This paper investigates different stakeholder groups’ perceptions on how Chinese investments contribute to the development of Ethiopia in the capital city Addis Ababa. To delimit the thesis, one recently completed infrastructural project was analyzed, namely the Light Railway Transit (LRT) in Addis. This project was a collaboration between the Ethiopian and the Chinese governments and to 85% funded by Chinese loans. By conducting twenty-six semi-structured interviews with interviewees from six strategically selected stakeholder groups, varying perceptions on Ethio-China relations and the LRT project were encountered. The main findings of the study include that the Ethio-China relations have been beneficial for the two governments and that Chinese investments have affected Ethiopia’s economic growth positively. However, in the case of the LRT project, the main observable was that it contributed to developmental image-building and failed to meet some of the other objectives pursued by it, such as providing reliable transportation service to the citizens. Moreover, experts and representatives from international organizations, the Ethiopian private sector and trade unions as well as citizens brought up problems with respect to skill transfer and working conditions related to Chinese investments, among other things. Further, they claimed that Ethio-China relations might negatively affect Ethiopia’s potential for democratization.