The launch of a divisive multibillion-dollar mega dam on the Nile River has sparked a tense diplomatic battle between Ethiopia and Egypt, with Cairo denouncing it as “an unlawful unilateral act” and protesting to the United Nations Security Council.
During an inauguration ceremony on Tuesday, Ethiopian Prime Minister Abiy Ahmed described the US$5 billion Grand Ethiopian Renaissance Dam as a “symbol of Ethiopian unity and national achievement“.
Several regional leaders, including Kenyan President William Ruto and Somalia’s President Hassan Sheikh Mohamud, attended the event.
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Egypt believes the dam will threaten its water supply and cause shortages. Following the inauguration, Cairo warned that it reserved the right to take all measures provided for under international law and the UN Charter to “defend the existential interests of its people”.
Sudan, another downstream nation, has also raised concerns about dam safety and the risk of uncoordinated water releases.
As the diplomatic row escalates, China has largely refrained from taking sides. However, observers said Beijing’s strong ties with all three nations put it in a better position to mediate than any other third party.
China’s involvement in what is Africa’s largest hydroelectric power dam includes providing loans for related infrastructure and contracting Chinese companies to supply equipment and build certain sections.
Loans provided by Chinese firms and banks include US$1.2 billion to fund the dam’s electricity supply lines. Contracts were awarded to companies such as China Gezhouba Group and Voith Hydro Shanghai for various sections of the project.
Beijing has so far avoided a direct mediating role, calling instead for a peaceful, African-led solution. However, Seifudein Adem, an Ethiopian global affairs specialist and visiting professor at Doshisha University in Kyoto, Japan, said China’s strong ties with and trust from both Egypt and Ethiopia meant it was in a better position to play a mediating role.
“It can do so more effectively and, if it wishes, more assertively than any other third party,” he said.
The dam dispute is one of the hotspot issues that China’s special envoy for the Horn of Africa, Xue Bing, has been involved in as part of Beijing’s broader effort to promote peace and development in the region.
Adem said the starting point for China would be to impress upon Egypt that the era when it could exercise comprehensive control over the Nile was gone for good. He said this was because a peaceful resolution of the existing and legitimate differences over the Nile was in the interest of all the states that touched the Nile Valley, as well as China.
Performers wave Ethiopian flags as they sing traditional songs during the mega dam’s inauguration ceremony. Photo: AFP alt=Performers wave Ethiopian flags as they sing traditional songs during the mega dam’s inauguration ceremony. Photo: AFP>
“That both Egypt and Ethiopia are members of the expanded Brics also makes China the ideal mediator on the issue should China decide to assume this challenging role,” Adem said. “I would not be surprised in the least if the Nile diplomacy is thus Sinicised over time.”
Beijing has vast investments in Ethiopia, such as in the Addis Ababa-Djibouti Railway. It has oil investments in Sudan and is a key investor and trade partner in Egypt, particularly in the Suez Canal Economic Zone and the new administrative capital east of Cairo.
According to Adem, China pursues cautious diplomacy when it comes to Ethiopia-Egypt tensions over the Nile.
“It understands the concerns of each side and can therefore contribute to their resolution,” he said.
China’s position was unlike that of the United States and the European Union, which were both seen as more sympathetic to Egypt, or that of the African Union, which appeared to be more sympathetic to Ethiopia, Adem added.
African Union-led talks that began in 2011 have failed to produce a binding deal.
During his first term, US President Donald Trump said it was a dangerous situation and that Cairo could end up “blowing up that dam”. His administration’s efforts to broker a deal failed after years of talks.
Nevertheless, Abiy said the dam was “absolutely not to harm its brothers” and was meant to “electrify the entire region and to change the history of black people”.
The dam, a national source of pride for Ethiopians, is a 5,150 megawatt powerhouse, which is more than double the country’s current capacity. It was financed mostly through domestic bonds and donations.
David Shinn, a former US ambassador to Ethiopia and a professor at George Washington University’s Elliott School of International Affairs, said that although Chinese banks had played an important role in financing parts of the project, the government of China, which had close relations with Ethiopia, Sudan and Egypt, had been careful to avoid engaging in controversy over the dam with the leaders of the three countries.
He said this would almost certainly remain China’s position in the future.
“[China] may call for dialogue among the three parties but will resist taking sides,” Shinn said.
Ethiopian Prime Minister Abiy Ahmed speaks at a ceremony held near the Grand Ethiopian Renaissance Dam on September 9. Photo: Xinhua alt=Ethiopian Prime Minister Abiy Ahmed speaks at a ceremony held near the Grand Ethiopian Renaissance Dam on September 9. Photo: Xinhua>
He said that like Ethiopia, China was also an upstream country engaged in a major hydro project in Tibet that would divert water from downstream India and Nepal. So Beijing was likely to “avoid taking any public position” on the African dispute that jeopardised the rights of upstream countries.
According to John Calabrese, a non-resident senior fellow at the Middle East Institute, China frequently supports “African solutions” and African Union mediation. He said this approach allowed Beijing to avoid playing a direct mediatory role and helped it navigate competing interests and balance its relationships.
Calabrese said Ethiopia welcomed China’s investment and diplomatic backing, while Sudan saw it as a stabilising economic partner, and Egypt – though frustrated by Chinese neutrality – still valued the relationship.
“Despite these divergent expectations, China has paid no evident price for its approach,” he said.
However, Calabrese said Ethiopia’s decision to launch the dam despite warnings from its two neighbours risked destabilising the region, which would jeopardise Chinese investments, supply chains and Belt and Road Initiative projects.
“It also raises the risk that Beijing might be cast as enabling Ethiopia, straining ties with Egypt and Sudan, and eroding soft-power gains,” he said.
Beijing would seek to contain these risks, preserve its reputation as a neutral development partner and maintain access to all three markets, Calabrese added.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.
