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1 [1] (June 6, 2025)

handle is hein.crs/casegmtidj0001 and id is 1 raw text is: Congressional Research Service Inforrnin g the legislive debate sin ce 1914 Updated June 6, 2025 China's Engagement in Djibouti Djibouti-a small country in the Horn of Africa that hosts the only permanent U.S. military base on the African continent-has transformed itself over the past two decades into a regional trade and logistics hub, with the People's Republic of China (PRC, or China) as its largest investor. China's engagement in Djibouti is multifaceted, ranging from major infrastructure investments to China's first overseas military base, established in 2017. China is Djibouti's largest source of imports and its second largest export destination (after neighboring Ethiopia, a landlocked country of 120 million people that relies on Djibouti for the transit of over 90% of its trade). Djibouti is part of China's Belt and Road Initiative, which aims to develop China- centered global infrastructure, transportation, trade, and production networks (see CRS In Focus IF11735, China's One Belt, One Road Initiative: Economic Issues). U.S. officials and Members of Congress have monitored and raised concerns about China's role in Djibouti given the latter's strategic location, its debt to China, and the close proximity of the PRC base to the U.S. base. Djibouti sits along one of the world's busiest shipping routes on the Bab el Mandeb strait, a strategic chokepoint between the Red Sea and the Gulf of Aden. The country has become a hub for foreign militaries, hosting facilities for former colonial power France, the United States, Japan, Italy, and, most recently, China. Djibouti's economy depends heavily on trade through its ports, and land leases for foreign military bases are an important revenue source for its government. China's growing engagement in Djibouti is emblematic of its shift since 2000 toward a more expansive foreign policy in Africa and beyond (see CRS In Focus IF12566, China and Sub-Saharan Africa). As the PRC has increased its investments and commercial presence on the continent through state-owned and PRC-based firms, its interest in safeguarding that presence has grown. China's People's Liberation Army (PLA) has its largest overseas deployment in Africa, including almost 2,000 troops deployed in UN peacekeeping missions. The presence of the PLA Navy (PLAN) in the Gulf of Aden, where it conducts anti-piracy operations, dates back to 2008. Djibouti is a key resupply node for those operations, through which the PLAN has developed its capacity for far seas defense. The Djibouti base expands the PLA's expeditionary capabilities, and the PLA has since increased exercises with African militaries and pursued other efforts to build security ties, including through the PRC's new Global Security Initiative. China and Djibouti announced in 2024 the elevation of [their] relationship to a comprehensive strategic partnership. U.S. officials have long characterized Djibouti as a strategic and critical counterterrorism partner; to date, the Trump Administration has not communicated changes to the U.S.-Djibouti relationship. For more on the country and U.S. relations, see CRS In Focus IF11303, Djibouti. Figure I. Ports and Foreign Military Bases in Djibouti Source: CRS, using Esri and U.S. State Department data. China's Economic Involvement Djibouti and China have significantly expanded economic ties over the past two decades. PRC investment has helped fuel Djibouti's economic growth: its gross domestic product (GDP) doubled from $2 billion in 2013 to $4 billion in 2023, but its public external debt rose from under 34% of GDP to 68% over that period, largely due to PRC lending. Djibouti is in debt distress, per the International Monetary Fund. PRC institutions hold over half of Djibouti's $2.6 billion external debt obligations, fueling U.S. concerns about PRC influence there. In late 2022, Djibouti suspended debt repayments to China after debt servicing costs tripled and has since reached a debt service moratorium deal with its largest creditor, China's Export-Import (Exim) Bank. China has invested in an array of infrastructure projects in Djibouti. Among the projects PRC firms are building is the $3.5 billion Djibouti International Free Trade Zone (FTZ), set to be Africa's largest; it describes itself as a model of China-Africa cooperation in this new era. Alongside Djibouti's port authority, three Chinese companies have stakes in the FTZ. Other PRC-backed projects include a multipurpose port, a railway connecting Djibouti and Ethiopia, and a pipeline that provides the arid country with potable water from Ethiopia. Those projects were financed with a $1.2 billion loan from China's Exim Bank. PRC companies have connected Djibouti to the Pakistan & East Africa Connecting Europe (PEACE) undersea cable system linking Asia, Africa, and Europe. The PEACE Cable is owned and operated by a subsidiary of Hengtong Group, a PRC state-tied telecommunications firm. One study has suggested that the PRC-financed project, part of China's Digital Silk Road Initiative, could raise Djibouti's GDP and transform it into an international internet and communications hub. U.S. officials have raised concern that data carried by such cables may be vulnerable to espionage.