Media reports have hardly mentioned what the latest episode of sectarian violence in Ethiopia could cost China. Few of the East African country’s foreign investors have more to lose, however. Officials in Beijing see Ethiopia as a hub for the Belt and Road Initiative, an ongoing project to expand China’s sphere of influence by bankrolling infrastructure throughout the Global South. China has poured money into the East African country in a bid to earn its goodwill, but ever-rising tensions between Ethiopian ethnic groups are undermining that strategy.
In early November, Ethiopian Prime Minister Abiy Ahmed declared war on the Tigray People’s Liberation Front (TPLF), the ruling party of the Tigray Region. Abiy accused the TPLF – the most influential representative of Ethiopia’s Tigray minority group – of attacking an Ethiopian military base. The Ethiopian National Defense Force’s ensuing foray into the Tigray Region followed months of tensions between the TPLF-led local government and Ethiopia’s central government.
The subsequent conflict had immediate consequences for China, which raced to evacuate several hundred citizens from the Tigray Region. China Gezhouba Group Co. Ltd., a company linked to China’s government, pulled 402 workers from a project near the Tigrayan capital of Mekelle, and 187 employees of the Chinese state-owned enterprise China CAMC Engineering Co. Ltd. fled the area in vehicles. The Chinese Embassy in the Ethiopian capital of Addis Ababa said that it assisted with the evacuations of Chinese citizens and other foreign nationals.
Abiy’s war on the TPLF has cast doubt on the future of foreign direct investment in the Tigray Region. The Chinese state-owned enterprise China Communications Construction Company Ltd. built Mekelle’s most important industrial park, and companies from Bangladesh, China, India, and the United Kingdom had expressed interest in operating there prior to Abiy’s offensive. The industrial park’s ability to attract foreign investors looks far less certain now.
Ethiopia seems to recognize the potential adverse effects that sectarian strife could have on its business relationship with China. “We know that safety and security, peace, and stability are key to foreign investors and that’s why we are trying to bring the situation back to normalcy, so that the economic and industrialization process that we have started in Ethiopia could continue without major disruption,” Teshome Toga Chanaka, the Ethiopian ambassador to China, said after announcing the successful evacuations of 600 Chinese from the Tigray Region.
Ethiopia’s military captured Mekelle from the TPLF in late November and appears to have all but defeated the group on the battlefield. Nonetheless, the prospect of a lengthy TPLF insurgency looks likely. This possibility raises the question of when Chinese companies can return to the Tigray Region. Gezhouba Group was working on what China’s state media called a $270 million “water supply project,” an enterprise that has become far riskier since November.
Even if Gezhouba Group does have to postpone or abandon that project, the Tigray Region represents just one aspect of China’s wider investment strategy in Ethiopia. By June 2020, Chinese companies had cemented plans to spend $2.7 billion in the East African country through no less than 1,500 initiatives. Ethiopia imports most of its goods from China and only exports more goods to the United States, China’s main rival in Africa. The East African country has also borrowed $16 billion from China, which amounts to half of Ethiopia’s national debt.
Though China’s wide-ranging financial ties to Ethiopia might cushion the economic fallout from the Tigrayan conflict, they could also become new vulnerabilities. To increase pressure on Abiy, the TPLF might choose to target Chinese projects well outside the Tigray Region. The TPLF’s battle with Ethiopian forces has already spilled into other areas, including the Amhara Region and even Ethiopia’s neighbor Eritrea, another key front for the Belt and Road Initiative.
In addition to the threat from the TPLF, Abiy is contending with an insurgency by the Oromo Liberation Front, which Ethiopian officials blamed for a massacre of civilians from the Amhara ethnic group in the Oromia Region in early November. If this type of sectarian violence becomes typical, China may rethink the wisdom of making further investments in Ethiopia.
China’s own ability to affect the outcomes of these conflicts remains limited. While the Belt and Road Initiative has given China a significant economic presence in Africa, Beijing had limited experience in mediating in the continent’s conflicts, in part due to its longstanding policy of “non-interference.” In a notable exception, China helped broker a fragile peace between Sudan and South Sudan, but internal ethnic conflicts – such as the ones plaguing Ethiopia – are more difficult for Beijing to handle from abroad.
In another telling example, Gezhouba Group and other Chinese companies are assisting Ethiopia with the construction of a controversial dam that contributed to a dispute between Ethiopia and Egypt. Yet American diplomats, not Chinese officials, have taken the lead in helping the two African countries resolve that disagreement.
Amid unrest in Ethiopia, Beijing may turn its attention to less problematic East African endeavors. Djibouti, which hosts a sprawling Chinese military base, looks like an obvious choice for continued investment. China has also attempted to strengthen its ties to Eritrea, where the China Shanghai Corporation for Foreign Economic and Technological Cooperation is building a major road.
Even if China chooses to explore opportunities elsewhere in East Africa, Ethiopia seems likely to top Chinese diplomats’ agenda for East Africa. China and Ethiopia have expressed their enthusiasm for expanding military ties, and officers from the Ethiopian military have even received training in China. The Tigrayan conflict and Oromo insurgency notwithstanding, Ethiopia also offers a much more promising environment for foreign direct investment than other East African countries where China has undertaken diplomatic and economic initiatives.
China’s attempt to invest in the petroleum industry in South Sudan, which has swung in and out of civil war for almost a decade, has yielded mixed results and even led to Chinese deaths. In Somalia, China has fared little better: the militant group al-Shabaab, an affiliate of al-Qaeda, struck the Chinese embassy in Mogadishu with a car bomb back in 2015.
By comparison, Ethiopia’s challenges with militancy seem far easier to manage. In 2018, Abiy concluded peace treaties with Eritrea and a rebel group in the Ethiopian region of Ogaden, ending decades-long conflicts that foreign diplomats had considered intractable. If Abiy takes the same approach to the TPLF insurgency, China appears set to reward Ethiopia with greater investment in the immediate future and stronger diplomatic and military ties down the road.