The market capitalization of all companies trading on China’s stock exchanges has reached a record $10 trillion, as investors bet on the world’s second biggest economy amid coronavirus uncertainty.

The total value of all stocks listed in bourses in Shanghai and Shenzhen secured a new peak of $10.08 trillion as markets closed on Tuesday, the same day that Beijing released positive trade data, the Financial Times reports, citing Bloomberg calculations. The previous milestone of $10.05 trillion was recorded in mid-June 2015, after which the Chinese stock market saw a historic crash which wiped out nearly a half of its value in months.

It took the world’s second-largest economy more than five years to recoup the losses. Chinese stocks managed to recover in recent months after the Covid-19 outbreak triggered panic on global markets in March. Stocks have been close to the $10 trillion milestone since July, and finally surged past the mark earlier this week.

“It’s a meaningful number, especially coming after a pause in the stock rally,” Hao Hong, chief strategist for Bocom International in Hong Kong, said, Bloomberg reports. “It’s possible China’s market value can expand faster now that market reforms like the registration-based IPO system are in place.”

The recent rally was powered by several factors, including fast recovery of the Chinese economy, which was the first to suffer from the pandemic, the appreciation of the yuan and an increased number of Chinese companies’ IPOs. Last year’s launch of Shanghai’s Nasdaq-style Star market also helped to attract more investment.

While some investors are still cautious about the one-year-old market technology board, analysts say the situation in China’s stock market has changed in general since 2015’s bubble popped. They also noted that risk factors are now more controllable and manageable for Beijing, while the share of institutional and foreign investors has increased and margin financing is twice as low as it was five years ago.

“Obviously the question that comes to mind is whether valuation is as bubbly as it used to be [in 2015] and the answer is no,” Frank Benzimra, head of Asia equity strategy at Societe Generale, told the Financial Times.

In school geography textbooks around the world, Mongolia’s Gobi desert is cited as the main example of a cold desert. It occupies almost the entire southern region of the country, covering approximately 350,000 square kilometres. What is less well known is that this desert is very rich in minerals, that extraction of these minerals has led to a situation where the traditional animal herders of the Gobi do not get enough water, and what they do get is toxic.

Before 2000 there were no mines in South Gobi apart from the state-run Tavan Tolgoi coal mine. But over the past two decades, foreign investment has flooded in, with companies now operating 12 large mines, including Rio Tinto’s Oyu Tolgoi, one of the world’s biggest copper and gold mines. Driven by the mining industry’s growing demands, the government estimates that the region’s groundwater will run dry within a few years.

Much of Mongolia’s water is in the north, and the government now plans to pipe this water to the arid south where the majority of the mining takes place, a ‘solution’ that has led to many more problems wherever it has been tried.

Meanwhile, the water shortage is critical enough to lead to violence. L. Battsengel, a herder in Khanbogd, a small town near the huge Oyu Tolgoi mine, told The Third Pole that many wells have dried up in areas where mines operate, and fights over water are common among herders. At a well near a mine, a herder opened fire last year, killing one and wounding another. In another incident on September 29 last year, one herder stabbed another to death in a fight over water.

“Mines take the water and pasture, the main means of life for the herder,” Battsengel said. “We know there is a plan to transfer water through pipes from the northern region. But that may not be feasible because Orkhon and Kherlen rivers are not that big and may not have enough water for diversion.”

Mishigsuren, another resident of Khanbogd, has given up herding. “Being a herder is no longer a simple and pleasant way of life, especially for women,” she said. “I was born to a herder family and lived much of my life as a herder. I quit due to increasing difficulties I was experiencing. Due to the large quantities of water used by mining companies much of surface water – such as small streams – in the surrounding area have all dried up and water in the well fields [a complex of water wells] used by herders has either dried up or decreased drastically. Mining companies use deep aquifers which means mines suck out underground water from area covering tens of kilometres surrounding the mine.”

Batulzii, a herder from Noyon, said, “In our county, there are two coal mines. Though we live about 7-8 kilometres from the mines, we people as well as animals are all covered with dust and breathe polluted air and drink polluted water. We started getting genetically mutated livestock like baby goats and camels born with extremely large heads, three hind legs and so on. That’s from drinking poisoned water. The well field where we used to water 500 camels dried up. It can’t even water 20 camels now. I had to reduce the number of livestock from 1,000 to 500 so that I can have sufficient water from the well fields around.”

