China is set to loan Ethiopia US$100 million and donate a fleet of 90 vehicles to help the African state complete its water supply projects, the Xinhua state news agency said.
China's Vice Commerce Minister Jiang Yaoping and Ethiopian Finance Minister Sufian Ahmed signed a deal for the loan on Wednesday, Xinhua said. It did not say when the money will be disbursed.
The loan will help pay for deep well water projects in Ethiopia's capital Addis Ababa while the fleet of 90 vehicles -- 65 cars and 25 buses -- would be used to "serve state guests", Xinhua said.
Government leaders from both sides said the loan demonstrated good bilateral relations which would improve further with deeper trade and investment links.
China's increasing reliance on Africa for oil and mineral resources, as well as diplomatic support, has been backed in recent years by more monetary aid from Beijing.
A separate Xinhua report said China handed over to Ethiopia on Wednesday a modern hospital built by Beijing at a cost of 80 million yuan to "promote friendship" between the two states.
But critics say China's aid is too often tied to its investment interests and can undermine efforts to encourage clean government in Africa because it does not demand the same kind of accountability as Western aid does.
China says its aid comes with no strings attached, is welcomed by African nations and has benefited millions of ordinary people.