Lifan Industry Group Co. a Chinese automaker, is set to expand in Africa with a $3.5 million investment on a new vehicle-assembly plant in Ethiopia, General Manager Liu Jiang said in an interview with Bloomberg.

Yangfan Motors PLC, Lifan's Ethiopia branch, is planning to start production in Ethiopia in the next five years, if sales continue to grow,General Manager Liu Jiang said.

Lifan selected to base its African operations in Ethiopia because of Ethiopia's good relations with China, its growing economy, low crime rate and political stability, Liu told Bloomberg.

Yangfan is in talk with the Chinese-owned Eastern Industry Zone in the Ethiopian town of Dukem, about 30 kilometers  southeast of Addis Ababa, to establish its production plant within the industry zone.

China is Ethiopia's biggest trading partner, according to the World Bank. Chinese commercial investment in Ethiopia totals $450 million and was $58.5 million in 2010. According to the International Monetary Fund, foreign direct investment in Ethiopia is projected to increase to 4.5 percent of gross domestic product this fiscal year from 3.1 percent in 2011.