Mongolian Prime Minister Oyun-Erdene Luvsannamsrai paid an official visit to China from June 26 to July 1, with stops in Beijing, Tianjin, and Ningbo, home of the world’s largest port. During his trip, Mongolia and China finalized a number of cooperation agreements that have previously been discussed, further deepening economic ties, particularly in energy, and infrastructure.

The Mongolian delegation, headed by Oyun-Erdene, was welcomed by Chinese Vice Minister of Foreign Affairs Sun Weidong, Chinese Ambassador to Mongolia Chai Wenrui, and Mongolian Ambassador to China Badral Tuvshin. During his week-long trip to China, Oyun-Erdene held an official meeting with Chinese President Xi Jinping, attended the World Economic Forum’s annual meeting in Tianjin, and met with leaders of some Chinese state-owned enterprises.

On June 27, Xi received Oyun-Erdene and the Mongolian delegation at the Great Hall of the People. The high-level meeting between the two leaders, followed by one-on-one meetings with Chinese officials and industry leaders, revealed Ulaanbaatar and Beijing’s shared interest in enriching the two countries’ economic ties within the framework of their comprehensive strategic partnership.

According to the press release of the Chinese Foreign Ministry, during the meeting “Xi Jinping stressed that China and Mongolia should always stay committed to respecting each other’s national independence, sovereignty, and territorial integrity, respecting the development paths independently chosen by the two peoples, and firmly supporting each other on issues involving their respective core interests and major concerns.”

In response, Oyun-Erdene stated that “Mongolia is ready to work closely with China to continue respecting and supporting each other’s choice of development paths, promote high-quality Belt and Road cooperation, strengthen inter-party and youth exchanges, advance connectivity projects such as cross-border railways and port connectivity between the two countries, and deepen cooperation in economy and trade, investment, energy, green development, anti-corruption, and other areas.”

In the last five years, Mongolia and China have prioritized expanding economic ties in a wide range of sectors. Many of the developmental projects – such as the construction of major railways connecting Mongolian and Chinese trade ports, and the construction of roads and freeways – represent parallel growth with Beijing’s own development. The Oyun-Erdene administration, particularly, has been proactive in bolstering infrastructure agreements, which are a lifeline of Mongolia’s mining and export sector at large.

Oyun-Erdene’s visit to Beijing can be viewed as a follow-up to Mongolian President Khurelsukh Ukhnaa’s visit to China in November 2022 – or rather a push to actually implement the development projects agreed to during that visit. During Khurelsukh’s meeting with Xi, the Mongolian president stated that Mongolia’s New Revival Policy and its long-term development policy paper, Vision 2050, can be a parallel development strategy of China’s Belt and Road Initiative (BRI). This is something Oyun-Erdene repeated during his meetings with Xi and other officials.

According to the Office of the Cabinet, Oyun-Erdene pointed out that “Mongolia has completed the construction work of our site to connect Gashuunsukhait-Gantsmod, Shiveekhuren-Sekhe, Bichigt-Zuunkhatavch, [and] Khangi-Mandal ports by rail.”

Currently, China buys almost 95 percent of Mongolia’s exports. It’s easy to see, then, why border ports such as Shiveekhuren-Sekhe carry strategic relevance to Ulaanbaatar’s economic security. Investment in these sectors is crucial for Mongolia to meet the demands of a quickly changing economic and geopolitical environment.

Facilitating faster movement through border ports has thus been a key goal for the Mongolian side. The Bichigt-Zuunkhatavch border was closed in 2021 amid China’s pandemic controls. It only resumed normal operation in July 2022. The construction of a 7.1 kilometer railway that links Shiveekhuren-Sekhe Port is expected to be completed in six months. This is part of Ulaanbaatar’s push for Beijing to accelerate the process of implemetning previously discussed projects.

