8 ms·

Ethiopia seemingly has an incredibly good relationship with China. The lion's share of FDI in Ethiopia is from China, and much of it goes towards large infrastr

Ethiopia seemingly has an incredibly good relationship with China. The lion's share of FDI in Ethiopia is from China, and much of it goes towards large infrastructure projects. Flying through the airport in Addis recently I was surprised to see multiple Chinese restaurants, a special lounge for Chinese travelers, and signs everywhere in Chinese. It's great to see economic cooperation working out so well on so many levels!

component 8y ago
Ethiopian here Yes, Chinese contractors are having a big boom (banks, stadiums, airports & roads) There's a shortage of foreign currency due to the mega projects underway - medicine, electronics, car prices have nearly doubled
- dvfjsdhgfv 8y ago
  > medicine, electronics, car prices have nearly doubled What about salaries? Is the net result positive for you?
  - bytematic 8y ago
    I imagine most or almost all of those jobs are going to chinese firms and citizens
  - component 8y ago
    Salaries went up a bit also tax was reduced - needless to say the price spikes aren't proportional but it's a start
- gandreani 8y ago
  > There's a shortage of foreign currency due to the mega projects underway Could you elaborate? How is there a shortage if there's a ton of foreign investment coming in?
  - nwah1 8y ago
    This sounds more like a case of rental values of locations increasing, as the price of prime urban land is bid up, requiring laborers be paid more to achieve the same standard of living, and inflating costs across the board. Same issue that all booming cities face, whether it is New York, San Francisco, London, Hong Kong, Tokyo, or anywhere else. Some manage it better than others.
  - Habesha 8y ago
    Not all mega infrastructure projects are foreign aid/loan financed. For example the 6000 MW Nile Grand Renaissance Dam is self financed by Ethiopia. Beside there is a deficit between export and import leading to currency shortage. https://www.reuters.com/article/ethiopia-energy-idUSL6N0N91QM20140423 https://www.reuters.com/article/ethiopia-energy-idUSL6N0N91Q...
- andrewksl 8y ago
  Genuinely curious: As far as you know, are the projects synergistic, or do the Chinese offer lopsided/predatory deals?
andrewksl 8y ago
As hopeful and excited as I am for Ethiopia, the cynical part of me can't help but see the relationship as less cooperation and more exploitation.
- deleted 8y ago
  [deleted]
- freehunter 8y ago
  Many countries grew rich off of US exploitation. Japan and then China wouldn't be the power houses they are today if it wasn't for the US needing a place to offload cheap and dirty manufacturing. True, many more countries were just exploited without any gain, but there are factors that can tilt the balance in your favor. The fact that they're a strong economy with a strong military and have a government wary of imperialism bodes well, as long as the can keep the number of revolutions and civil conflicts low. Stability is the key.
- temp-dude-87844 8y ago
  Let's have a nuanced conversation about this. The article suggests that Ethiopia may be trying to position itself as a destination for manufacturing. In today's global economy, regardless of value judgments about its merits, less developed countries have an opportunity because they can offer much lower labor costs than highly-developed states. However, structural changes that result from large-scale gainful employment cause costs to rise over time, as a middle class emerges, people place themselves into global context, and begin to ponder whether they can realistically achieve something better. This is happening in China today. The continent of Africa remains the last frontier in outsourcing manufacturing, but right now it's not competitive: transport costs are high, there are issues with utilities, capricious governments, and no established concentration of expertise. The Chinese involvement is working hard on improving these for other reasons, but ironically it may enable Ethiopia to begin to take on roles that China has now in the global supply chain. It may also be deliberate: during a gold rush, most money was made by those who enabled the prospectors, not the prospectors themselves.
ende 8y ago
It’s really not polite to celebrate colonialism.
- jeffreyrogers 8y ago
  This isn't colonialism.
- _emacsomancer_ 8y ago
  Ethiopia is one African country that was never really colonised - though it was occupied by Mussolinian Italy for a few years.
dalore 8y ago
This might not be as good as you think: https://news.ycombinator.com/item?id=15272413 https://news.ycombinator.com/item?id=15272413 China will cause the country to become indebted to it and when they can't make the repayments offer to helpfully take full control of it.
- beat 8y ago
