Management Economic Systems and Governance to Reduce Potential Risks in Digital Silk Road Investments: Legal Cooperation between Hainan Free Trade Port and Ethiopia

Abstract

This research explores the interplay between innovation, economic systems, governance structures, and law, and how they interact with one another in the context of China and Ethiopia’s investments in the Digital Silk Road. The way cutting-edge methods related to governance and economic systems might help lower the risks involved in major infrastructure projects, like the Digital Silk Road, particularly in light of law and 5G developments, is investigated. China–Africa connections are to be strengthened, sustainable development is to be encouraged, and healthy economic progress is the goal of the partnership between Ethiopia and the Hainan Free Trade Port. The impact of these transnational investments on fair growth and sustainable development is assessed, while exploring the evolving agendas and procedures governing investments. This research draws attention to how the law and legal cooperation between Ethiopia and China may promote mutually advantageous outcomes, promote transparency and governance mechanisms, and lessen the likelihood of disputes. This research on the factors influencing the future of the Digital Silk Road and its consequences for long-term, sustainable economic growth, and business in the area, aims to provide valuable insights for policymakers, development professionals, and academics, and for the copromotion of China and Ethiopia in terms of digital investment. This research relates to the promotion of the African Continental Free Trade Area (AfCFTA), in terms of construction and economic development. It also examines how the DSR raises concerns about data security and privacy, cross-border transactions, technology transfer, and cyberterrorism, as well as encourages digital investment, such as through enhancing digital governance regulations, modernizing international investment agreements (IIAs), and bolstering global health, coordination, and cooperation; the article concludes by analyzing the implications for Africa. The findings show that such cooperation would support Africa’s digital transformation and sustainable development, while strengthening China–Africa cooperation.

1. Introduction

China proposed that the BRI build the Silk Road Economic Belt and the 21st Century Maritime Silk Road, the modern version of the Silk Road, in 2013. It strongly aligns with the United Nations Sustainable Development Goals (SDGs). When mentioning the Belt and Road (B&R), most people think of infrastructure, such as roads, railways, dams, and ports. With the development of technology, the typical B&R infrastructure is also embedded with technology. However, in comparison, the DSR is a more forward-looking component of the B&R. As an organic combination of digital economic development and the B&R, the DSR belongs to the second goal of the B&R, which is “facilities interconnection” [1]. Through exporting Chinese technology and the vision of Chinese Internet governance, it aims to promote digital connectivity among participating countries of the B&R [2]. Key aspects of the DSR are detailed as follows. Specifically, the DSR connects countries through fiber optic cables, mobile communication facilities, and e-commerce, and introduces common technical standards in participating countries, which complement the physical infrastructure [3]. It promotes China’s advantages as a technological power and has become one of the focuses of China’s policies. The Belt and Road Initiative (BRI) holds great significance for the participating countries, as it aims to improve trade and economic cooperation between them, hence having a substantial impact on their respective growth paths. The BRI offers numerous countries the prospect of enhancing their infrastructure, augmenting investment, and enhancing connectivity. It does mean, however, that the participating nations must negotiate certain challenges to maximize the advantages of the BRI, while minimizing any potential risks. Comprehending these dynamics is imperative to ascertain pertinent research subjects that are tackling the consequences of the BRI on local stability and advancement [4]. According to the BRI White Paper, entitled A Key Pillar of the Global Community of Shared Future [5], by the end of 2022, China had signed a Memorandum of Understanding (MoU) on building the DSR with 17 countries, MoUs on e-commerce cooperation with 30 countries, and MoUs on closer investment cooperation in the digital economy with 18 countries and regions. Several related initiatives have been proposed and launched, namely the Global Initiative on Data Security, the B&R Digital Economy International Cooperation Initiative, and others. It has also led to the formulation of the Framework of Standards on Cross-border E-commerce. China is actively strengthening digital infrastructure connectivity and is stepping up the work on digital corridors. Several international submarine cables that were installed have made positive progress and 130 cross-border terrestrial cable systems have been built. China has built many 5G base stations, data centers, cloud computing centers, and smart cities, and has digitally upgraded traditional infrastructure. Its success has important economic, security, and geopolitical implications for the Asia–Pacific region and even the world. Innovation is no longer limited to new product creation or technical breakthroughs. It has influenced every facet of corporate operations, changing how companies handle their people, assets, and strategic choices. Innovative methods have been incorporated into management systems, which has improved productivity, flexibility, and the response to shifting market conditions for businesses.

In terms of the connotations of the DSR, we first express the project categories and types, because it is more appropriate to think of it as consisting of four interrelated and technology-focused initiatives. The first is physical infrastructure in the digital field, the second is the development of advanced technology, the third is e-commerce, and the fourth is international norms for cyberspace and advanced technologies. Through the DSR, China is increasing its investment in digital infrastructure, advanced technology, and e-commerce, advocating network sovereignty as an international organizing principle for Internet governance. In other words, the DSR has promoted the vigorous development of digital investment. In turn, the development of digital investment will also promote the construction of the DSR. However, digital investment also faces serious risks and challenges. Western countries have many concerns about the DSR [6], which has a certain impact on the DSR and investment in it. With the development of new technologies, issues concerning data security and privacy, cross-border transactions, technology transfer, and cyberterrorism have also emerged. In addition, political risks, legal risks, and conflicts arising from the relationship between national initiatives and commercial needs also jeopardize DSR investments. Managing these risks requires the effective use of international law. As an important legal basis for protecting international investments, the role of international investment agreements in reducing the risks in DSR investments and protecting digital investments cannot be ignored [7]. However, as technology evolves, there is a need to reform international investment agreements to address the challenges facing digital investments. The emergence of digital investment has enriched the scope of investment, which makes it difficult for investment definitions in existing international investment agreements to cover digital investment. Whether the host country’s extensive national security review of digital investments constitutes expropriation, whether restrictions on cross-border data flow constitute restrictions on investment-related transfers, and whether full protection and security (FPS) standards can be invoked when digital investments are attacked by cyberterrorism, all of these are unclear. In addition, improving data governance rules and strengthening international cooperation and coordination are also ways to deal with challenges [8]. Ethiopia is an important participant in B&R and DSR and has a particularly important position in Africa. The digital investment cooperation between Ethiopia and China deserves attention. They have launched investment cooperation in telecommunications infrastructure and other digital infrastructure, and in May 2022, Ethiopian Telecom cooperated with Huawei to launch 5G network pilot services in Ethiopia [9]. Ethiopia also actively supports the construction and investment of digital infrastructure. In June 2019, Ethiopia approved the Telecommunications Services Law, liberalizing the country’s telecommunications sector for the first time. According to the law, telecommunications businesses, including telecommunications operators or owners of telecommunications networks, shall be open to private investors, including domestic investors and foreign investors, without restrictions [10]. This represents the partial privatization process of Ethiopian Telecom, Ethiopia’s only telecommunications service provider. Unfortunately, after the government announced its proposal to partially privatize Ethiopian Telecom in 2021, it announced in 2022 that it would postpone the process [11].

