Introduction

The relationship between Djibouti and China is multifaceted, encompassing significant economic, political, and strategic dimensions.

While China has made substantial investments in Djibouti, the nature of this relationship and whether it constitutes a “debt trap” is complex and debated.

Economic Ties

Infrastructure Development
China has invested heavily in Djibouti’s infrastructure, including:

The Doraleh Multipurpose Port

The Ethiopia-Djibouti Railway

The Ethiopia-Djibouti water pipeline

The Djibouti International Free Trade Zone (DIFTZ)

These projects aim to transform Djibouti into a regional commercial and logistics hub.

Investment and Debt

China has invested approximately $14 billion in Djibouti between 2012 and 2020.

Chinese loans account for a significant portion of Djibouti’s external debt, estimated at about 45% of the country’s GDP.

Political Relations

Diplomatic Ties

China and Djibouti established diplomatic relations in 1979.

In 2024, the two countries elevated their bilateral relations to a comprehensive strategic partnership.

Strategic Importance

Djibouti’s location at the entrance of the Red Sea near the Suez Canal makes it strategically valuable for China’s trade routes and maritime interests.

Military Presence

China established its first overseas military base in Djibouti in 2017, signaling a significant expansion of its global military footprint.

Debt Sustainability Concerns

Debt Distress

Djibouti is among 22 African countries considered to be in financial distress by the World Bank.

In late 2022, Djibouti suspended debt repayments to China due to economic pressures.

Debt Trap Debate


While some argue that China’s investments in Djibouti constitute a debt trap, others suggest the situation is more nuanced:

Debt Trap Concerns

Djibouti’s debt-to-GDP ratio is approaching 100%.

There are fears that Djibouti might have to hand over strategic assets to China if unable to repay debts.

Alternative Perspectives:

Some analysts argue that China itself may be trapped by its extensive lending, becoming deeply entangled with assertive African partners.

The strategic importance of Djibouti may compel China to find accommodations rather than risk losing influence.

Conclusion

The Djibouti-China relationship is characterized by significant economic cooperation and strategic alignment. While concerns about debt sustainability and potential loss of sovereignty exist, the situation is complex. Djibouti benefits from infrastructure development and economic opportunities, while China gains strategic positioning. Whether this constitutes a debt trap remains debated, with some arguing it’s a mutually beneficial partnership, albeit with risks, while others see it as part of China’s broader strategy to gain influence through economic means.