Perizat RISBEK KIZI
On January 28, Member of the State Council of the People’s Republic of China, Minister of Foreign Affairs Wang Yi held a telephone conversation with the Minister of Foreign Affairs of Mongolia, Battsetseg Batmonkh. Wang Yi said that China is ready to work with Mongolia to give a strong impetus to Sino-Mongolian cooperation and bring bilateral relations to a new level.
The high intensity of bilateral meetings and calls indicates that China and Mongolia are ready to develop diplomatic contacts and establish cooperation in various fields. In fact, since the establishment of diplomatic relations on October 16, 1949, Mongolia and China have come a long way in multifaceted cooperation in political, economic, cultural and other fields. Here we consider the main aspects of bilateral relations:
In the economic sphere, cooperation between the two states is clearly demonstrated by bilateral trade and the volume of foreign direct investment
China is Mongolia’s main trading partner
Thus, for 10 months of 2021, the trade turnover between Mongolia and China increased by 144.5%. At the same time, 86.3% of Mongolian exports are accounted for by China.
Mongolian political scientist Byambatsogtyn Batsaikhan says that: “This is normal. Almost all countries in the world buy Chinese goods. China is the main producer of many types of goods. And our two countries are neighbors, the geographical location allows our people to buy different goods at an affordable price. As for exports, as you know, our country has no access to the sea. Mongolia’s main export product is fossil raw materials, including coal. In China, there is a huge demand for coal, while in Russia there are many coal mines, so they do not buy coal from us. As a result, Mongolia supplies coal to the PRC”.
Moreover, landlocked Mongolia needs access to ports in China’s northeast to reach the international market. Since 1991, China has allowed Mongolia access to the Chinese port of Tianjin, from where most Mongolian exports that do not reach China go to other countries.
China is expected to channel some US $30 billion of credit to Mongolia
With the continuous progress of The Belt and Road Initiative, Grassland Road in Mongolia and the construction of China-Mongolia-Russia Economic Corridor, China has become the largest direct investor in Mongolia.
By the end of 2017, China’s direct investment in Mongolia had exceeded $4 billion, accounting for about 30 percent of the total foreign investment. Chinese companies’ direct investment or contracted projects in Mongolia have created nearly 100,000 jobs and paid nearly $2 billion in taxes. In addition, under the Belt and Road Initiative, China is expected to channel some US $30 billion of credit to Mongolia for infrastructure projects. The proposed corridor aligns well with Mongolia’s national development strategy, known as the Steppe Road, which calls for massive infrastructure investment to expand the country’s railway and road systems and to upgrade the electricity grid and energy supply pipelines.
Geographical Importance of Mongolia
China-Mongolia-Russia Economic Corridor
Within the framework of the BRI, Mongolia has become a key transport corridor between China-Russia and Europe. It is in one of the six main economic corridors – the China-Mongolia-Russia Economic Corridor (hereinafter, CMREC). The three countries signed a Memorandum-of-Understanding (MoU) to build an “Economic Corridor” on the basis of their respective development strategies during the trilateral meeting in Ufa, Russia in 2015.
It is in Mongolia’s interest not only to promote Mongolia as ‘a reliable and cheaper ‘Economic Corridor’ for Sino-Russian transit traffic across Eurasia’ but also to increase Russia’s investment in Mongolia, building a transport infrastructure that would connect with the Trans-Siberian rail system and further with China and the Asia-Pacific.
Soyuz Vostok gas pipeline
Recently the topic of transporting gas from Russia to China through Mongolia is receiving unexpected development. Thus, on January 26 of this year, Deputy Prime Minister of Mongolia Sainbuyangiin Amarsaikhan announced that the Soyuz Vostok gas pipeline, which will be laid from Russia to Mongolia and China, could begin work in 2027-2028. And the day before, on January 25, Alexei Miller, Chairman of the Board of Gazprom, and Sainbuyangiin Amarsaikhan approved a feasibility study for the gas pipeline construction project.
The Soyuz Vostok gas pipeline, PRIME specifies, will become a continuation of the Russian Power of Siberia-2 gas pipeline, the export capacity of which can exceed the capacity of the Power of Siberia by more than 1.3 times and amount to 50 billion cubic meters per year, which will allow to supply gas from Western Siberia for export in large volumes not only in the western, but also in the eastern directions.
Mongolia itself, in turn, is negotiating with Gazprom on not only transiting, but also consuming natural gas supplied via Soyuz Vostok. An appropriate decision is planned to be made after a careful calculation of domestic gas consumption and presentation of the results to the National Security Council.