2. Literature Review

The ideological impact of DSR investment mainly comes from accusations from Western countries against DSR. By constructing digital infrastructure in BRI, China can control large amounts of data, facilitating China’s projection of power overseas [12]. The United States government is increasingly concerned about the expansion of DSR and believes that China’s expansion of DSR may not only lead to espionage activities but may also endanger the security of the US and its partners. American officials believe China is at the forefront of developing and expanding a new, different, and troubling Internet governance model known as “digital authoritarianism”. This view holds that just as China has developed a technological approach to tighten its control over society, sideline opponents, and dissidents, spread propaganda disinformation, and promote economic exchange without free human rights, China has also transplanted this technology across borders to suppress rulers (Figure 1). Similarly, non-governmental organizations such as Freedom House and Human Rights Watch believe China’s DSR investment is often described as unethical support for authoritarian leaders [13]. This seems to mean that in the context of the DSR, China’s digital investment in Ethiopia not only helps the Ethiopian government control its citizens but also affects Ethiopia’s independence; however, in fact, the Ethiopian government has the right to make its own choices and the ability to act independently. In addition to China, the Ethiopian government has cooperated in digital investment with Germany, France, Italy, the United Kingdom, etc. [14]. In contrast, the independence of ordinary Ethiopian citizens has decreased [14]. DSR raises concerns about free speech in receiving countries, as there are concerns that Beijing is not only exporting equipment but also spreading a culture of digital surveillance. There is also a narrative circulating among Western policymakers that Beijing is exporting China’s “technological dictatorship” model to B&R countries. According to Gramsci, DSR projects encourage China to expand its hegemony and control Indonesia’s economy [15].

2.1. Privacy, Security Risks, and Threat of Cyberterrorism

After B&R is digitized, relevant countries’ data security and confidentiality will face challenges. Although B&R countries work hard to maintain the connection between traditional sovereignty values, maintaining data security is still very complex, especially cross-border data transmission [16]. DSR and its impact on data governance are intertwined with the global health and global expansion strategies of large Chinese e-commerce and ICT companies, such as Alibaba, Huawei, ZTE, Tencent, and Byte Dance. The entry into US, UK, European, and Japanese markets has triggered widespread debate, mainly around privacy and national security issues, as well as technological problems and problems of economic hegemony. China may use 5G networks to conduct espionage and data infringement to blackmail politicians in DSR countries or use trade flows and port access as a punishment mechanism for political opponents [17]. For example, communications are potentially subject to surveillance, cyberattacks, and many other types of cyber interference. Latin American governments can pass legislation prohibiting companies from developing network technology backdoors and using them to intercept data. Still, they seem more concerned about access to high-speed telecommunications technology and China’s assistance than the potential of DSR’s coming privacy and security risks [18]. Regarding cyberterrorism, one characteristic is its political nature, which is the main difference between cyberterrorism and cybercrime; that is, cyberterrorism is political, while cybercrime is personal. In general, there is a reluctance to link attacks by non-agency actors to cyberterrorism because cyberterrorism is waged by terrorist groups or at least by hierarchical groups with ties to foreign powers [19]. Since B&R involves more than 60 countries in Asia, Europe, and Africa and involves global terrorism and global health, close cooperation in DSR expands the visibility and impact of cyberterrorism [20]. Companies are under growing pressure to think beyond maximizing profits and take stakeholders, the environment, and society into account. As a result, cutting-edge CSR strategies that support ethical governance, sustainability, and stakeholder involvement have emerged. Cyberterrorism-related privacy and security hazards are serious threats to both persons and companies. Sensitive personal and corporate data are more vulnerable to theft, manipulation, and destruction as hackers exploit weaknesses in digital infrastructures. Serious repercussions could result, such as loss of money, harm to one’s reputation, and a decline in public confidence. The environment is further complicated by the rise of state-sponsored cyberterrorism, which targets vital infrastructure and interferes with essential services if geopolitical tensions turn into cyber wars. Strong cybersecurity measures such as encryption, frequent security audits, and personnel training are necessary to reduce these threats [21]; promoting global collaboration in the realm of cyber defense has the potential to improve overall security and resistance to these dynamic threats.

2.2. The Hainan FTP’s Role in Supporting Africa’s Growth

In this regard, China can effectively meet Africa’s infrastructure needs through the Hainan free trade port as part of the larger Belt and Road Initiative. By taking advantage of the port’s advantageous regulations, efficient logistics, and availability of Chinese capital and knowledge, African nations may draw in more investment and cooperation in vital sectors such as energy, digital connection, and transportation [22]. This could make it possible to build cross-border infrastructure that fosters trade with China and other major economies and strengthens Africa’s involvement in global supply chains. Furthermore, African countries can benefit from the Hainan free trade port’s emphasis on technology transfer and advanced industries by learning new skills, information, and innovations that can propel their own industrialization and economic diversification. African companies and laborers may be able to gain from joint research and development projects and capacity-building programs by interacting with Chinese organizations and enterprises that operate within the port. Generally, if African enterprises and governments aggressively utilize the port’s special resources and capabilities, the synergies between China’s Belt and Road Initiative (BRI) goals and the Hainan free trade port might open up significant growth prospects for Africa [23].

2.3. Conflicts of the Relationship between National Initiatives and Commercial Need

As China’s presence on the global internet expands, it is important to consider the complexity and instability of state–business alliances rather than assuming a dominant role in state power. Although the profit-maximizing interests of Chinese Internet companies are increasingly integrated with the country’s strategic considerations in building DSR, various conflict points still exist [24]. For example, during the implementation of BRI, how different types of Internet capital (such as state-owned capital and private capital) interact differently with the country is an essential issue for future research; DSR involves different countries’ dynamic, complex, and sometimes unpredictable power relations between institutions and different capital units, which requires ongoing, historically specific research [25]. Although rich countries have excluded Chinese companies from critical infrastructure networks due to security concerns, many developing countries seem unwilling to do so and choose to continue cooperating with China. The goal of national programs like environmental laws or infrastructure development is to advance sustainable growth and public welfare. Nevertheless, this can occasionally impede business objectives in conflicts. Strict rules, for example, can make it more difficult for businesses to operate freely, and corporations might put profit ahead of social obligations, which could undermine national objectives. Working together is crucial for reducing these tensions. Dialogue between stakeholders from different sectors can promote understanding in policies that balance business viability and national interests. This will boost economic growth and satisfy societal demands simultaneously. Fostering a robust and sustainable economy satisfies the goals of the public and private sectors’ cooperation [26].

2.4. Digital Investment and the B&R

When building the infrastructure for electronic global trade platforms, the goal should be to create scalable, secure systems that enable cross-border transactions. Alibaba’s electronic world trade platform aims to connect global small businesses through trade. The platform is related to DSR because B&R countries are the most important areas for Alibaba and Jack Ma’s global expansion plan [27]. Alibaba’s investment in overseas data centers may open the door for other Chinese companies to expand their global operations [28]. In terms of the Beidou Navigation Satellite System (BDS) infrastructure construction, before DSR and BRI were proposed, the coverage of BDS was limited to China. However, now, BDS has become part of B&R and helps products made in China be sold to more than 130 countries in South Asia, West Asia, Eastern Europe, ASEAN, and Africa (Figure 2). China also intends to build a Navigation Satellite System called the Space Silk Road as part of B&R, a China-centric digital infrastructure emphasizing Beijing’s interests [29]. Technology transfer and digital investment have become important forces behind innovation and economic expansion. Digital technologies give organizations access to international markets, increase productivity, and boost competitiveness. Knowledge and intellectual property exchanges between nations promote cooperation and spread creative solutions at the same time. To promote sustainable economic development, this study explores the potential and problems that arise from the interaction between digital investment and technology transfer [30].