Many herders in South Gobi have been forced to give up their traditional livelihood for similar reasons, though there are no official estimates of the numbers.

Effects of uranium mining

The poisoning of groundwater is most serious around uranium mines.

Norsuren, a herder at Ulaanbadrakh in Dornogobi, told The Third Pole that water is poisoned in over 10 well fields around a uranium mine, some as far as 30 kilometres away. He said the polluted water has caused women to give birth to premature or genetically defective babies. “Although it’s not really publicly disclosed, this may affect [adults] as well. We filed a lawsuit, to no avail. The court said that water was poisoned by effects of uranium mining, but the state doesn’t seem to want to do much about it.”

Local media reported four birth defects in a single herder family in the area. Norsuren said, “This is one case now disclosed. But there are many such cases in Ulaanbadrakh. Engineers and other employees of the mining company don’t drink water from the well fields around the mine. If water is fresh and not poisonous as they claim, why don’t they drink it?”

Water demand outstripping supply

World Bank studies show that water demand in the Gobi is growing quickly and will increase further, driven mainly by mining. Currently, mining accounts for 71% of the 155 million cubic metre annual water demand in the Gobi. This growing demand will soon outstrip the available resources.

The World Bank estimates Gobi has about 200-500 million cubic metres of available groundwater. Mongolia’s Ministry of Environment and Green Development has a more precise and smaller estimate of 172 million cubic metres. Going by the ministry estimate, the demand will outstrip groundwater availability within the next few years.

Even with an optimistic estimate of groundwater availability, the Gobi is likely to run out of water by 2030 unless preventive steps are taken urgently.

Transporting water a pipe dream?

Ya. Boldbaatar, head of the water resource department in Mongolia’s Ministry of Environment and Green Development, said, “We don’t have many choices in solving the Gobi water resource shortage issues. The government considers water transfer projects from the northern region feasible and Orkhon-Gobi and Kherlen-Gobi river projects are under review now. Once financing issues are resolved, these projects will need to be implemented. Meanwhile, we are also pushing mining companies towards water reuse technologies that enable companies to reuse 70-80% of the water that has been used once.”

Both of the water diversion plans will need pipelines about 700 kilometres long. Each project has an estimated price tag of USD 550-600 million.

Chandmani, a highly respected water expert, was sceptical of the plans. He said the annual demand from the mines in the Gobi (100-150 million cubic metres) is higher than the water available in the two rivers. The Orkhon-Gobi project is expected to transport 2.5 cubic metres of water per second. “It will dry up the river,” the expert said. “Kherlen is smaller than Orkhon, so don’t even mention diverting water from Kherlen. Also, Orkhon and Kherlen are both transboundary rivers flowing out to Russia and China respectively. This means implementation of water transfer plans may become international issues.”

The rivers are important for regional economies in Russia and China. The Orkhon river converges with the Selenge river, a major tributary of Russia’s famous lake Baikal. Kherlen is the main tributary flowing into Dalai lake across the border in China. The World Bank pulled out of financing the Orkhon-Gobi water project due to public opposition in Mongolia and Russia, and because there had been no consultation with Russia’s authorities. The Kherlen-Gobi project, which is still under government review, has met with public opposition in Mongolia and is not likely to gain support from China either.

With such grave doubts about the success of these water-diversion plans, the herders need a plan that is feasible and sustainable, for themselves and for the animals they have been herding for centuries.

Batsuuri Khaltar is an economist and accountant and contributor to Mongolia’s professional journals and newspapers. He is a graduate of the London School of Economics and a researcher with an emphasis on economic development, environmental protection and mining in developing countries

A French museum has postponed an exhibit about the Mongol emperor Genghis Khan citing interference by the Chinese government, which it accuses of trying to rewrite history.

The Château des ducs de Bretagne history museum in the western city of Nantes said it was putting the show about the fearsome 13th century leader on hold for over three years.

The museum’s director, Bertrand Guillet, said: “We made the decision to stop this production in the name of the human, scientific and ethical values that we defend.”