  coughcoughIMFcough More broadly, taking on debt to build the infrastructure needed to level up industrial capabilities isn't exploitation. Building better energy grids, transportation, and communication infrastructure is expensive. It's fundamentally no different than software startups taking on fundraising rounds to enable growth. As long as the leadership isn't irresponsible about it, there's nothing wrong with it and it should easily pay for itself. The important thing for debt-for-infrastructure planning is to keep corruption manageable, so you don't wind up borrowing to build boondoggles that are for the personal enrichment of the the well-connected rather than the good of the country. At any rate, China is no more predatory in this regard than the IMF, the World Bank, or other western financial institutions. They have a surplus of capital and need to invest it somewhere. The goal is not imperialist, but rather capitalist.
  - eloff 8y ago
    I think what you say is true, but that you very much underestimate China's imperialist ambitions.
  - dalore 8y ago
    China is more imperial. They have a really long 100 year view. They don't mind losing money to gain a long term advantage. Yes it's exactly/similar behaviour to the IMF. Doesn't make a difference though to the people.
- jrs95 8y ago
  If the local government is already highly corrupt this might not even ultimately be a bad thing for most Ethiopians.
- thablackbull 8y ago
ak39 8y ago
A short summary of China's Belt and Road Initiative: https://www.youtube.com/watch?v=EvXROXiIpvQ https://www.youtube.com/watch?v=EvXROXiIpvQ (6 min)
joelhaasnoot 8y ago
Note that this is probably also because of foreign travelers in transit through the airport. Ethiopian Airlines is growing fast and is a major player in travel to a lot of African countries. See for instance https://www.reuters.com/article/us-ethiopia-airlines/ethiopian-airlines-to-step-up-expansion-with-more-deals-and-jets-idUSKBN1I81N5 https://www.reuters.com/article/us-ethiopia-airlines/ethiopi... A family member on a recent flight between Chad and Addis Abeba told me that 85% of passengers on the flight were Chinese.
jjcc 8y ago
It's more than just good relation, its a --quite-- assistant to Ethiopia from Chinese government to export nation build expertise with a goal of creating a prosperous area that ultimately as an investor also can benefit from the development and growth by itself. Contractors and private companies are just tip of iceberg. A lot of hi level government cooperations , government sponsored think tank activities[1] which might play a more important role than private business activities. Chinese are coaching Ethiopia to build a nation. It's the same journey that China itself experienced for last 30 years. The nation building expertise partially comes from tons of competing local government policy makers fighting for the prosperity of their home cities on the vast experiment field of 1.3 billion people, but in early years of struggle also from Hongkong,Taiwan entrepreneurs and even a foreign government with their management expertise when China was as poor as many Africa countries and with no expertise. During the time (in 1996) I created the first web site for CS-SIP[2], I witnessed local Chinese government officials learned from Singapore coaches like pupils. Why Ethiopia? Because although it's a democracy but the Ethiopian political ecosystem is closer to an "Orwellian regime" that makes building nation possible. It's totally not because Chinese particularly like a regime. Actually Chinese are ideology agnostic and pragmatic. Chinese have a better understanding that this kind of "oppressive" governance creates less chaos. For example Chinese construction contractors almost always hire Chinese worker from China. The real reason is those are the only qualified teams[3] be able to get the job done. However in a democratic countries some sponsored NGO and activists will speak out the "true" that Chinese companies have job discrimination against local people. Then there are massive protests by local people Th Projects can not continue. These incidents happened many times in non-regime countries. Why quite? Isn't nation building expertise is more valuable and worth to promote than business building expertise so larger population can benefit from? There are a couple of reasons: 1.Western journalists are almost all belief driven people with a little different mindset of HN readers with proof driven thinking. Most of them are activists in the guise Journalist who want to promote their own ideology. They mentally deny the real cause of fast growth in Ethiopia because both governments are regimes so they unintentional hide the truth. 2.Chinese government don't want to be to visible so the nation building is less likely to be interrupted. The international community won't see Chinese effort as an mutual beneficial economic activity but as an expansion to gain regional influence like Soviet Union or Iran because international community is largely brain washed by Orwell's works like 1984 which used to be valid many years ago and still valuable but not applicable everywhere any more. [1]I have a old friend did consulting job helping policy making for Ethiopia [2] https://en.wikipedia.org/wiki/Suzhou_Industrial_Park https://en.wikipedia.org/wiki/Suzhou_Industrial_Park [3] https://twitter.com/elonmusk/status/968608879914270721?lang=en https://twitter.com/elonmusk/status/968608879914270721?lang=...

