Tags: Belt and Road Initiative, China, Djibouti, East Africa, Ethiopia, Horn of Africa, and Railways
May 4, 2026
By: Miles Pollard, and Payton Kleidon
China’s extensive investments in Ethiopia’s railways and airports are raising concerns about foreign ownership in the country.
As China deepens its economic engagement across Africa, Ethiopia has become a particularly significant anchor for Beijing’s regional strategy. The decision to extend zero-tariff treatment to imports from 53 African countries beginning May 1 underscores the scale of this broader push. The clearest example in Ethiopia is the $4 billion, 750-kilometer (466-mile) Addis Ababa-Djibouti Railway, a Chinese-financed infrastructure project serving as one of East Africa’s most critical transportation nodes.
The railway provides landlocked Ethiopia with its primary commercial link to the sea via the Djibouti Port of Doraleh. The World Bank estimates that more than 95 percent of Ethiopia’s import-export trade by volume navigates the Addis-Djibouti corridor. Thus, the railway is a vital economic lifeline for the 132 million Ethiopians seeking reliable access to global markets. When it functions well, Ethiopian producers can move goods efficiently. When it does not, the wider economy pays a substantial price.
While the Chinese originally operated the railway, it has since been transferred to the Ethiopian and Djiboutian states. By then, thousands of workers had reportedly been trained in operations, maintenance, and safety management. While the railway corridor has become a massive boon for the Ethiopian economy, certain issues have limited the project’s full potential. Frequent railway theft and vandalism, combined with political instability and unreliable power grids, have markedly slowed operational speeds.
As of 2024, Ethiopia owes $3 billion for this project and $14 billion in total for other projects Beijing has invested in. Half of Ethiopia’s outstanding foreign debt is owed to China, though some restructuring efforts have occurred. While China’s role in Ethiopia is a strategic development worth monitoring, it is not limited to the Addis-Djibouti rail corridor.
The Bishoftu Airport, expected to be the continent’s largest when completed sometime after 2029, is being constructed, at least in part, by the state-owned China Civil Engineering Construction Corporation. The airport is projected to cost $12.5 billion and handle between 60 and 110 million passengers and 3.73 million tons of cargo. While not an outright Chinese project, it does suggest that Beijing remains a key player in Ethiopia’s next major infrastructure push.
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In fact, the US State Department’s 2025 Investment Climate Statement notes that China is the largest source of foreign direct investment in Ethiopia. Therefore, the Addis Ababa-Djibouti line and the Bishoftu Airport are simply the largest footholds for China in Ethiopian infrastructure, logistics, and industrial development. Moreover, Ethiopia’s own domestic constraints make outside capital more consequential.
The Heritage Foundation’s 2026 Index of Economic Freedom assigns Ethiopia a score of 48.1, ranking it 155th worldwide. Weak rule of law, an uncertain regulatory framework, and underperformance across key policy areas are critical aspects the index considers in its evaluation of the country.
Additionally, the World Bank projects that 9 percent of Ethiopians will be under the $3-a-day poverty threshold in 2025, up from 33 percent in 2015. Meanwhile, the International Monetary Fund reports resilient growth, falling inflation, and meaningful reform progress in Ethiopia, even as its joint debt sustainability analysis still finds the country in debt distress and stresses the need to restore debt sustainability and sustain reform momentum.
While these infrastructure projects are important commercial assets for the landlocked country, Chinese financing comes with understandable tradeoffs. When a foreign power, especially of Beijing’s stature, holds sizable portions of a nation’s public debt, that relationship naturally deserves closer attention from policymakers, especially given the recent ownership transfer of a Sri Lankan port back to its Chinese builders.
Ethiopia is a vital case study in how Chinese capital and construction capacity are becoming embedded in vital commercial sectors. Sustained foreign investments in a country’s logistics backbone can create commercial advantages, deepen institutional familiarity, and generate long-term influence that may matter later, especially in a strategically sensitive region like the Horn of Africa. As Ethiopia relies on foreign-funded infrastructure for growth, Washington should closely monitor Beijing’s expanding influence.
About the Authors: Miles Pollard and Payton Kleidon
Miles Pollard is a policy analyst for Economic Policy in the Center for Data Analysis at The Heritage Foundation. His work has been cited or published in media outlets including The Epoch Times, The Washington Times, and RealClear Policy. Pollard earned his Master of Public Policy from Pepperdine University, with concentrations in Economic Policy and National Security. During his time at Pepperdine, he also served as the editor-in-chief of the Pepperdine Policy Review. He earned his bachelor’s degrees in both Economics and International Studies from the University of West Florida.
Payton Kleidon is a member of The Heritage Foundation’s Young Leaders Program for the spring of 2026 and an intern at the Thomas A. Roe Institute for Economic Policy Studies. He is a graduate of San Diego State University and a former journalist for the Leadership Institute.