Chinese firms sweep in; Ethiopia’s external debts swell again; there remains strong nationalist sentiment within the country, dubbing China as ‘neo-colonialists’. Corruption, bureaucracy, and low skillfulness remains a challenge within the government itself, and these issues will have to be solved sooner or later.

Nonetheless, despite the ups and downs, prospects remain high in this African country.

Read their full chronology, and the relations’ current condition, in International Policy Digest.

 

Excerpt (one section):

 

Loans and Government Contracts Highlight China’s Engagement

By 2005, China’s embassy in Addis Ababa hosted more high-level visits than any Western mission and Chinese companies had become a dominant force building highways and bridges, dams and power stations, cell phone networks, schools, and pharmaceutical factories. Ethiopia’s trade minister said that “China has become our most reliable partner.” China became involved in nearly every aspect of Ethiopia’s economy. One agreement in 2006 with three Chinese companies is valued at $1.5 billion in commercial suppliers’ credit at Libor (interbank lending rate) plus 1.5 percent to develop cellular and 3G services across Ethiopia.

Chinese companies built and largely financed the $365 million dam on the Tekeze River in northern Ethiopia. The Industrial and Commercial Bank of China is funding the Dongfang Electric Machinery Company to supply electrical equipment and turbines for the Gibe III dam on the Omo River. Environmental groups have expressed concern about potential damage to communities along the river and its impact on Lake Turkana in neighboring Kenya. Another Chinese company with Export Import Bank financing agreed to build a high-tension line for supplying electricity to Addis Ababa. These large loans contain a grant component, although the terms are not always transparent. The grace period for the two hydro projects is three years and the loans mature at the end of ten years. The interest rate is Libor plus 1.8 percent to 2.35 percent. China does not offer grant budgetary assistance to Ethiopia. China also won the contract for building power transmission lines from the Grand Renaissance Dam on the Blue Nile River.

In 2010, the China Road and Bridge Corporation signed a $67 million contract to expand the Addis Ababa airport. Chinese companies are building about 70 percent of the roads in Ethiopia, including the highly visible Addis Ababa Ring Road. Chinese soft loans often provide financing for bids below cost and sometimes with no bidding process. Chinese companies have largely displaced those from South Korea and Japan that had previously been important in road construction. Because these projects are seen and used by so many Ethiopians, they tend to create considerable good will.

In 2010, China and Ethiopia announced loans to cover the cost of a light rail system in Addis Ababa, the purchase of nine vessels for Ethiopian Shipping Lines, and the construction of 200 buildings for the Ethiopian Housing Corporation. The following year, the China Railway Group and Ethiopian Railway Corporation signed a $1.1 billion agreement for construction of the first phase of the Ethio-Djibouti railway project. By 2013, loans from China for this project reached about $3 billion. The two countries also signed a $100 million loan for the construction of deep water wells and $300 million memorandum of understanding for support of projects in Ethiopia’s master plan. By the end of 2011, China’s Export-Import Bank lending to Ethiopia had reached $1.8 billion. Ethiopia has become one of the largest recipients in Africa for credit lines from the Export-Import Bank.

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