It said the Chinese authorities demanded that certain words, including “Genghis Khan,” “Empire” and “Mongol” be taken out of the show. Subsequently they asked for power over exhibition brochures, legends and maps.

The spat comes as the Chinese government has hardened its discrimination against ethnic Mongols, many of whom live in the northern province of Inner Mongolia.

The exhibit was planned in collaboration with the Inner Mongolia Museum in Hohhot, China. But tensions arose, the Nantes museum said, when the Chinese Bureau of Cultural Heritage pressured the museum for changes to the original plan, “including notably elements of biased rewriting of Mongol culture in favour of a new national narrative”.

The museum branded it “censorship” and said it underlined a “hardening … of the position of the Chinese government against the Mongolian minority”.

The Chinese consulate in Paris did not immediately return calls for comment.

More than 24,500 Mongolian nationals have returned home so far since the COVID-19 outbreak, the country's National Emergency Management Agency (NEMA) said Wednesday.

"Since the COVID-19 outbreak, our country has evacuated a total of 24,553 nationals on chartered flights and buses or trains from COVID-19-hit countries," Batmunkh Uuganbayar, deputy head of the NEMA, said at a press conference.

"We planned to repatriate 2,700 stranded nationals from abroad on 11 chartered flights this month, and over 1,500 of them have been repatriated so far," Uuganbayar added.

The Asian country has confirmed 320 COVID-19 cases so far, all imported.

Thanks to the early introduction of social distancing and rigid health protocols for cross-border flows, no local transmissions or deaths have been reported in Mongolia so far.

The country entered a heightened state of readiness on Feb. 12 to prevent the spread of COVID-19, including the suspension of international passenger flights.

With expanding regional cooperation and a readily available platform, the building blocks are in place for Central Asia to achieve energy security, resilience and economic competitiveness.

When countries cooperate, they prosper. Increased dialogue between nations can boost trade in goods and services, open larger markets for businesses, and strengthen energy security. Energy sharing is particularly important in Central Asia – a region with rich but unevenly distributed fossil fuel and hydro resources.

In the Central Asia Power System – a Soviet-era electricity grid – the region has a readily available platform that can help expand energy trading and boost regional energy security.

Kazakhstan, Turkmenistan, and Uzbekistan are rich in fossil fuels, while the Kyrgyz Republic and Tajikistan have extensive hydropower. Yet in winter, the hydro-rich countries suffer from power shortages due to a combination of reduced water flow and higher demand for heating. The solution is for these countries to share energy.

To achieve this, they need physical infrastructure such as transmission lines to move electricity in bulk and a governance structure to ensure the market functions properly. An integrated system would enable the hydro-resource rich nations to buy electricity from their fossil-fuel rich neighbors in winter, while surplus power can flow in the opposite direction in summer.

The good news is that countries in Central Asia have begun to expand regional cooperation. In August 2020, Afghanistan and Uzbekistan signed a decade-long power purchase agreement while a new 500kV transmission line will connect both countries. In 2019, the Central Asia Regional Economic Cooperation (CAREC) Program’s 11 members signed a landmark energy cooperation agreement.

Investments have continued to flow into the region’s other mega projects including the Turkmenistan-Uzbekistan-Tajikistan-Afghanistan-Pakistan electricity project, the Central Asia South Asia Electricity Transmission and Trade Project, and the Turkmenistan-Afghanistan-Pakistan-India gas pipeline.

With strong momentum towards greater regional connectivity, there is renewed attention on the strategic importance of the Central Asia Power System. Built in the 1970s, power sharing under the system has steadily declined in recent decades. But given the system connects Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan, it can act as a readily available platform for regional energy security.

Here are four ways to help advance the regional electricity grid as a platform for deeper regional integration.

First, it is essential to ensure adequate transmission capacity in the region, which is a pre-requisite to enabling power trading. Transmission systems in Central Asian countries are generally old and inadequate – they must be strengthened at the country level to meet fast-growing national demand. In parallel, regional interconnectivity needs to be conceived to enable power to flow to other countries.

