Ethiopian Trade Relations With China: Achievement, Challenges And Prospects

The main objective of this study was to examine post1991Ethiopian trade relationswith China, the main focus being on achievements, challenges and prospects.Ethiopia needs China for economic cooperation including trade relation. It cannot allin all depend on the western countries. China’s development experience is generallyconsidered as a role model for Ethiopia to adopt. Moreover, China supports Ethiopiaon different economic issues like aid and soft loan. On the other hand, there are alsoseveral factors pushing China to look towards Ethiopia especially in terms ofEthiopia’s strategic importance and market potential. After the critical analysis oftrade data between Ethiopia and China, this paper empirically proved that Ethiopiaincurs huge deficit in its trade balance with China in the period from1991onwards.The result from cross sectional data sources, i.e. secondary sources, and officialreports, reveal that Ethiopia’s export to China is much less than its imports fromChina. Although trade figures show that there are improvements in the Ethiopia’sexport, the trade balance is still largely in favor of China. Dependence on the exportof few unprocessed agricultural products, weak export performance and geographicfactors are among the reasons for the Ethiopia’s trade deficit.The researcher also provides practical policy recommendations such as: preferentialtreatment to be fully exploited by Ethiopia; leveraging China’s investment in SpecialEconomic Zones; encouraging joint venture between Chinese and Ethiopian firmsamong others.