component 8y ago

Ethiopian here Yes, Chinese contractors are having a big boom (banks, stadiums, airports & roads) There's a shortage of foreign currency due to the mega projects underway - medicine, electronics, car prices have nearly doubled

dvfjsdhgfv 8y ago
> medicine, electronics, car prices have nearly doubled What about salaries? Is the net result positive for you?
- bytematic 8y ago
  I imagine most or almost all of those jobs are going to chinese firms and citizens
- component 8y ago
  Salaries went up a bit also tax was reduced - needless to say the price spikes aren't proportional but it's a start
gandreani 8y ago
> There's a shortage of foreign currency due to the mega projects underway Could you elaborate? How is there a shortage if there's a ton of foreign investment coming in?
- nwah1 8y ago
  This sounds more like a case of rental values of locations increasing, as the price of prime urban land is bid up, requiring laborers be paid more to achieve the same standard of living, and inflating costs across the board. Same issue that all booming cities face, whether it is New York, San Francisco, London, Hong Kong, Tokyo, or anywhere else. Some manage it better than others.
- Habesha 8y ago
  Not all mega infrastructure projects are foreign aid/loan financed. For example the 6000 MW Nile Grand Renaissance Dam is self financed by Ethiopia. Beside there is a deficit between export and import leading to currency shortage. https://www.reuters.com/article/ethiopia-energy-idUSL6N0N91QM20140423 https://www.reuters.com/article/ethiopia-energy-idUSL6N0N91Q...
andrewksl 8y ago
Genuinely curious: As far as you know, are the projects synergistic, or do the Chinese offer lopsided/predatory deals?

andrewksl 8y ago

As hopeful and excited as I am for Ethiopia, the cynical part of me can't help but see the relationship as less cooperation and more exploitation.

deleted 8y ago
[deleted]
freehunter 8y ago
Many countries grew rich off of US exploitation. Japan and then China wouldn't be the power houses they are today if it wasn't for the US needing a place to offload cheap and dirty manufacturing. True, many more countries were just exploited without any gain, but there are factors that can tilt the balance in your favor. The fact that they're a strong economy with a strong military and have a government wary of imperialism bodes well, as long as the can keep the number of revolutions and civil conflicts low. Stability is the key.
temp-dude-87844 8y ago
Let's have a nuanced conversation about this. The article suggests that Ethiopia may be trying to position itself as a destination for manufacturing. In today's global economy, regardless of value judgments about its merits, less developed countries have an opportunity because they can offer much lower labor costs than highly-developed states. However, structural changes that result from large-scale gainful employment cause costs to rise over time, as a middle class emerges, people place themselves into global context, and begin to ponder whether they can realistically achieve something better. This is happening in China today. The continent of Africa remains the last frontier in outsourcing manufacturing, but right now it's not competitive: transport costs are high, there are issues with utilities, capricious governments, and no established concentration of expertise. The Chinese involvement is working hard on improving these for other reasons, but ironically it may enable Ethiopia to begin to take on roles that China has now in the global supply chain. It may also be deliberate: during a gold rush, most money was made by those who enabled the prospectors, not the prospectors themselves.

ende 8y ago

It’s really not polite to celebrate colonialism.

jeffreyrogers 8y ago
This isn't colonialism.
_emacsomancer_ 8y ago
Ethiopia is one African country that was never really colonised - though it was occupied by Mussolinian Italy for a few years.

dalore 8y ago

This might not be as good as you think: https://news.ycombinator.com/item?id=15272413 https://news.ycombinator.com/item?id=15272413 China will cause the country to become indebted to it and when they can't make the repayments offer to helpfully take full control of it.