Following his meeting with Xi, Oyun-Erdene met with the leaders of Chinese state-owned enterprises such as Power China, China Energy, China National Offshore Oil Corporation, Power China, China State Construction Group, and Norinco. As the Montsame News Agency reported, “About 25 cooperation agreements, totaling three billion yuan [$414 million], were signed during the ‘Mongolia-China Trade and Economic Cooperation’ Forum,” which took place during his state visit.

Moreover, the signing of a Memorandum of Understanding between the Mongolian and Chinese agencies responsible for overseeing state-owned enterprises (SOEs) presages greater cooperation between the SOEs of Mongolia and China in renewable energy, technology and innovation, hydroelectric power plants, oil, and gas producing technologies. An important takeaway from the high-level meetings is the financing of mega projects such as the Erdeneburen hydropower plant and the Choibalsan power plant expansion project.

Coinciding with Oyun-Erdene’s visit to Beijing, China hosted the 2023 World Economic Forum’s “Annual Meeting of the New Champions” in Tianjin, sometimes dubbed the “Summer Davos.”

At the WEF, Oyun-Erdene showcased Mongolia’s progress in recovering from the pandemic and introduced his administration’s implementation of the New Recovery Policy. Addressing global leaders from governments and the private sector, Oyun-Erdene encouraged both the private and public sectors to invest in Mongolia’s science, information technology, and sectors that demand innovation and modernization.

Moreover, during a one-on-one meeting with Klaus Schwab, founder and executive chairman of the World Economic Forum, Oyun-Erdene discussed Mongolia’s challenge as a landlocked economy and the need for assistance and cooperation, with a particular focus on transportation and logistics sectors. Oyun-Erdene invited Schwab to attend the Mongolia Economic Forum, which will take place from July 9-10 in Ulaanbaatar.

Oyun-Erdene’s week-long official visit to China revealed both intent and motivation on Ulaanbaatar’s part to accelerate the two countries’ economic activities within the framework of the comprehensive strategic partnership. Although Oyun-erdene’s visit centered around activating many of the bilateral projects that Mongolia and China have previously discussed, this was also an opportunity for Mongolia to seek investment and promote tourism.

Since he took office in 2021, the Oyun-Erdene administration has heavily invested in new infrastructure projects, specifically to bolster trade with China. It has undertaken major expansions to existing land ports on the border, establishing a comprehensive 3,000 km road network to connect border ports for efficient transportation, and doubling the number of active airports to alleviate pressure on ground-based infrastructure. Free trade zones such as Zamiin-Uud, which already handles 70 percent or more of Mongolia’s total trade volume, are also being established to provide tax and regulatory incentives for business and connect key parts of the transport network.

One major takeaway from Oyun-Erdene’s official visit to China is that both the Mongolian and the Chinese governments are willing to enrich their comprehensive strategic partnership and major development projects will involve state-owned enterprises. While it is paramount for the government to implement policies that can and will diversify the country’s economy, it is equally important to include the private sector in developmental projects.

On a bilateral level, considering Ulaanbaatar’s strong traditional ties with Beijing, the continued exchange of high-level visits entail a parallel growth between the two countries. Mongolia can combine a close relationship with China with greater openness to international investment in general, by diversifying sources of investment.

BY GUEST AUTHOR

Bolor Lkhaajav

Bolor Lkhaajav is a researcher specializing in Mongolia, China, Russia, Japan, East Asia, and the Americas. She holds an M.A. in Asia-Pacific Studies from the University of San Francisco.

China’s decision to control the export of two key metals showed it has some power to retaliate against moves by the US, Japan and Europe to cut Beijing off from advanced technology. But it also risks backfiring.

The new export licensing system unveiled late Monday highlighted China’s dominant position in global production of gallium and germanium, which are used to make chips, electric cars and telecommunications equipment. The announcement — just days before US Treasury Secretary Janet Yellen visits Beijing — appears timed to give China leverage as it pushes the White House to remove export controls that risk hobbling the nation’s development.