However, cross border interconnectors will need to generate large bilateral gains to outweigh the costs and thus should be thoroughly and independently studied. Longer-term, ongoing regional network development plans supported by the Asian Development Bank will help to identify critical corridors for regional interconnections.

Second, harmonizing regulations to facilitate greater power trading. Currently, power is traded across the region based on bilateral contracts with agreed tariffs between two parties, while ancillary services such as frequency regulation follow established rules in the Central Asia Power System and interconnected Russian system.

Instead of re-inventing the wheel, the rules of the Central Asia Power System could be further refined and harmonized to provide better governance which could facilitate trading. The Coordinating Dispatch Center, CDC Energia, located in Tashkent, Uzbekistan for example, could function as a regional transmission system operator.

Different market mechanisms need to be assessed for deeper integration including market pooling and day-ahead/real-time trading, which can facilitate different forms of electricity trading between countries. This may also lead to more competition than in bilateral arrangements and result in more efficient use of resources.

Based on past experiences, this will be a long and complex process so a roadmap for reform and development of the regional power market should also strengthen the institutional and governance arrangements, and the design of the integrated power market.

Third, domestic reform efforts must continue. The region is characterized by a range of market structures and uneven market development because of the varying speeds of electricity market reform. While regional trade can still happen without significant market reforms, in many cases, effective electricity trade also requires reform at the domestic level. For instance, energy subsidies, particularly fossil-fuel subsidies, should be phased out gradually as they distort the accurate prices of the traded power, making price determination difficult without cross-subsidizing neighbors.

Third-party access to their transmission networks is necessary for power transit to move through different jurisdictions. Measures to improve the sustainability of a country’s own electricity market are pivotal to the creditworthiness of power importers and exporters. Going forward, continuous regional commercial power trading will eventually require a more flexible market structure. Renewed attention needs to be paid to electricity market reform at the country level.

Lastly, the Central Asia Power System can serve as the springboard to introduce more renewable energy into the region’s energy mix. The system was originally designed to balance the uneven distribution of fossil fuels in Kazakhstan, Turkmenistan, Uzbekistan, and hydro resources in Kyrgyzstan and Tajikistan through electricity trading - the same principle can facilitate the shift to green energy systems of countries by relocating carbon emissions from one country to another that can manage emissions more efficiently, and eventually reducing them.

One of the benefits of regional interconnection includes shared reserve margins which can introduce additional capacity in the region, and act as a buffer against energy intermittency – one of the main factors affecting renewable energy. Given that solar and wind-based systems are dependent on the amount of sunlight and wind at any given time and can be subject to seasonal variations, electricity from these sources is inherently affected by intermittency.

Better interconnected capacity would enable countries to use the capacity from neighbors, enabling greater flexibility to accommodate variable renewable energy in the region. A reformed Central Asia Power System could spur private sector investment to further accelerate the expansion of renewable energy. Smarter and innovative technical solutions should be considered at the regional level under broader initiatives such as the Central Asia Regional Economic Cooperation program.

With strong momentum to expand and deepen regional cooperation, and a readily available platform, the core building blocks are in place in Central Asia. With further reforms to strengthen regional connections, the resulting energy security, resilience and economic competitiveness will in turn build the confidence essential for further investments in the region.

Ulaanbaatar /MONTSAME/. A meeting of the International Cooperation Review Group (ICRG) of the Financial Action Task Force (FATF) to discuss final recommendation to the FATF Plenary session held virtually yesterday.

According to Minister of Finance Ch.Khurelbaatar, the participating representatives of more than 100 countries unanimously supported Mongolia’s removal from the list of countries with strategic deficiencies or so-called ‘Grey List’ during the meeting based on the reports presented by the team who visited Mongolia to conduct an on-site assessment.

The Minister tweeted, “Although we were expecting a positive result, everyone was truly happy to hear that Mongolia’s removal from the grey list has been supported”, saying that it came into reality as a result of significant efforts and contribution made by everyone involved in the process.

The final decision regarding Mongolia’s removal from the list will be made at the FATF Plenary session which will be held virtually on October 21-23.

The cabinet resolved to allocate MNT 1.96 billion from the government contingency fund for the preparation of fodder and hay reserves for Bayankhongor, Gobi-Altai, Gobisumber, Dornogobi, Dundgobi, Zavkhan, Umnugobi, Uvurkhangai and Tuv aimags, which experienced poor summer weather.