The use of cutting-edge technologies like cloud computing, artificial intelligence, and the Internet of Things (IoT) has increased the potential of information systems to assist corporate sustainability. With the help of these technologies, organizations may improve their environmental and social performance, maximize resource utilization, cut waste, and make automated decisions. Real-time monitoring and predictive analytics are also made possible. In terms of optical fiber cable infrastructure construction, the total number of Chinese submarine optical fiber cable projects has grown rapidly, which is regarded as an important milestone in China’s digital rise under DSR. In DSR, optical fiber cable connections combined with Chinese data centers and servers are mainly used to enhance Internet connectivity between the global East and West. Regarding 5G network infrastructure construction, 5G is the cornerstone of digitalization, marked by rapid and continuous technological development [31]. It promotes social and economic development, and the large-scale deployment of 5G networks will unleash the full potential of the fourth industrial revolution. Chinese policymakers see 5G as a prospect for promoting global adoption of Chinese norms and standards [32]. The Belt and Road Initiative (B&R) relies heavily on digital investment to improve connectivity and promote economic growth among member nations. Through the utilization of technology, countries can enhance their infrastructure, optimize trade procedures, and enable international electronic commerce. The focus of this project is on digital infrastructure investments, which are essential to modern economies and include things like broadband networks and data centers. Digital investment also promotes innovation and knowledge sharing, which helps nations adopt cutting-edge technologies and become more competitive. By forming digital alliances, nations ensure that the advantages of globalization are distributed more fairly while also enhancing their economic resilience and advancing sustainable development. All things considered, a major factor in achieving B&R’s full potential is digital investment [33].

2.5. Digital Investment and Governance Mechanisms

The rapid development of digital technologies has paved the way for new organizational forms. It is facilitated by the increased exchange of data and knowledge between individuals and organizations, but this has brought significant new challenges to designing effective governance mechanisms [34]. Specific to B&R digital investment, it is how the data governance of DSR evolves as Chinese companies acquire and process data. In the context of data increasingly becoming a key resource for the digital economy, DSR may become the next chapter of Chinese resource diplomacy. However, shortcomings in Chinese data governance, including cross-border data flow restrictions and a still-evolving data privacy/protection framework, may hinder Chinese companies from entering foreign markets [35]. Regarding capital-importing countries, attracting foreign direct investment in the digital economy requires specific policies and measures. Through encouraging accountability, efficiency, and openness in public administration, digital investment plays a critical role in improving governance procedures. Governments may improve service delivery, expedite procedures, and encourage citizen participation as they embrace digital technologies. However, to guarantee that these investments are in line with ethical norms and national interests, strong governance structures are necessary. Establishing strong frameworks that handle data privacy, cybersecurity, and equitable access is essential to maximizing the benefits of digital investments. This increases public confidence and motivates people to take part in digital projects. Governments can successfully address new issues and guarantee that digital transformation results in better governance and sustainable development by incorporating stakeholder feedback and preserving flexible governance agendas [36]. It promotes investment in digital companies; secondly, it enables traditional non-digital companies to adopt digital technologies; and third, it promotes investment in digital infrastructure [37]. Determining the relative priority and importance of different policies and measures can help governments prioritize and sequence policies and measures and identify priority areas for dialogue and potential cooperation between economies with different regulatory visions, which can inform investors of factors of concern in the above three different areas. Ultimately, civil society and public institutions are key actors in democratizing data governance and redistributing the value generated by data [38]. Increased investment in BDR will lead to more economic activities and closer economic relationships among B&R countries, which will generate more goods and services and bring about cross-border capital flows and payments. Implementing new blockchain technology could power financial transactions. At the same time, this is also in line with B&R Financing Guiding Principles, which mentions that financial integration is “an important support for the implementation of BRI”. Increasing investment in cross-border digital services can drive economic growth in importing countries, highlighting the huge economic value of such digital services [39].

2.6. Digital Investment and Technology Transfer

Technology transfer has received great attention as an important means to promote innovation and international investment [40]. China promotes Chinese technology standards through DSR, from optical fiber systems to mobile communications and OTT services, and the participation of Chinese companies in the entire communications industry will enable Chinese companies to play a greater role in standard-setting bodies. For example, companies such as Huawei and ZTE have successfully formulated 5G standards. These companies have grown from small players to major contributors to standard essential patent intellectual property rights [41]. Now, China’s digital development is beyond doubt [42]. In recent years, well-known Chinese technology companies have widely advocated for and implemented advanced 5G networks, telecommunications systems, data centers, cloud computing, mobile payment systems, e-commerce, intelligence monitoring systems, and a large number of other high-tech tools, which has made China the world’s largest exporter of communications technology. Moreover, without effective technology transfer mechanisms, using more foreign-built digital infrastructure and services is reasonable. It allows both Chinese and non-Chinese technology companies to benefit from existing technological inequalities and develop long-term commercial assets [43]. Organizations must strategically integrate information systems to meet stakeholder expectations, navigate the complexities of sustainable business practices, and advance broader societal and environmental goals as the corporate sustainability landscape continues to change. Businesses can seize new chances for innovation, competitiveness, and long-term value generation by utilizing the power of IS. Mobilizing investment in digital infrastructure from high-income economies to low- and lower-middle-income economies requires effective governance mechanisms. Because a favorable legal and regulatory environment and active investment policies are important components of the digital investment ecosystem, inadequate regulatory frameworks and policies can hinder the adoption and use of digital technologies. For example, there is a lack of data protection and privacy regulations, unnecessary barriers to data collection, transfer, and sharing high market concentration, and failure to prevent anti-competitive behavior (Figure 3) [44].

2.7. Digital Investment and International Cooperation

Countries should create an international investment support program consisting of investment facilities and funds to increase the quantity and quality of investment flows. The beneficiaries of this program should be developing countries (including economies in transition), especially the least developed countries (LDCs) [45]. Building partnerships and industry-based alliances is a useful mechanism. It can implement rapid and revolutionary change in pursuing sustainable and digital investments. As Chinese companies engage in all aspects of digital infrastructure, partner countries have opportunities to close infrastructure gaps and acquire cutting-edge technologies [46]. Understanding how China’s activities align with national development priorities and national needs and assessing any associated risks are critical to maximizing these opportunities [47]. Building partnerships and industry-based alliances is a useful mechanism. It can implement rapid and revolutionary change in the pursuit of sustainable and digital investments [48]. Chinese companies engage in all aspects of digital infrastructure, and partner countries have opportunities to close infrastructure gaps and acquire cutting-edge technologies. Understanding how China’s activities align with national development priorities and national needs, as well as assessing any associated risks, are critical to maximizing these opportunities. Taking Europe as an example, it should not completely oppose China’s investment in Europe or globally [49]. It cooperates with China, but this cooperation is conditional, that is, it cannot ignore risks and ensure that it is conducted sustainably and democratically. To facilitate international cooperation, digital investment is essential. It allows countries to work together on infrastructure development and technology breakthroughs. Nations can more successfully address global issues like economic injustice, public health, and climate change by combining their resources and expertise. Investments in digital technology promote innovation and knowledge exchange, strengthening the bonds between nations in the global economy. International collaborations can also improve cybersecurity protocols, guaranteeing the security of digital infrastructures against attacks. However, confidence among participating countries and open governance structures are necessary for successful digital investment [50]. Based on this, the EU should strengthen its existing review mechanism for China’s digital investment in European countries to minimize the risk of such investment posing a security threat or being used to concentrate government power in authoritarian European countries. These agreements can set precise rules for the protection of investments, procedures for resolving disputes, and equitable treatment of investors. For instance, the Bilateral Investment Treaty (BIT) states that Ethiopian enterprises investing in China are entitled to the same legal safeguards, which will be best for Ethiopian development; legal scholars can be advantageous, and mutual knowledge of one another’s legal systems and practices may improve. Ethiopian legal scholars can impart knowledge on African Union legislation, and Chinese legal professionals can instruct their Ethiopian colleagues on how to handle business conflicts. Legal process transparency can be improved via e-governance technologies to expedite judicial proceedings, Ethiopia can, for instance, take a cue from China’s experience with digital legal platforms and online courts [51]. The creation of cooperative arbitration centers might offer a third with impartiality in conflict resolution. These can focus on business conflicts between Chinese and Ethiopian companies together. China’s sophisticated intellectual property registration and enforcement mechanisms could be advantageous to Ethiopia, and reduced trade disputes can result from the implementation of technology-driven trade facilitation measures. This will strengthen Ethiopia’s legal cooperation and foster a transparent and stable environment for social and economic exchanges, which will ultimately reduce conflict and increase the likelihood of mutually beneficial outcomes. That all-encompassing strategy reduces the possibility of conflicts by encouraging socially conscious and sustainable economic activity in addition to building trust and confidence among investors and enterprises [52].