Yet the measure is a double-edged sword, and may simply accelerate efforts by those countries to reduce dependence on the world’s second-biggest economy. If Beijing did at some point uses these new rules to restrict shipments and cut supply to other nations, prices would likely rise and make it more economical to boost output in Japan, Canada, the US or elsewhere.

“It’s part of the tit-for-tat the PRC is playing with the US and its allies,” said Ja Ian Chong, an associate professor of political science at the National University of Singapore. He was referring to the country’s formal name, the People’s Republic of China. “There may be some initial shock to the markets and firms but over time, should these restrictions persist, markets and firms adjust.”

The move underscores the dilemma facing President Xi Jinping as he seeks to counter US efforts to prevent China from accessing the chips needed to dominate technology like artificial intelligence and quantum computing. Any reciprocal actions only give the US and Europe more ammunition to push for derisking, something Xi’s government has sought to counter.

“China always takes a tit-for-tat approach,” Roy Lee, Taiwan’s deputy foreign minister, said of the new measures, which he called a retaliation to export controls by the US and other democratic nations. These “will become an accelerator for countries including Taiwan, South Korea and Japan to reduce our dependence on China supply of those critical minerals and materials.”

Rare earth weapon

China’s previous efforts to restrict the sale of rare earths have only diminished its market share as other countries work to secure supplies of the metals that aren’t controlled by China.

China first introduced an export licensing system for rare earths in the 1990s while also gradually ramping up taxes, squeezing companies in Japan and elsewhere that relied on Chinese supplies. But the big shift happened in 2010, when Beijing temporary halted exports to Japan in reaction to a collision between a Chinese fishing boat and the Japanese coast guard near islands claimed by both countries.

That incident set off a race to find alternative supplies from China. Output in Australia and the US subsequently increased, pushing China’s share of mining output down to 70% of global supply in 2022 from a peak of 98% in 2010, according to the US Geological Survey.

China currently accounts for about 94% of the world’s gallium production, according to the UK Critical Minerals Intelligence Centre. Still, the metals aren’t particularly rare or difficult to find, though China’s kept them cheap and they can be relatively high-cost to extract.

“Imposing export restrictions risks reducing market dominance,” researchers from Eurasia Group including Anna Ashton wrote in a note. “If implemented as is, China’s new export mineral restrictions could offer fresh impetus for foreign manufacturers to shift production out of China, accelerating the trend of supply chain diversification.”

China said the new licensing system for exports of gallium and germanium, along with their chemical compounds, was aimed at protecting national security — the same justification given by the US and it allies for their export controls.

The announcement nevertheless sparked concern in Europe about potential disruption to supply chains in the short term and is likely to spur discussion about how to reduce the bloc’s reliance on China.

The European Union announced a new economic security strategy last month and launched a Critical Raw Materials Act to ease financing and permitting for new mining and refining projects, and also to strike trade alliances to reduce the bloc’s dependence on Chinese suppliers. If the new rules were used to restrict exports, that escalation of tensions could threaten the bloc’s ability to transform its economy to become more environmentally friendly.

The immediate effect of the changes seems to be limited, according to a statement from the Korean industry ministry on Tuesday, which noted that there are other supplies of the two metals.

However even if China doesn’t use this new rule to limit exports at some point in the future, it arguably has more to lose than the US, particularly as its mounting economic challenges raise questions about whether it will ever take over as the world’s biggest economy.

Beijing’s most effective tool to sanction others is to cut off access to its huge market, or limit exports of strategically important goods. But this further drives the decoupling from China that Beijing wants to avoid, as it would undermine its stated goals of ensuring the nation is dominant in new technologies and essential in global supply chains.

At the moment, however, the growing ideological struggle between the US and China is taking precedence over globalization, Morris Chang, the founder of chip giant Taiwan Semiconductor Manufacturing Co., said at an industry event in Taipei on Tuesday.