beat 8y ago
coughcoughIMFcough More broadly, taking on debt to build the infrastructure needed to level up industrial capabilities isn't exploitation. Building better energy grids, transportation, and communication infrastructure is expensive. It's fundamentally no different than software startups taking on fundraising rounds to enable growth. As long as the leadership isn't irresponsible about it, there's nothing wrong with it and it should easily pay for itself. The important thing for debt-for-infrastructure planning is to keep corruption manageable, so you don't wind up borrowing to build boondoggles that are for the personal enrichment of the the well-connected rather than the good of the country. At any rate, China is no more predatory in this regard than the IMF, the World Bank, or other western financial institutions. They have a surplus of capital and need to invest it somewhere. The goal is not imperialist, but rather capitalist.
- eloff 8y ago
  I think what you say is true, but that you very much underestimate China's imperialist ambitions.
- dalore 8y ago
  China is more imperial. They have a really long 100 year view. They don't mind losing money to gain a long term advantage. Yes it's exactly/similar behaviour to the IMF. Doesn't make a difference though to the people.
jrs95 8y ago
If the local government is already highly corrupt this might not even ultimately be a bad thing for most Ethiopians.
thablackbull 8y ago

ak39 8y ago

A short summary of China's Belt and Road Initiative: https://www.youtube.com/watch?v=EvXROXiIpvQ https://www.youtube.com/watch?v=EvXROXiIpvQ (6 min)

joelhaasnoot 8y ago

Note that this is probably also because of foreign travelers in transit through the airport. Ethiopian Airlines is growing fast and is a major player in travel to a lot of African countries. See for instance https://www.reuters.com/article/us-ethiopia-airlines/ethiopian-airlines-to-step-up-expansion-with-more-deals-and-jets-idUSKBN1I81N5 https://www.reuters.com/article/us-ethiopia-airlines/ethiopi... A family member on a recent flight between Chad and Addis Abeba told me that 85% of passengers on the flight were Chinese.

jjcc 8y ago

It's more than just good relation, its a --quite-- assistant to Ethiopia from Chinese government to export nation build expertise with a goal of creating a prosperous area that ultimately as an investor also can benefit from the development and growth by itself. Contractors and private companies are just tip of iceberg. A lot of hi level government cooperations , government sponsored think tank activities[1] which might play a more important role than private business activities. Chinese are coaching Ethiopia to build a nation. It's the same journey that China itself experienced for last 30 years. The nation building expertise partially comes from tons of competing local government policy makers fighting for the prosperity of their home cities on the vast experiment field of 1.3 billion people, but in early years of struggle also from Hongkong,Taiwan entrepreneurs and even a foreign government with their management expertise when China was as poor as many Africa countries and with no expertise. During the time (in 1996) I created the first web site for CS-SIP[2], I witnessed local Chinese government officials learned from Singapore coaches like pupils. Why Ethiopia? Because although it's a democracy but the Ethiopian political ecosystem is closer to an "Orwellian regime" that makes building nation possible. It's totally not because Chinese particularly like a regime. Actually Chinese are ideology agnostic and pragmatic. Chinese have a better understanding that this kind of "oppressive" governance creates less chaos. For example Chinese construction contractors almost always hire Chinese worker from China. The real reason is those are the only qualified teams[3] be able to get the job done. However in a democratic countries some sponsored NGO and activists will speak out the "true" that Chinese companies have job discrimination against local people. Then there are massive protests by local people Th Projects can not continue. These incidents happened many times in non-regime countries. Why quite? Isn't nation building expertise is more valuable and worth to promote than business building expertise so larger population can benefit from? There are a couple of reasons: 1.Western journalists are almost all belief driven people with a little different mindset of HN readers with proof driven thinking. Most of them are activists in the guise Journalist who want to promote their own ideology. They mentally deny the real cause of fast growth in Ethiopia because both governments are regimes so they unintentional hide the truth. 2.Chinese government don't want to be to visible so the nation building is less likely to be interrupted. The international community won't see Chinese effort as an mutual beneficial economic activity but as an expansion to gain regional influence like Soviet Union or Iran because international community is largely brain washed by Orwell's works like 1984 which used to be valid many years ago and still valuable but not applicable everywhere any more. [1]I have a old friend did consulting job helping policy making for Ethiopia [2] https://en.wikipedia.org/wiki/Suzhou_Industrial_Park https://en.wikipedia.org/wiki/Suzhou_Industrial_Park [3] https://twitter.com/elonmusk/status/968608879914270721?lang=en https://twitter.com/elonmusk/status/968608879914270721?lang=...