3. Materials and Methods

This part outlines the materials and methods used to examine topics such as evaluating governance mechanisms, reducing risks in DSR investments, exploring China–Ethiopia cooperation, and its impact on China–Africa relations. This study explores how to effectively solve the risks and challenges in DSR Investments and the significance of digital investment cooperation between China and Ethiopia. In this regard, this study collected and analyzed many materials and used various research methods comprehensively, and concurrent with this change, has been an increasing acknowledgment of the significance of corporate social responsibility.

3.1. Methodology

This section outlines the methods of the existing literature, which is an important foundation for academic research. Various studies can be used to explore the risks that investment in the DSR faces, how to deal with these risks, and the significance of digital investment cooperation between China and Ethiopia. This study used the keywords of DSR, investment risk, digital investment, B&R, governance mechanism, cross-border transactions, technology transfer, international cooperation, and Sino-US competition to search journal articles, books, reports, policy documents, etc. This study extensively reviewed the literature mentioned above. Based on this, we discovered the value and shortcomings of existing research and then determined the research focus of each part. This study conducted a quantitative analysis of the collected data to demonstrate the rationality of our views. It used data on the temporal evolution of political risk, domestic political risk, and international political risk along with B&R and the legal risk assessment index of B&R countries, verifying the severe political and legal risks that DSR investment faces [53]. These in-depth discussions have given people a deeper understanding of the solution to this problem. The research used relevant data on digital investment cooperation between China and Ethiopia. It tests the importance of cooperation between China and Ethiopia and highlights the value of this study. The results of this study provide profound suggestions for resolving risks. These provide a more systematic and reasonable method for this study, thereby promoting the value of the research results. It can provide information to policymakers, legal experts, and relevant stakeholders, help reduce risks in DSR Investments, and promote digital investment cooperation between China, Ethiopia, and even China and Africa [54].

3.2. Data Source

The paper uses publicly available data. The data collected in this study come from the official websites of international organizations and institutions such as UNCTAD, WTO, WB, IMF, and OECD, as well as the official websites of China and countries along the B&R. The paper collects data on political and legal risks in DSR investments. This includes the temporal evolution of political risk, domestic political risk, and international political risk, along with the B&R and legal risk assessment index of B&R countries. Political risk is complex and has diverse sources. It is usually closely related to the host country’s system and economic development level. It is one of the challenges foreign investors must consider when investing in the host country. Legal risk is also related to the above factors. In evaluating legal risks, the paper selects indicators widely used by global academics, policymakers, the rule of law, and governance indicators, including the World Bank [55,56]. These indices are multifaceted tools that are widely used in many studies. It helps to comprehensively understand the degree of rule of law in a country and thus judge the level of legal risk. In addition, the digital investment cooperation between China and Ethiopia is an important part of the paper. Hence, this paper collects relevant published data, including import and export amounts for China and Ethiopia, China’s direct investment stock in Ethiopia, and China’s digital investment projects in Ethiopia [57].

3.3. Results

3.3.1. Digital Investment Cooperation between China and Ethiopia

Located in the Horn of Africa, Ethiopia borders Sudan to the west and north, Kenya to the south, Somalia to the southeast, and Eritrea and Djibouti to the northeast. It is a key country in African geopolitics [58]. The formation of the Ethiopian state is unique because it resulted from African rather than European imperial conquest. Ethiopia has undergone rapid transformation in less than two decades as Africa’s second most populous country. It transformed from a state on the verge of collapse at the end of the Cold War to one of the world’s fastest-growing economies and a regional power in the Horn of Africa [59]. As a major country in East Africa, Ethiopia has strong military strength in the region. Considering Ethiopia’s special national history, geographical location, and important position in Africa, cooperation between China and Ethiopia is significant. In practice, the two countries have launched in-depth cooperation, and China is an important partner of Ethiopia in both trade imports and exports, as well as the foreign direct investment (Table 1). In October 2023, they upgraded their bilateral relations to an all-weather strategic partnership [60].

Ethiopia aims to reach lower-middle-income status by 2025. Under the Digital Ethiopia 2025 Strategy, the country has started focusing on several key technology sectors, especially smart cities, cybersecurity, information economy, mobility, digital healthcare, and telecom [61]. Ethiopia hopes to become Africa’s next technology hub [62], which seems to go hand in hand with China’s push for DSR. From Ethiopia’s perspective, China builds transnational network infrastructure in B&R countries, which is an opportunity to strengthen interconnection; from China’s perspective, DSR attempts to narrow the gap between underdeveloped and developed countries, eliminate bottlenecks that hinder the development of relevant countries, and significantly improve (relevant countries’) own production capabilities [63]. The digitalization of Ethiopia’s economy has been achieved with China’s technology and support, and digital investment cooperation between the two countries is also very close. Since 2008, Chinese telecom providers Huawei and ZTE have dominated Ethiopia’s telecoms infrastructure market, supplying the country’s sole telecoms provider, state-owned Ethiopian Telecom. Ethiopia is among the top five countries estimated to spend on the global DSR [64]. It is estimated that 24 African governments and their state-owned enterprises have received 57 loans totaling USD 4.7 billion. It is used to fund telecom infrastructure projects implemented by Huawei in their countries, with Ethiopia receiving one of the largest telecom investments from China [65]. Table 2 lists selected Chinese-financed and led telecom infrastructure projects in Africa from 2010–2020. In addition to telecommunications infrastructure, China and Ethiopia are expanding investment cooperation in other digital infrastructure. For example, in May 2022, Ethiopian Telecom cooperated with Huawei to launch 5G network pilot services in Ethiopia. As mentioned earlier, the DSR has played a positive role in Ethiopia’s digital transformation. For example, in terms of telecommunications infrastructure, since 2008, Chinese telecom providers, Huawei and ZTE, have dominated Ethiopia’s telecoms infrastructure market, supplying the country’s sole telecoms provider, state-owned Ethiopian Telecom. In May 2022, Ethiopian Telecom collaborated with Huawei to launch 5G network pilot services in Ethiopia. In addition, the Ethiopian Government’s investment arm, Ethiopian Investment Holdings (EIH), signed a memorandum of understanding with Hong Kong-based West Data Group’s Center Service PLC to commence mining bitcoin. This will make Ethiopia the first African country to start Bitcoin mining [66].

3.3.2. WJP and ROL

At the same time, investment in the DSR has also had a positive impact on improving the investment environment in Ethiopia. For example, in terms of legal risks, taking WJP ROL as an example, Ethiopia’s ranking shows a slight upward trend in Table 3. It indicates that the legal environment and business environment in Ethiopia have improved, which is beneficial for investment cooperation between China and Ethiopia.