“Right now national security and technology and economic leadership take priority over globalization,” he said. “The relations between US and China are more about competition than collaboration.”

(With assistance from Rebecca Choong Wilkins, Betty Hou and Jennifer Creery)

Mongolia plans to increase its number of 24-hour ports and transport links along the border with China, pinning economic-growth hopes on the post-Covid recovery on its southern neighbour, according to a high-ranking Mongolian official.

Port recovery is “one of the pillars” of Mongolia’s economic development, according to the minister in charge of road and transport development, Byambatsogt Sandag, and the country “intends to expose all ports, connect them by road and rail”.

“In the future, we will make Gashuunsukhait, Hangi, Bichigt and Bulgan ports 24-hour operational, which is important for the further expansion of trade and economic cooperation between [China and Mongolia],” he said in a written response to the Post.

Sandag was one of the ministers of the Mongolian delegation that visited China by joining the World Economic Forum held in the northern port city of Tianjin between June 27 and 29.

During the visit, Prime Minister Luvsannamsrain Oyun-Erdene and Minister of Border Port Recovery B. Tulga met with director general of the General Administration of Customs, Zhao Zenglian, and they discussed the 24-hour operation of the Zamin-Uud and Erlian ports.

All-day operations will also extend to other ports on the 4,700km (2,920-mile) land border between the two countries.

Both governments aim to develop ports, which Sandag described as an “air vent” that opens occasionally now but will become more akin to a “door” that is always open.

The closer bilateral economic relations came as Mongolia launched its “New Recovery” policy in 2021, which aims to spur investment in areas such as energy, border ports, industrialisation, urban and rural recovery, green development, and public sector efficiency.

Total trade value from Mongolia to China reached US$4.2 billion for the first quarter, surging 1.7 times year on year, according to Mongolian official data. Coal comprises 63 per cent of Mongolian exports.

During the Mongolian prime minister’s visit to China, the contract for the eastern region railway construction was signed for US$1.8 billion, according to Sandag.

“Within the framework of the development of the eastern railway corridor, a major construction project is being started to renovate the railway line from the Russian-Mongolian border to Ereentsav-Choibalsan, and to construct a new railway from Choibalsan to the Mongolian-Chinese Bichigt-Zunkhatavch port,” he added.

“In this regard, the eastern railway corridor connecting Mongolia-Russia-China will be created, and our country will have the second railway corridor connecting Asia and Europe.”

Mongolia’s railway in the eastern region is planned to be 420km long, running through Choibalsan, the fourth-largest city, to the Khuut coal mine and Bichigt, the border-crossing station.

Sumiya Chuluunbaatar, a non-resident fellow at the Mongolian Academy of Sciences’ Institute of International Studies, said the construction of railways in these southern regions of Mongolia is one of the most critical factors in becoming “a land-connected country”.

“During the epidemic, the Mongolian people felt the importance of building infrastructure and customs-clearance capabilities,” he added.

Chuluunbaatar explained that a work delegation from China’s Liaoning province paid a visit to Mongolia recently, as they want to turn Liaoning ports such as Dalian and Jinzhou into “Mongolia’s new Tianjin Port”, which requires railway construction in eastern Mongolia and a connection with Northeast China.

There is a great need for Mongolia, Russia and China to expand their road and rail corridors … to learn from China

Byambatsogt Sandag, Mongolian minister

Sandag said in his written response that the development of the road and transport sector is the “lifeblood of the economy” because the development of other sectors depends on the “infrastructure, accessibility, quality of services, transparency and speed”.

“In terms of new infrastructure, there is a great need for Mongolia, Russia and China to expand their road and rail corridors, to have new corridors, to connect their ports, to learn from China’s urban planning and infrastructure experience in reducing congestion in Ulaanbaatar, and to attract investment in this area,” he noted.

