This study analyzes the trends and determinants of FDI flows to Ethiopia from India and China. It is based on panel data from the decades 1997-2016. It uses a gravity model approach and fixed effects estimation technique to identify the factors governing FDI flow to Ethiopia. Factors affecting Indian FDI flow into Ethiopia include: 1. Introduction. Massive FDI and the entry of multinationals are boosting industrial development in China. The ripple effects of FDI on the Chinese economy are highly appreciated by researchers Fan et al. Hu et al. Kim and Xin, But over time, China's national industrial environment or market ecology may influence. Since then, China's share of Africa's trade volume has seen a persistent increase, reaching an all-time high compared to the United States. Due to the coronavirus pandemic, African economists had predicted a higher trade volume between Africa and China due to the expected effects of African free trade. The Guangdong Free Trade Zone GFTZ is a special economic zone located in the southern province of Guangdong, China. Established, the GFTZ covers an area of square kilometers and includes three distinct zones: Nansha in Guangzhou, Qianhai and Shekou in Shenzhen. The GFTZ aims to promote trade, bringing it all together. In conclusion, the VAT system in China is an important part of the country's tax system and must be fully understood and respected by foreign entities operating in the country. Recent changes to the VAT system have made it simpler and more efficient for businesses to operate, but it is important to remain,