The legal risk. Criticisms about B&R countries mean they are full of legal and regulatory minefields, and their weak legal and regulatory systems make investments face greater legal risks [67]. Table 4 lists the legal risks of B&R countries under the above indicators. The ease of DB score is reflected on a scale of 0 to 100, where 0 represents the lowest and 100 represents the best; the ease of doing business ranking ranges from 1 to 190 [68]. The regulatory quality and rule of law in the WGI are presented in terms of the estimation of governance and percentile rank, respectively. The estimate of governance refers to the governance performance range from approximately −2.5 (weak) to 2.5 (strong), and the percentile rank ranges from 0 (lowest) to 100 (highest) [69]. The WJP ROL Index score ranges from 0 to 1, with 1 indicating the greatest compliance with the rule of law; the ranking range is 1 to 142. Although various indicators’ calculation methods and consideration factors differ, the trends are generally the same. The legal environment among the B&R countries is quite different, and the legal risks are also very different. However, not all B&R investments will face greater legal risks. Among them, legal risks are lower in East Asia, the Commonwealth of Independent States (CIS), and Central and Eastern Europe. In comparison, legal risks are higher in South, West, Southeast, and Central Asia [70]. Businesses are seeing the value of sustainable business strategies as a result of escalating environmental and social concerns. Information systems (IS), which have emerged as a crucial enabler of business sustainability, are at the forefront of this shift.

4. Analysis and Discussion

First, political risk. Political risk is one of the challenges that foreign investors must consider when investing in a host country. Its extension includes social unrest, civil unrest, riots, political instability, terrorism, and even war [72]. Although the definition of political risk remains controversial, the concept is often linked to the host country’s macro-environment in the FDI literature. Political risk is a complex phenomenon whose sources may be diverse and theoretically depend on the host country’s institutional and economic development stage. From a broader perspective, risks such as data security and privacy, cross-border transactions, technology transfer, and cyberterrorism are risks faced by DSR investments and generally faced by digital investments worldwide. In fact, on a global scale, the digital divide is very severe; there is a huge gap in digitalization levels, and the level of digitalization is often closely related to the income level [73]. Generally speaking, the business environment in lower-income economies is poorer. Therefore, digital investments by high-income, high-digitalization economies in lower-income, low-digitalization economies are more likely to face the above risks. Multinational enterprises in socio-politically and economically underdeveloped host countries are likely to encounter non-violent political risks, such as adverse legal rulings and strict entry requirements, or more serious risks, such as regime overthrow, war, and expropriation [74]. In practice, however, political risk is often related to the host country’s government unexpectedly changing the “rules of the game” for corporate operations. Changes in government policies and political systems may affect the investment behavior of multinational companies because the risk premium of any investment project and location decisions will be affected by political risk [75]. Due to the wide distribution of B&R countries, large differences in economic development levels between countries, complex geopolitics, imperfect laws and regulations in some countries, and intense political and economic competition among major countries, the political risks of countries along the B&R can be divided into four levels. Level 1 represents extremely high political risk, Level 2 represents high political risk, Level 3 represents moderate political risk, and Level 4 represents negligible political risk. Among them, the proportion of Level 1 and Level 2 is quite high, while Level 4 is very rare. It indicates that the political risks of countries along the B&R are generally high [72]. Specific to DSR, investments in digital infrastructure often involve sensitive areas such as data management, personal privacy, data sovereignty, and national security. This makes such investments more likely to attract host country supervision, such as strict national security review. Based on this, DSR investment will face higher political risks [76]. In the quickly changing corporate environment at the moment, innovation is now a vital component of both success and sustainability. This essay delves into the complex relationship between company innovation and management systems, as well as the increasing significance of corporate social responsibility (CSR). Ethiopia and the Hainan Free Trade Port (HFTP), with their distinct characteristics and prospects, present fascinating case studies in health economics development. China launched the HFTP in 2018 to make Hainan Island a major international free trade zone by 2035. Its emphasis on cutting taxes, trade barriers, and customs procedures makes the environment more appealing to foreign companies. The port focuses on important industries including high-tech, modern services, and tourism to draw in more foreign investment and incorporate Hainan into global trade networks. On the contrary, Ethiopia’s economy is among the fastest-growing in Africa and is fueled by industries including manufacturing, services, and agriculture. With a population of over 110 million and a strategic location in the Horn of Africa, the nation is well-positioned to play a major role in regional trade and development. Ethiopia’s capital, Addis Ababa, is home to the African Union headquarters and is a significant political and health economics center. When Ethiopia and HFTP are examined jointly, possible synergies are revealed. The sophisticated infrastructure and trade facilitation skills of HFTP may be an asset to Ethiopia’s expanding health economics sectors. Trade agreements and joint ventures, especially in the fields of technology and agriculture, can promote healthy economic progress on both sides. Combining Ethiopia’s aspirations for growth with HFTP’s strategic objectives, this cooperation would promote greater health economics integration and involvement in international trade for both regions. China’s initiatives in Ethiopia, which prioritize infrastructure development, technology transfer, and capacity building, may greatly complement Ethiopia’s national development aspirations. China can assist Ethiopia achieve its Vision 2025 [77], which aims to reduce poverty and promote economic progress, by investing in initiatives that would benefit Ethiopian companies and create jobs. Furthermore, by matching these initiatives to Ethiopia’s particular requirements, such as enhancing the country’s energy and transportation systems, risks related to an excessive reliance on foreign investment can be reduced. Through the promotion of sustainable development and the guarantee that projects are customized for local settings, this strategic cooperation can optimize advantages. Furthermore, encouraging openness and putting in place systems to include stakeholders will contribute to the development of trust and the avoidance of possible disputes. China and Ethiopia may establish a mutually advantageous collaboration that serves both short-term demands and long-term stability and growth.

Reducing technology transfer risk in digital investment is inseparable from formulating technical standards. In practice, private companies in the United States largely dominate global technical standards and, to a certain extent, Europe [78]. However, as China’s influence in internationalizing technical standards increases, technical standards are becoming geopolitical [79]. DSR not only spreads Chinese standards and technologies to the world but also spreads American and European standards and technologies to the world. Indeed, technology products are rarely completely monolithic. Rather, they are a synthesis of international components and generally adhere to common standards. It is a more ideal state than over-reliance on a certain country’s technical standards. It can promote competition and lower prices, thereby promoting investment and digital infrastructure construction [80]. The digital economy has emerged as a key factor in international trade and economic expansion in the age of globalization. However, increasing digital trade barriers, especially those related to connectivity and infrastructure, present serious difficulties for both companies and legislators. The uneven development of digital infrastructure between nations and regions is one of the main causes of concern. Variations in broadband availability, data transfer rates, and network dependability can engender substantial obstacles to international digital commerce. Companies frequently find it difficult to gain access to the digital infrastructure required for e-commerce, cloud computing, and other digital services, especially small and medium-sized businesses. Furthermore, the smooth cross-border transfer of data and digital services may be hampered by the absence of unified regulatory frameworks and interoperability standards. Different data protection regulations, requirements for data localization, and limitations on the transmission of personal data can cause global supply chains to get disrupted and make it difficult for digital assets to move freely.