Trade between China and Mongolia via Ganqmod Port in Inner Mongolia – the largest highway port between China and Mongolia – cleared nearly 8 million tonnes worth of goods in the first quarter of 2023, an increase of more than four times from last year, Xinhua reported.

The volume of imported coal from Mongolia was 7.68 million tonnes, up 525.4 per cent year on year, the Chinese media added, while imports of refined copper powder grew by 12.2 per cent year on year to 201,200 tonnes.

“Trucks and food shipments from China to Russia are increasing,” Sandag said. “We are inviting both Russian and Chinese sides to the construction of the Eastern Region Railway Corridor.”

Kh. Baatarkhuu, a Mongolian author and one of the participants of the delegation to China joining the World Economic Forum, called the resolution on operating checkpoints along the border between both countries “very important”.

“If there is an increase of specific railroads to connect the ports, the amount of coal exported from Mongolia will at least double in size,” he added.

The supply chain subsidiary of Shaanxi Coal and Chemical Industry Group, one of largest state-owned coal and chemicals producer in China, reported the successful customs clearance of its first batch of Mongolia coking coal, about 30,000 tonnes, through Ceke border crossing on June 27, marking a solid step for the company in the field of international trade.

China is the largest destination of coal exports from the landlord country, but the major coal producer itself hasn't imported coal from Mongolia before.

Since the coal cross-border transportation resumed at Ceke port on February 10, the company has quickly sent teams to the port and also Ganqimaodu port to gain a thorough understanding of transportation, warehousing, and sales conditions, in order to accelerate the progress of importing Mongolian coal.

This coal trade also marked the first usage of Chinese yuan for settlement. By prioritizing the use of the local currency, the company not only enhanced the yuan's internationalization but also facilitated the achievement of budget targets and ensured the smooth operation of business activities and risk management.

Ceke, as an important transportation hub connecting Northwestern China with Mongolia, plays a crucial role in coal trade. The company's strategic focus on expanding the Mongolian coking coal import scale is in line with China's Belt and Road Initiative and the "China-Mongolia-Russia Economic Corridor."

(Writing by Alex Guo Editing by Emma Yang)

For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.

On June 29 and 30, Mongolia’s Foreign Minister Battsetseg Batmunkh hosted foreign ministers from France, Germany, Indonesia, Liechtenstein, and South Africa as well as representatives from international organizations in Ulaanbaatar. They discussed issues related to gender equality, including ways to tackle the climate crisis and food insecurity, resulting in the “Ulaanbaatar Declaration.” Mongolia, which recently joined the “Feminist Foreign Policy Plus Group” at the United Nations – an alliance of countries engaging in the topic – says it will hereby contribute to promoting feminist and gender transformative approaches to multilateralism and foreign policy.

Feminist foreign policy wants to strengthen the rights, resources, and representation of women and marginalized groups, in the proven knowledge that more inclusive decision-making leads to more sustainable diplomatic and peace processes. Germany’s government became the seventh country to commit to a feminist foreign policy (FFP) in late 2021. Since then, more states have announced their commitments, including Chile and the Netherlands.

They have joined a reform-minded club – one that promotes a sharp new understanding of security that puts the interests of people, rather than states, at the center. For governments, this means aiming at status quo assumptions, national interests, and relations with other states. While FFP’s implementation and focus may vary from state to state, it is still a commitment to fundamental transformation.

The ceremony of handing over the standard management plan for the closure of the Salkhit silver and gold mine was held yesterday at the "Tuushin" hotel.

The mine closure pilot plan is to improve land use, to provide a healthy and safe living environment for the people in the mining area, and in general, to improve the social and economic benefits when the mine is closed. It is a complex activity to liquidate the infrastructure of the mine, restore the environment, and carry out environmental monitoring. Rehabilitating areas affected by mining activities in order to enable them to be used again sustainably has a positive effect on local communities and ecosystems.

