The Kenyan traders have been angered by a newly opened China Square retail shop on the outskirts of Nairobi, whose prices for everyday goods like curtains imported from China are on average 50% cheaper than those brought in by local traders.
China Square's owner Lei Cheng told a local newspaper he was inspired to open the shop after finding the prices at a Nairobi supermarket to be exorbitant.
Clad in dust coats used in their retail outlets, the traders marched to the office of the deputy president and to parliament to submit a petition against the Chinese retailers.
"The Chinese cannot be importers, retailers, wholesalers and hawkers," read one placard held aloft during the protest. Some chanted "Chinese must go!"
Trade Minister Moses Kuria has offered to take over China Square's lease from its Chinese owner and hand it to local traders, but Korir Sing'oei, the principal secretary at Kenya's ministry of foreign affairs, stressed on Twitter that all investors are welcome, irrespective of their nationality.
Wu Peng, the top Africa official at China's ministry of foreign affairs welcomed Sing'oei's assurance on Twitter.
Kenya's relationship with China was in focus during last year's presidential election, won by William Ruto.
Ruto followed through in November on his campaign promise to publish documents related to $3 billion in loans for a controversial Chinese railway built under his predecessor.
Analysts said the move could strain relations with China, Kenya's biggest bilateral creditor, since such deals are generally kept confidential. Chinese officials did not comment on Ruto's action.