4.1. Paths to Resolve Risks in DSR Investment

Promote the reform of IIAs. IIAs (IIAs and investment provisions in international trade agreements) mitigate the political risks in foreign investments. Commitments to protect foreign investors’ property rights are intended to allow developing countries to mitigate political risks without other credible investor protection measures. Typically, these countries are capital-poor and have weak rule of law [81]. Among them, the Investor–State Dispute Settlement (ISDS) mechanism is the most important. Regarding the risks in DSR investment, foreign investors can use ISDS to claim compensation from the host country. However, the current actual situation is not satisfactory. On the one hand, IIAs do not induce large amounts of desirable foreign direct investment or exclude home country interests from investor–host country conflicts. Neither countries in the Global South nor the Global North are capital-importing or capital-exporting countries; they are neither absolute losers nor winners in terms of IIAs and ISDS. It means that developed countries and their foreign investors may view IIAs and ISDS as less valuable forms of political risk mitigation, and even if they are winners, their regime interests will be harmed [82]. Based on this, countries are more inclined to prioritize national sovereignty over political risk mitigation. It can be attributed to the fact that IIAs often promise to prioritize political risk mitigation and ignore the legal obligations of foreign investors to comply with the host country’s development policy objectives. Most IIAs have not yet adapted to the needs of digital economy development [83]. Improve data governance rules. Currently, when it comes to investment in digital infrastructure, large technology companies and telecommunications companies have an asymmetric power, and they have established a de facto monopoly over the data held. It would have negative impacts, such as bias and manipulation in algorithmic decision making, privacy violations, and security risks. It is necessary to correct these distortions. Many actors from the public sector, academia, business, and civil society, as well as activists and social entrepreneurs, are seeking alternatives to mainstream data governance models. Civil society and public institutions are key actors in democratizing data governance and redistributing the value generated by data. Strengthen international cooperation and coordination. Countries are encouraged to build partnerships and industry-based alliances to implement effective changes in digital investments. Establish information-sharing mechanisms to address common issues [84]. This partnership facilitates innovation and digital investment and promotes governance innovation, cross-border transactions, and technology transfer. However, various problems in Ethiopia severely restrict the digital investment cooperation between China and Ethiopia and weaken the ability to deal with investment risks. The UN still classifies Ethiopia as a least-developed country, and the World Bank ranks it as a low-income country. The quality of governance and institutions in Ethiopia remains low. Indicators such as the Global Competitiveness Index 2019, Corruption Perception Index 2021, and the IIAG 2020 identify the country’s challenges. The World Economic Forum’s Global Competitiveness Index ranked Ethiopia 126 out of 141 economies in 2019. In 2021, Ethiopia ranked 87 out of 180 in the Corruption Perception Index, and the 2020 IIAG rating places Ethiopia 31st out of 54. Third, the level of educational development in Ethiopia is low, especially in rural areas. In 2021, only 55 percent of the population attended school, and only 12 percent had graduated with at least a secondary education [85].

4.2. Digital Investment, Governance Mechanisms, Cross-Border Transactions, and Technology

From a global perspective, the digital divide remains severe. Currently, 2.6 billion people (about one-third of the global population) are still without internet access, most of whom live in low- and lower-middle-income economies. As shown in Figure 4, imports of ICT products from LDCs remain restricted. For this reason, LDCs and some developing countries continue to play a marginal role in digital investment. In addition, due to a lack of Internet connectivity, underdeveloped digital infrastructure, lack of necessary Internet equipment resources, and lack of policies to help Small and Micro-sized Enterprises (SMEs) enter the digital market, SMEs in these developing countries often cannot access digital platforms [86]. This highlights the importance of investments in digital infrastructure by high-income economies over those of low- and lower-middle-income economies. Sustainable business strategies are propelled by the diverse role of information systems. Organizations may learn more about their supply chain effects, resource consumption trends, and environmental footprint with the use of data analytics and visualization technologies. Companies can track their progress towards sustainability targets, find potential for efficiency improvements, and make better decisions thanks to this data-driven approach. Additionally, IS solutions make it easier to include sustainability factors in crucial business operations like transportation, manufacturing, and product creation. Organizations may make sure that sustainability is a major consideration in daily operations by integrating sustainability KPIs and decision-making frameworks into enterprise resource planning (ERP) systems and other operational platforms.

Therefore, investment in digital infrastructure requires governments to establish a regulatory and policy environment that promotes investment in the digital world and produces inclusive and sustainable outcomes [87]. It would promote cross-border transactions and technology transfer in digital investment and mitigate risks therein. However, the current governance mechanisms, such as laws and policies on cross-border transactions and technology transfer, struggle to provide due protection for digital investments and may exacerbate investment risks. In digital investments, ubiquitous cross-border data flows raise concerns among governments and citizens. For example, there are implications of collecting and using so much information, often without the data subject’s knowledge [88]. This has led to countries restricting or banning data transfers abroad, impacting transactions. In many cases, the domestic regulatory environment supporting digital trade is becoming increasingly stringent. Evidence from the OECD Digital Services Trade Restrictions Index (DSTRI) shows that domestic regulations affecting digital trade are becoming increasingly stringent, particularly on issues related to bridging the digital divide, such as infrastructure and connectivity, including data flow restrictions and data localization measures.

DSTRI ranges from 0 to 1, with 1 being the most stringent. The degree of restrictions is assessed against benchmarks in different areas of the industrial and technological sectors. In some areas, a lack of regulation is considered restrictive. The 2022 DSTRI database also revealed significant regional differences. OECD economies have lower average restrictions, and the Americas have lower average restrictions than African and Asian economies. Also, cross-border transactions are a complex financial system that needs to be updated to catch up with the development of financial technology. For example, blockchain technology can be introduced into trading systems, and an asymmetric alliance blockchain system can be established to build a fairer and more intelligent cross-border trading system [89].

4.3. The Hainan FTP to Solving Future Development Prospects for African Nations

As part of the Belt and Road Initiative, China may also assist Africa’s growth through the Hainan Free Trade Port (BRI) [90]. We believe that Africa may open up new growth opportunities in the coming years by utilizing China’s Hainan free trade port (Hainan FTP). Africa, having one of the greatest rates of economic growth globally, will gain a great deal from this special free trade zone’s advantageous policies, simplified logistics, and market access prospects. Future export growth potential for Ethiopia may be facilitated by the Hainan FTP. There are some exciting prospects for African economic development in China. Africa, home to some of the fastest-growing economies on the planet, has been actively pursuing international trade and investment relations [91]. Businesses in Ethiopia and other nations may benefit from the free trade policies and incentives provided by the Hainan FTP [92]. For example, more access to China’s enormous consumer market may be advantageous for their agriculture sector, which is a major economic engine. The port’s simplified customs processes and reduced tariffs may facilitate the export of premium coffee, fruits, vegetables, and other produce to China for its farmers and agribusinesses. Additionally, this might result in increased earnings and a deeper integration of Ethiopian agriculture into international supply networks [93]. Moreover, Ethiopian businesses operating in the textile, leather processing, and light industrial goods sectors may find opportunities due to the free trade port’s emphasis on modern manufacturing and services. Ethiopian businesses may be able to take advantage of Hainan’s favorable policies to set up manufacturing sites or distribution centers, giving them access to the rich Chinese market. The Hainan FTP appears to offer valuable economic opportunities that African nations should carefully explore to drive their continued growth and development. Technology transfer and knowledge sharing in these industries have the potential to help Ethiopia and other African countries strengthen their industrial capabilities and move up the value chain in the future [94].