Erdenes Silver Resource LLC, a daughter company of a group of state-owned mining companies Erdenes Mongol, was handed over "Mongolia: Enhancing Resource Management through Institutional Transformation" (MERIT) Project, implemented with the funding of the Government of Canada and the Ministry of Foreign Affairs of the country. The project was fully implemented in two phases from September 2021 to June this year.

Erdenes Silver Resource LLC operates in the Salkhit silver and gold deposit located in Gurvansaikhan soum of Dundgobi aimag. Despite the fact that the exploitation of the Salkhit silver and gold deposit will continue for the next 8-10 years, the closure plan has been developed and presented. By accepting the standard mine closure management plan, the company assumes the responsibility of implementing the laws and regulations related to mine closure and rehabilitation and working as a pioneer in the further development of responsible mining. Ambassador of Canada to Mongolia Mrs. Catherine Ivkoff noted in her opening speech, "In advanced mining countries, closure plans are developed before the operations begin. Actually, the closure management plan goes hand in hand with the mine operations."

Mining industry participants in the ceremony emphasized that the management plan for the closure of the Salkhit mine will be a world-standard model that can be used in other mines in Mongolia.

Quite a number of mines have been closed in the past in Mongolia. However, first of all, the closures were done in different ways for a certain period of time due to various conditions of the mines, such as depletion of resources, and financial and economic conditions, as pointed out by the legal adviser of the MERIT project G. Surakhbayar.

In a sense, the mining sector of our country has developed intensively in the last 30 years with foreign and domestic investments, still, there is no history of closing mines based on rational, correct, and theoretical concepts. However, he emphasized the significance of this closure management plan as it is being implemented in Mongolia in accordance with world norms and standards.

During the visit of the Prime Minister of Mongolia L. Oyu-Erdene to China, Minister of Environment and Tourism B. Bat-Erdene met with representatives of 22 leading companies, including Chinese tourism group North China Region, CTG Travel Service Corporation Ltd., China Gaund Tourism Group, Ctrip International Travel Service, UTour Group Co., Ltd., and Tuniu Tour, etc., and introduced them new activities and events in the Mongolian tourism industry. The parties agreed to carry out the following activities between the two countries. They include:

• Reviving the tourism activities of three countries in the scope of the "Great Tea Road" ;

• Cooperation in border tourism;

• Cooperation with the online "Ctrip" agency to import and trade Mongolia's travel products;

• Providing comprehensive tourism support within the "Belt and Road" economic corridor;

• Cooperation with the TOP 22 Chinese tourism entrepreneurs in receiving Chinese tourists;

• Supporting investment in the tourism industry.

As part of the "Visit Mongolia Years" being implemented by the Government of Mongolia, our country aims to receive 400 thousand tourists from China.

The Head of China's Beijing Foreign Cultural and Trade Association, Pan Ching Lin, expressed support for collaboration and coordination between Mongolian and Chinese tourism companies for realizing the goal of receiving "One Million" tourists this year, specifically 400 thousand tourists from the southern neighbor. In addition, both sides emphasized that the Silk Road or "Belt and Road" project is an opportunity to start new relations in the field of tourism between the two countries.

In 2020, the Mongolian Government amended Law on Celebrations and extended the public holiday during the Naadam Festival from three days to five. This year, Mongolians will get a full week of holiday on 10-16 July.

Recognised by UNESCO as Intangible Cultural Heritage, the Naadam Festival unites Mongolians to celebrate their heritage, customs via an enthralling mix of sports and arts. Held every year from July 11-15, it is evidence of their long history, devotion to their nomadic culture, and unwavering national pride. Witness the vigour and spirit of Mongolia, as the whole country comes together in a proud display of majestic festivity.

Referred to as ‘Eriin Gurvan Naadam’, which translates to ‘Three Manly Sports’, it has its roots in the ancient Mongols’ nomadic culture and traditional way of life across the vast steppe. The festival features the three main activities – wrestling, horse racing, and archery, which are closely related to the history and culture of Mongolia.