China’s Belt and Road Initiative in Ethiopia and Eritrea: The Construction of Economic Interests Through Development Projects

This chapter analyzes the Chinese contribution to Ethiopian and Eritrean economic development through the Belt and Road Initiative (BRI). Ethiopia and Eritrea are both part of the Belt and Road Initiative. While collaborating much longer, China has made substantial foreign direct investments in these countries since the “Go out” policy of the Chinese government introduced in 1999 and more recently through the BRI. In recent years, China has become involved in manufacturing and telecommunications in Ethiopia and in mining and improving ports in Eritrea. The chapter analyzes the achievements in terms of who benefits from China’s new presence in Africa (Van Dijk, The new presence of China in Africa. University Press, 2009) and what are the dependency relations developed. The main investments are listed and their impact is assessed. In particular in the case of Ethiopia these investments have led to a heavy foreign debt that Ethiopia can hardly serve. In the case of Eritrea it has led to more dependence on China, in particular when the EU started a partial boycott of Eritrea because of its involvement in the Ethiopian civil war. Three positive and three negative effects of the increased presence of China in Africa through the BRI are mentioned: more goods and services are available and they tend to be cheap, investments in infrastructure are achieved, and the bi-polar world of choosing for the United States or the Soviet Union has been replaced by a multi-polar world where Ethiopia welcomes investments by the Chinese, the Dutch (in horticulture), the Turkish (in textiles), and the Americans. On the negative side China often brings Chinese workers for its projects. Some of them stay to start enterprises when their project has finished (Warmerdam & Van Dijk, Chinese traders in Kampala: Status, challenges, and impact on Ugandan society. African Studies Quarterly, 16(3–4), 2017), which are competing with Ethiopian or Eritrean companies and Ethiopia has become heavily indebted because most Chinese assistance comes in the forms of loans. The relation is a win-win situation according to China, where China builds the infrastructure and sells the goods which compete with local providers, while Ethiopia and Eritrea get the desired investments and support for their governments. However, the local manufacturing sector cannot compete with Chinese products. Ethiopia and Eritrea are pressured to vote along with China in the United Nations and its specialized agencies. Not only do these countries depend on China for the investments, they also have to repay them at great cost.