Ethiopia is stepping up efforts to narrow its widening trade deficit with China by using new duty-free market access, domestic economic reforms and export-promotion initiatives to expand sales to the world’s second-largest economy.
China remains Ethiopia’s largest trading partner and leading source of foreign direct investment, with more than 4,500 Chinese companies operating in manufacturing, infrastructure and services. However, bilateral trade remains heavily tilted in China’s favour.
During the 2025/26 fiscal year, Ethiopia imported nearly USD 21 billion worth of goods from China, largely machinery, construction materials, manufactured products and industrial inputs. Ethiopian exports to China, by contrast, reached USD 369 million, leaving a substantial trade imbalance.
The figures were highlighted at the *“Big Market for All: Export to China”* forum held in Addis Ababa on Aug. 19, where Ethiopian and Chinese companies signed 33 cooperation agreements valued at more than USD 330 million. The agreements cover coffee, oilseeds, pulses, leather, mineral products and textiles.
Kassahun Gofe, Minister of Trade and Regional Integration, said Ethiopia was seeking to use the Chinese market to accelerate domestic production, diversify exports and improve foreign-exchange earnings.
He said exports to China had grown at an average annual rate of 92 percent over the past five years, supported by demand for Ethiopian coffee, oilseeds, pulses, leather products and other agricultural goods.
However, the growth in exports remains small compared with the value of imports from China. Chinese involvement in Ethiopian infrastructure, including roads, industrial parks, energy projects and construction, has increased demand for imported machinery, equipment and materials.
The imbalance has placed additional pressure on Ethiopia’s foreign-exchange reserves and strengthened calls for greater domestic processing, import substitution and export-oriented manufacturing.
Kassahun said the government’s Homegrown Economic Reform Agenda was intended to address such structural challenges by liberalising the foreign-exchange market, improving trade logistics, reducing administrative bottlenecks and providing incentives for private-sector investment.
China has also expanded market access for African exporters. On May 1, Beijing began implementing zero-tariff treatment for imports from all 53 African countries with which it maintains diplomatic ties, including Ethiopia. The policy expanded an earlier preferential arrangement that had applied mainly to least-developed countries.
Chinese Ambassador to Ethiopia Chen Hai said the policy could reduce market-entry costs for Ethiopian small and medium-sized enterprises and encourage investment in sectors where Ethiopia has a comparative advantage.
The arrangement is expected to support exports of Ethiopian coffee, sesame, pulses, horticultural products, leather goods and other agricultural and manufactured items that meet Chinese quality, safety and quarantine requirements.
China has also granted market access to coffee beans meeting quarantine requirements from African countries with diplomatic relations with Beijing, creating an additional opening for Ethiopian exporters.
Chang Hui, Deputy Director-General of the Department of Foreign Trade at China’s Ministry of Commerce, said China was committed to expanding imports and strengthening commercial ties with Ethiopia.
“The zero-tariff policy reduces trading costs and enables a wider array of specialty Ethiopian products to reach Chinese consumers,” Chang said at the forum.
He said the policy could benefit farmers, processors and exporters by helping convert Ethiopia’s natural-resource base into higher export earnings.
Zekarias Assefa, Secretary-General of the Addis Ababa Chamber of Commerce and Sectoral Associations, said the forum offered Ethiopian firms a route to establish commercial relationships in a market of more than 1.4 billion consumers.
“Platforms like ‘Big Market for All’ are vital for our business community,” Zekarias said. “They enable investors to secure reliable partners, attract foreign investment and establish long-term commercial networks.”
The 33 agreements signed at the forum demonstrate commercial interest, but their impact will depend on whether Ethiopian suppliers can meet buyers’ standards on volume, quality, reliability, processing, certification and delivery.
Closing a multi-billion-dollar trade deficit will require more than duty-free access. Ethiopia will need to increase agricultural productivity, expand processing capacity, improve logistics, address foreign-currency shortages, secure trade finance and build stronger links between producers, exporters and Chinese buyers.
For policymakers, the immediate opportunity is to turn growing demand for Ethiopian coffee, oilseeds, horticulture, leather, textiles and mineral products into sustained export growth. The longer-term goal is to shift the trade relationship away from dependence on imported machinery and manufactured goods toward a more balanced exchange built on higher-value Ethiopian exports.