Also, over MNT 400 million to be allocated for putting aside green fodder and bran in inter-aimag ‘otor’ regions – the emergency grazing reserves areas, in Zavkhan, Uvs, Gobisumber, Bulgan, Khentii, Gobi-Altai and Khovd aimags.

Deputy Prime Minister Ya.Sodbaatar has worked in some rural aimags to check preparations for the upcoming winter and spring seasons. Requests have been forwarded to the government to provide support to over 2,685 herder families in the aforementioned regions, where pastures are overgrazed and had poor summer, as well as to tackle issues concerning water and electricity supply in Dundgobi and Umnugobi aimag.

Moreover, at the meeting, the cabinet decided to earmark more than MNT 3.8 billion from the government’s contingency fund for the following purposes:

- To cover expenses of accommodation for employees and officers of healthcare, police, professional inspection, emergency services working at the isolation facilities and MIAT Mongolian Airlines crew members in connection with the COVID-19 pandemic;

- To rebuild and mitigate the damages caused by natural disasters and hazards took place in Arkhangai, Bayan-Ulgii, Gobi-Altai, Uvurkhangai, Sukhbaatar, Tuv and Khuvsgul aimags;

- To deliver sterilizing machines and other necessary equipment and disinfectants and sterilization products to the National Rescue Brigade, emergency and inspection departments in the capital city and some aimags, and

- To provide Ger homes and other essential items for people who have lost their homes from the state reserve.

BHP Group has received deferment requests from Chinese coal customers, chairman Ken MacKenzie said on Wednesday, after reports that China had put a freeze on accepting Australian coal amid trade tensions between the two countries.

“We understand there may be some new developments relating to how China plans and moderates imports versus its own domestic coal production,” MacKenzie told reporters.

“Our commercial team has recently received deferment requests,” he told a briefing after the miner’s annual general meeting, adding, “It would be concerning if the rumours were true.”

MacKenzie did not specify whether he was referring to BHP’s thermal or metallurgical coal.

Trade industry reports late last week suggested that some Chinese ports had been told not to accept either type of Australian coal, and that such shipments were being sold along to other markets at the last minute.

China’s coal imports had been expected to slow in the second half, after heavy imports earlier this year and weaker than expected demand due to coronavirus-related disruption, spurring China to act to support its domestic industry.

Customs data shows that China has taken less coal from Australia and also Indonesia in the past month.

Australian politicians have played down the issue, with Prime Minister Scott Morrison on Tuesday characterising China’s move to put quotas around imports as “not uncommon.” Australian coal shipments to China were delayed in February last year.

Australia’s ties with top trade partner China soured in 2018 when it became the first country to publicly ban China’s Huawei from its 5G network, and worsened after Canberra called for an enquiry into the origins of the coronavirus.

China is the biggest importer of Australian coal, taking 27% of its metallurgical coal in the year to June and 20% of its thermal coal, which the Australian government estimates was worth A$13.7 billion last year behind China’s iron ore imports which were worth A$84.9 billion.

(By Melanie Burton; Editing by Louise Heavens)

(The opinions expressed here are those of the author, Clyde Russell, a columnist for Reuters)

China has reportedly told coal traders and users to stop imports from Australia with immediate effect in a move that would choke a major trade channel for both countries, a major escalation of political tensions between the pair.

Commodity price reporting agencies S&P Global Platts and Argus, as well as other media outlets, reported in recent days hearing from unnamed sources that Beijing had given “verbal” instructions to some steel mills, power companies and coal traders to halt imports from Australia.

If the reports are accurate – there has been no official confirmation yet – it would constitute a serious deterioration in the relationship between Australia and its largest trading partner. Coal is one of the big three Australian commodity exports to China, coming in behind iron ore and liquefied natural gas (LNG).

Ties between the two have been severely strained on a political level by Canberra’s call for an international investigation into the novel coronavirus pandemic, which originated in China before spreading globally.

So far Beijing has effectively banned imports of Australian barley, placed restrictions on wine and meat, and discouraged students and others from travelling to Australia.