5. Conclusions

All things considered, the study has some theoretical and applied value. The knowledge of hazards in DSR investments and their mitigation strategies is improved, to start, with our research findings. We also discuss the digital investment cooperation between China and Ethiopia and its spillover effects on Africa, which complements the existing research; it helps to provide governments and enterprises with suggestions for improving governance mechanisms and resisting digital investment risks. It also guides the construction of a China–Africa community with a shared future, realizing sustainable development goals. Ethiopia should promote health economics growth, improve systems and governance, and improve its educational level, thereby further promoting digital investment cooperation between China and Ethiopia and improving its ability to deal with risks. Due to Ethiopia’s special and important position in Africa, the cooperation between China and Ethiopia has a spillover effect that will radiate throughout Africa. Of course, for Africa, there are both advantages and risks. DSR investment brings many advantages and opportunities to Africa [95]. It is undoubtedly highly consistent with the AfCFTA, which aims to reduce tariffs, eliminate trade barriers, and achieve the free flow of goods, services, and capital on the African continent. While rich countries have excluded Chinese companies from critical infrastructure networks due to security concerns, many developing economies appear reluctant to follow suit. The country’s participation in DSR will further promote its ICT development and increase its participation in the global ICT value chain. Overall, the benefits of participating in B&R for ICT development are enhanced by participating in DSR [96]. Currently, investments in ICT and digital connectivity are positively impacting the implementation of SDGs in these recipient countries. The potential for fostering healthy economic growth, sustainable development, strengthening China–Africa connections exists through the cooperation between Ethiopia and the HFTP. However, managing regulatory environments and cultural differences will be essential to this partnership’s success. It helps promote health economics growth in rural areas of least-developed countries and middle-income countries, promotes the development of SMEs, encourages traditional industries’ digital transformation and green growth, narrows the digital divide, and enhances digital inclusion. DSTRI shows that Africa has made significant progress in lowering digital trade barriers. It supplements existing research and has certain significance for future research; it has promoted the resolution of risks in DSR digital investments in practice, digital investment cooperation between China and Ethiopia, and the construction of a China–Africa community with a shared future.

5.1. Implications

In terms of digital infrastructure construction, Chinese companies have participated in several submarine optical fiber cable (OFC) projects connecting Africa to Europe, Asia, and the Americas. They have cooperated with mainstream African operators to achieve full coverage of telecom services in Africa [97]. Up to now, more than 17 cities and more than 1500 companies in more than 15 African countries have chosen Chinese companies as digital transformation partners, and 29 countries have chosen smart government service plans provided by Chinese companies. China–Africa e-commerce cooperation continues to be enriched, and Chinese companies are actively participating in constructing public service platforms such as electronic payment and smart logistics in Africa. Many developing countries, especially the LDCs, still have high costs for digital connectivity, mainly due to limited infrastructure, regulatory barriers, and lack of competition in the telecommunications industry. Digital connectivity remains prohibitively expensive in many developing economies. In Africa alone, providing universal Internet access will cost approximately USD 100 billion, of which approximately 80% will be used to lay and maintain broadband networks and 20% will be used to improve skills [98]. From an economic perspective, Chinese companies investing in digital infrastructure in African countries may cause unfair competition between local and Chinese companies. As a market maker, China knows how to compete in the market better than Africa’s relatively underdeveloped countries. Finally, data privacy and security risks cannot be ignored. For example, the entry of large Chinese e-commerce and ICT companies, such as Alibaba, Huawei, and TikTok, into the markets of other countries will trigger controversies surrounding privacy and national security issues. 5G networks may have a certain impact on health, but this impact cannot be arbitrarily amplified; otherwise, it will distort the public’s understanding of this technology [99].

5.2. Study of Limitations and Future Research Directions

It is worth noting that the African Union is accelerating the construction of the AfCFTA. The AfCFTA constitutes a critical tool to achieve the economic transformation objectives for the continent set out in the African Union (AU) Agenda 2063 by increasing intra-African trade and investment [100]. As early as 2020, the AU Heads of State and Government Assembly decided that e-commerce would be included in the AfCFTA and amplified the scope to include other forms of digital trade. That highlights the important position of the digital economy in the AfCFTA. China’s digital investment in Africa, such as in constructing digital infrastructure, is more prominent in this context. It can improve the infrastructure conditions required to construct the AfCFTA through high-quality China–Africa digital investment cooperation. However, it cannot be ignored that optimizing infrastructure also comes at a price. First of all, this study has certain limitations, whether it is risk in DSR investments or the global digital investment risk. Because this paper only selects the risk types of general concern to the academic community, the perspective can be further expanded and refined, such as changes in foreign investment national security review policies, international cooperation and coordination risks, the impact of major power relations, and the international situation. These risks, their impact on digital investments, and their interactions with existing research risks can be further explored in future research [101], limited to the paper’s topic, focusing on the digital investment cooperation between China and Ethiopia in the DSR and its impact on Africa. It does not involve the impact on other regions of the world. Future research can further explore this to obtain a more comprehensive understanding. Finally, China is in a period of rapid development of the digital economy and has a huge domestic market, which has attracted a large amount of overseas digital investment. Therefore, analyzing the risks faced by foreign digital investment in China and comparing the digital investment risks in China with those in other countries will help to deepen the understanding of the problem and resolve the risks.

Author Contributions

Conceptualization, methodology, and writing—original draft preparation: S.W. Validation, formal analysis, writing—original draft, and resources: Q.L. Data curation, investigation, formal analysis, writing—original draft preparation, writing—review, and editing, visualization, M.B.K., and project administration: Funding acquisition: S.W. All authors have read and agreed to the published version of the manuscript.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

The original contributions presented in the study are included in the article; further inquiries can be directed to the corresponding author.

Conflicts of Interest

The authors declare no conflicts of interest.

Footnotes

Disclaimer/Publisher’s Note: The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of MDPI and/or the editor(s). MDPI and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

Figures and Tables

Figure 1. Aspects of DSR; Fudan Institute of Belt and Road and Global Governance, DSR Bluebook 2018, p. 10, translated.

Figure 2. DSR project categories and types.

Figure 3. Digital trade barriers, in particular regarding infrastructure and connectivity, are intensifying.

Figure 4. Imports of ICT goods in total merchandise trade.

Table 1

China’s direct investment stock in Ethiopia.

Year	2014	2015	2016	2017	2018	2019	2020	2021	2022
China’s stock of direct investment in Ethiopia (USD 10,000)	91,462	113,013	200,065	197,556	256,816	255,887	299,280	281,090	262,032
Total stock of foreign direct investment flowing into Ethiopia (USD 10,000)	726,400	1,069,200	1,370,000	1,851,200	2,225,300	2,492,300	2,735,100	3,161,100	3,528,100
Percentage of the total stock of direct investment in Ethiopia	12.6%	10.6%	14.6%	10.7%	11.5%	10.3%	10.9%	8.9%	7.4%

Source: Ministry of Commerce of the People’s Republic of China, National Bureau of Statistics, State Administration of Foreign Exchange Statistical Bulletin of China’s Outward Foreign Direct Investment; UNCTAD, WIR.

Table 2

China-financed and led telecom infrastructure projects in Africa.

