Following the end of the Tigray conflict in 2022, Ethiopia has sought to recalibrate its economy and pivot away from agriculture towards a raft of jobcreating export industries, notably garments, leather and light manufacturing. Chinese finance and knowhow have played an essential role in this transformation by supporting the development of the infrastructure needed, and providing subsequent investment in the manufacturing projects that have capitalised upon it. More than 4,500 Chineseled projects in construction, power and manufacturing are now operating in the country, according to a recent report of the Ethiopian Investment Commission, an outcome that solidifies China’s position as Ethiopia’s largest foreign investor in terms of project volume and operations.

The country has benefitted from being part of China’s Belt and Road Initiative (BRI) from the project’s earliest days. The US$5 billion Addis Ababa-Djibouti Railway, for instance, broke ground in 2011 and was built largely by two Chinese stateowned companies, the China Railway Group and the China Civil Engineering Construction Corporation.

It started transporting freight in January 2018 and became Africa’s first electrified crossborder line – and the country’s most visible BRI project. The 750kilometre railway connects the capital, industrial parks and dry ports to the Port of Djibouti, one of Africa’s largest. Ethiopia is Africa’s secondmost populous nation, but landlocked; hence the railway is seen as crucial to its ambition to become a regional manufacturing and trading hub.

Other BRIlinked projects include the Dire Dawa Free Trade Zone and the Mainlanddeveloped Eastern Industrial Zone at Dukem, a site where firms manufacture footwear, garments, plastics and light engineering products for export. Energy and green mobility are also becoming priority sectors, and Chinese firms have been instrumental in expanding Ethiopia’s grid and in building renewable projects.

The Adama I and II wind farms, which boast a combined capacity of about 204 MW, for example, are seen as exemplifying concessional Chinese financing when it comes to diversifying Ethiopia’s energy mix, and supporting the electrification of mass transport and the wider industry base. Addis Ababa’s deployment of 100 locally assembled electric buses using Chinese components reflects Ethiopia’s push towards an electric vehicle (EV) ecosystem. While grid capacity and affordability remain constraints, the EV sector offers scope for growth in terms of the charging infrastructure and energystorage solutions.

Much of this activity has been led by Chinese enterprises, and Hong Kong and other Greater Bay Area (GBA) investors are beginning to get in on the act. In 2024, for example, Ethiopian Investment Holdings signed a memorandum of understanding with Hong Kongbased West Data Group for a US$250 million data centre and AI training complex.

Construction is also under way on a West Data Groupfunded 20 MW campus in Wolaita Sodom while Shenzhenbased EV manufacturer BYD has a growing footprint in Ethiopia’s emobility market and is wellpositioned to supply vehicles, charging systems and battery solutions. Local assembly using Chinese kits is proving successful and has been seen as fostering  a more structured supply chain, with obvious benefits for the industry as a whole.

Although Ethiopia will continue to face significant challenges in the coming years, with high levels of debt, foreignexchange rationing, electricity shortages and localised security risks that may disrupt supply chains, more opportunities for GBA businesses are steadily emerging. Essentially, Ethiopia now offers a challenging but potentially rewarding frontier at the intersection of infrastructure, industrialisation and green energy.

In addition, the country’s current administration is supportive of trade, exporters enjoy zerotariff access to China, and there is a steady liberalisation of the nation’s finance, logistics and capital markets. Most notably, the Ethiopian Securities Exchange (ESX), the country’s first stock market, was launched in January 2025. Privatisations, such as the planned sale of a stake in Ethio Telecom and expanded publicprivate partnerships in transport and utilities, should also attract foreign investors.

In the country’s growing number of industrial parks, supplychain services (such as trims, fabrics, packaging and machinery maintenance) could benefit from colocation with exporters. In terms of green transport, models for turnkey charging depots, batteryswapping services and renewableplusstorage systems are gaining ground. Digital infrastructure, though underdeveloped, offers potential for Tier2 and Tier3 data centres, AI clusters and cloudadjacent services powered by renewable energy.

Beyond this, Hong Kong’s expertise in logistics and digital trade could well find a role within the EthiopiaDjibouti corridor. With the ESX now operational, Hong Kong’s strengths in brokering, capital raising and foreignexchange hedging could also be leveraged to structure financing for corporates and publicprivate partnerships.

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