While these measures certainly are negative to the sectors involved, they are still relatively insignificant when compared to the overall trading relationship between Australia and China.

Australia is China’s top supplier of iron ore and coking coal, the two main ingredients used to make steel, while also being a major provider of LNG and thermal coal, used predominantly in power stations.

It’s worth noting that this isn’t the first time that China has supposedly imposed some sort of ban, or go-slow, on imports of coal from Australia.

The most recent occasion was in March 2019, when there was reported to be an unofficial slowing of customs clearances of Australian cargoes.

However, despite extensive reporting on the delaying of shipments, Australian coal exports to China seemed to show very little impact, with a small dip in February 2019 being made up a rebound in March that year.

It will take several months to work out if China is being more serious this time around, or if the reported import restrictions are just part of the wider cut and thrust of the ongoing political tensions.

In the meantime, vessel-tracking and port data compiled by Refinitiv show that China has already been slowing imports of Australian coal.

September imports of all coal types from Australia were 5.48 million tonnes, down from 6.04 million in August and 8.17 million in July.

In year-to-date terms, China imported 67.68 million tonnes from Australia in the first nine months, a drop of 7.3% from the same period in 2019.

Still, it’s worth noting that Indonesia, traditionally the biggest supplier of coal to China, has seen steeper declines: China’s imports from Indonesia in September were 4.18 million tonnes, the lowest since Refinitiv started vessel-tracking in January 2015.

For the first nine months of 2020, China imported 86.63 million tonnes from Indonesia, down 17% from the same period last year.

China is believed to have been restricting coal imports, particularly thermal grades, in order to support prices for domestic miners, and it appears that so far Indonesia has taken a bigger hit than Australia.

Escalation fears

Another factor worth noting is that while coal is one of the big three Australian commodity exports to China, it’s still the one upon which China is least reliant, and Beijing has a realistic chance of being able to source alternative supplies.

In thermal coal, China can source similar grades from Russia, South Africa, Colombia and the United States without incurring too much of a financial penalty through higher freight charges.

In coking coal, the situation is somewhat tricker.

AUSTRALIA SUPPLIES ABOUT 68% OF CHINA’S IRON ORE IMPORTS

Australia’s share of China’s coking coal imports in the first half of 2020 was about two-thirds, according to the Australian government’s latest Resources and Energy Publication.

Australia is the world’s largest coking coal exporter, supplying about 55% of the traded market.

If China were to stop importing from Australia, it would have to scramble to buy whatever it could from neighbouring Mongolia and Russia, as well as Canada and the United States.

While the price of Australian coking coal would no doubt suffer, the prices of these other types would also likely rally strongly: Cutting off imports from Australia will potentially be a costly exercise for Beijing.

It would also make coking coal cheaper for regional steel-making competitors, such as Japan, South Korea and India, handing those countries an advantage in the highly competitive steel export market in Asia.

These may be costs Beijing is willing to bear in its bid to keep Australia in check, but there is always a risk of undue and unforeseen escalation of the conflict.

The conservative government of Prime Minister Scott Morrison may deem it worth the risk of retaliating, with the obvious candidate being Australian iron ore, upon which China is heavily reliant.

Australia supplies about 68% of China’s iron ore imports, and there is absolutely no way the rest of the world could make up for the shortfall if shipments were halted.

Given the reliance of the Chinese economy on steel as the key component of infrastructure, construction and manufacturing, an Australian ban on iron ore exports would have a far bigger impact on China than a Chinese ban on Australian coal imports has on Australia.

(Editing by Kenneth Maxwell)

The municipal government of Mongolia's capital Ulan Bator said Tuesday it is buying 200 more school buses this year to reduce traffic congestion and ensure student safety.

"To improve access to the school transportation, we planned to buy 200 more school buses within this year. Today, we are handing over the first 75 buses to relevant schools," the city's mayor's press office said in a statement.

Traffic congestion has been one of the most pressing issues in the Mongolian capital for many years.

Parents driving their children to school are said to be one of the major factors of the traffic congestion in the city.

To cope with this problem, Ulan Bator, home to more than half of Mongolia's population of 3.2 million, launched a school bus service with 40 buses last year. Enditem