Country	Project	Financier	Borrower	Implementation	Amount	Year
Tanzania	National ICT Broadband Backbone (NICTBB) Phase II	Exim bank	Tanzanian government	CITCC, Huawei	USD 100 m	2010
Cameroon	National Broadband Network Phase I:4G mobile broadband (LTE)	Exim bank	Cameroonian government	Huawei	USD 168 m	2011
Kenya	National Optic Fibre Backbone Infrastructure (NOFBI). Phase II: E-government	Exim bank	Kenyan government	Huawei	USD 7l m	2012
Nigeria	Galaxy Backbone project for National Security development system	Exim bank	Nigerian government	Huawei	USD 100 m	2012
Ethiopia	Telecom Transformation and Expansion (4G network and mobile expansion) 6 Circles—ZTE	Exim bank	Ethiopian government	ZTE	USD 300 m	2013
Ethiopia	Telecom Transformation and Expansion (4G network and mobile expansion) 7 Circles—Huawei	Exim bank	Ethiopian government	Huawei	USD 800 m	2013
Tanzania	National ICT Broadband Backbone (NICTBB) Phase III	Exim bank	Tanzanian government	CITCC, Huawei	USD 94 m	2013
Nigeria	National Information Communication Technology Infrastructure Backbone (NICTIB) Phase I	Exim bank	Tanzanian government	Huawei	USD 100 m	2013
Guinea	National Backbone fiber optics	Exim bank	Guinean government	Huawei	USD 214.2 m	2014
Cameroon	National Telecommunications Broadband Network Project Phase II	Exim bank	Cameroonian government	Huawei	USD 337 m	2015
Ivory Coast	Abidjan Video Surveillance Platform	Exim bank	Ivory Coast government	Huawei	USD 56.7 m	2016
Cameroon	South Atlantic Inter Link (SAIL)	Exim bank	Cameroonian government	Huawei	USD 85 m	2017
Nigeria	National Information Communication Technology Infrastructure Backbone (NICTIB) Phase II	Exim bank	Nigerian government	Huawei	USD 334 m	2018
Sierra Leone	Fibre Optic Backbone Network Phase II	Exim bank	Sierra Leonean government	Huawei	USD 30 m	2019

Table 3

WJP ROL in Ethiopia.

Year	2023		2022		2021		2020		2019		2017–2018
Index	Overall Score	Ranking	Overall Score	Ranking	Overall Score	Ranking	Overall Score	Ranking	Overall Score	Ranking	Overall Score	Ranking
Ethiopia	0.38	129/142	0.39	123/140	0.41	122/139	0.41	114/128	0.39	118/126	0.38	107/113

Source: WJP ROL.

Table 4

Legal risk assessment index of B&R countries.

Area	Country	DB Index		WGI				WJP ROL Index
		Ease of DB Score	Ease of DB Ranking	Regulatory Quality		Rule of Law		Overall Score	Ranking
				Estimate of Governance	Percentile Ranking	Estimate of Governance	Percentile Ranking
East Asia	Mongolia	67.8	81	−0.27	42.45	−0.19	45.75	0.53	64
	China	77.9	31	−0.42	36.79	−0.04	52.83	0.47	97
Southeast Asia	Brunei	70.1	66	1.07	82.55	0.93	80.19	—	—
	Indonesia	69.6	73	0.21	59.43	−0.19	45.28	0.53	66
	Laos	50.8	154	−0.99	16.04	−0.18	23.58	—	—
	Malaysia	81.5	12	0.64	72.64	0.56	68.40	0.57	55
	Myanmar	46.8	165	−1.24	9.91	−1.53	5.66	0.35	135
	Philippines	62.8	95	0.06	53.77	−0.52	33.49	0.46	100
	Singapore	86.2	2	2.21	100.00	1.78	99.06	0.78	17
	Thailand	80.1	21	0.17	58.49	0.07	54.72	0.49	82
	Vietnam	69.8	70	−0.43	36.32	−0.16	47.64	0.49	87
West Asia	Bahrain	76	43	0.97	78.30	0.44	65.09	—	—
	Iran	58.5	127	−1.59	4.25	−1.02	17.45	0.39	126
	Iraq	44.7	172	−1.18	11.79	−1.75	3.30	—	—
	Israel	76.7	35	1.21	86.32	0.95	81.13	—	—
	Jordan	69	75	0.16	57.08	0.22	57.08	0.55	62
	Kuwait	67.4	83	0.21	60.38	0.28	57.55	0.58	52
	Lebanon	54.3	143	−1.13	13.68	−1.10	13.68	0.45	107
	Oman	70	68	0.43	65.57	0.50	66.51	—	—
	Palestine	—	—	—	—	—	—	—	—
	Qatar	68.7	77	0.87	77.36	0.92	79.25	—	—
	Saudi Arabia	71.6	62	0.42	65.09	0.29	58.02	—	—
	Syria	42	176	−1.82	3.77	−2.07	0.94	—	—
	Türkiye	76.8	33	−0.24	43.40	0.46	36.79	0.41	117
	The United Arab Emirates	80.9	16	1.03	82.08	0.84	78.77	0.64	37
	Yemen	31.8	187	−1.92	2.83	−1.85	1.89	—	—
	Cyprus	73.4	54	0.77	75.47	0.57	68.87	0.68	31
	Greece	68.4	79	0.46	67.45	0.33	59.91	0.61	47
	Egypt	60.1	114	−0.71	24.53	−0.26	42.45	0.35	136
South Asia	Afghanistan	44.1	173	−1.27	8.96	−1.66	5.19	0.32	140
	Bangladesh	45	168	−0.93	17.92	−0.60	29.72	0.38	127
	Bhutan	66	89	−0.38	38.68	0.67	71.70	—	—
	India	71	63	−0.05	50.94	0.11	55.19	0.49	79
	Maldives	53.3	147	−0.66	26.89	−0.03	53.30	—	—
	Nepal	63.2	94	−0.65	27.83	−0.45	37.74	0.52	71
	Pakistan	61	108	−0.89	20.28	−0.67	25	0.38	130
	Sri Lanka	61.8	99	−0.65	27.36	−0.06	52.36	0.50	77
Central Asia	Kazakhstan	79.6	25	−0.01	52.83	−0.47	35.85	0.53	65
	Kyrgyzstan	67.8	80	−0.63	28.77	−1.15	12.74	0.45	103
	Tajikistan	61.3	106	−1.20	11.32	−1.26	10.85	—	—
	Turkmenistan	—	—	−2.07	1.89	−1.49	6.13	—	—
	Uzbekistan	69.9	69	−0.55	31.60	−0.85	21.70	0.50	78
CIS	Armenia	74.5	47	−0.02	51.89	−0.14	46.23	—	—
	Azerbaijan	76.7	34	−0.10	48.11	−0.62	25.94	—	—
	Belarus	74.3	49	−1.33	7.55	−1.22	11.79	0.45	104
	Georgia	83.7	7	1.03	81.60	0.17	56.60	0.60	48
	Moldova	74.4	48	0.10	54.72	−0.29	41.98	0.53	68
	Russia	78.2	28	−1.14	13.21	−1.20	12.26	0.44	113
	Ukraine	70.2	64	−0.33	40.57	−0.92	18.87	0.49	89
Central and Eastern Europe	Bosnia and Herzegovina	65.4	90	−0.16	45.75	−0.31	41.51	0.51	75
	Bulgaria	72	61	0.22	61.79	−0.11	49.53	0.56	59
	Croatia	73.6	51	0.50	68.40	0.37	61.32	0.61	45
	Czech Republic	76.3	41	1.39	88.68	1.10	83.49	0.73	20
	Estonia	80.6	18	1.56	92.92	1.42	89.62	0.82	9
	Hungary	73.4	52	0.41	64.62	0.42	63.21	0.51	73
	Latvia	80.3	19	1.17	84.91	0.92	79.72	0.73	22
	Lithuania	81.6	11	1.30	87.74	1.06	83.02	0.77	18
	North Macedonia	80.7	17	0.45	66.98	−0.10	50.00	0.53	67
	Montenegro	73.7	50	0.54	69.34	−0.13	48.58	0.56	57
	Poland	76.4	40	0.72	74.53	0.43	64.15	0.64	36
	Romania	73.3	55	0.36	63.68	0.40	62.26	0.63	40
	Serbia	75.7	44	0.14	56.13	−0.11	49.06	0.48	93
	Slovakia	75.6	45	0.85	76.89	0.62	70.28	0.66	34
	Slovenia	76.5	37	0.85	76.89	0.97	82.55	0.69	27

Source: DB Index, WGI, WJP ROL Index [71].

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