China has the capacity to lift Mongolia out of its current crisis and improve its economy under the condition that Mongolia intensifies its involvement in the One Belt One Road Initiative, says the Chinese state-run newspaper Global Times.

The Global Times is largely thought of as the informal voice of the Chinese government internationally. The newspaper is widely known to release controversial and critical articles that are believed to voice the positions of the Chinese Communist Party through an alternative channel.

The newspaper has been critical of Mongolia in the past, especially surrounding the recent Dalai Lama visit. This time, however, the newspaper proposed that enhancing economic cooperation with China could help Mongolia with its “financial impasse and reverse its slow growth.”

The article reminded readers about the 580 million USD bond debt due in March and mentioned about the charity fund established for citizens to donate money to help revive the economy. The bond in question was issued by the Development Bank of Mongolia in March 2012, with a tenor of five years and a coupon of 5.75 percent. The bond will mature on March 21.

The government is currently negotiating a bailout with the International Monetary Fund (IMF) and China amid a severe economic crisis in the country, which has dragged down GDP from double-digit growth a few years ago to close to zero.

The Global Times underlined, “Experts said China, Mongolia’s largest trading partner, can play a positive role in helping the crisis-stricken country.

“As of the end of September 2016, Mongolia’s overall debt stood at 23.78 billion USD, up 10 percent from a year earlier and exceeding 210 percent of its GDP, according to a statement posted on January 25 on the website of the economic and commercial counselor’s office of the Chinese Embassy in Mongolia. The statement cited data from Mongolia’s statistical authority and the central bank in the country.”

The article highlighted that a slump in commodity prices, coupled with natural disasters in 2016, caused Mongolia’s GDP growth in 2016 to drop to 1.6 percent.

Sun Huijun, an expert on relationships among China, Russia and Central Asian countries, told the Global Times on Sunday that as China’s neighbor is experiencing hardships, China can prove to be “a friend in need.”

“China can help Mongolia secure low-interest loans from multilateral institutions, or arrange loans after inter-governmental negotiations,” Sun said.

Li Xing, director of the Eurasian Studies Center with the Beijing Normal University, said that China has the capacity to lift Mongolia out of the current crisis and improve its economy, but there is a condition.

“Under China’s proposed One Belt and One Road initiative, there is an economic corridor starting from China, running through Mongolia and onward to Russia. This is a plan drawn up by the Chinese government, and much can be done under the framework,” Li said.

The One Belt and One Road initiative has been at the forefront of Chinese foreign policy as the project which was proposed by President Xi Jinping.

The initiative has many plans involving infrastructure and connectivity, and it can bring lots of money to Mongolia, Li told the Global Times on Sunday.

Sun said prosperous neighbors and partners also suit China’s ambitions to push its One Belt and One Road initiative, against the backdrop of likely uncertainties in world trade brought up by the Trump administration.

“Russia, Kazakhstan and Mongolia are especially important to the northern route of the Silk Road initiative,” noted Sun.

Li said that 580 million USD liquidity is within easy reach for China, “but China has its principles that are non-negotiable.” Li noted that the visit by the Dalai Lama to Mongolia last year hurt bilateral relations.

Analysts have noted that this might be the Chinese government’s way of expressing its openness to helping the Mongolian economy revive, more specifically helping pay off its bond obligations.

15 COMMENTS

  1. Only through better policies and accepting some short-term slow growth & pain can Mongolia achieve a truly more prosperous future… countries that lean too much on outside assistance over time usually trade their sovereignty for modest economic gains (if even that). I acknowledge that Mongolia’s finances ARE really hurting, but depending on either China or the IMF to help in anything more than on a short basis is a recipe for eventual serfdom for Mongolians. Nobody wants to see a repeat of the situation currently seen in Greece. If the One Belt One Road Initiative is advantageous to Mongolia on its own merits, great, but I really hope Mongolia doesn’t accept a bad deal just on the basis of getting loans from the Chinese government that will likely use said loans to push its neighbor around at its whim.

      • Ok fine, push its neighbor around ‘MORE’…

        I sense more than a bit of defeatism in your posts. The future is not set in stone and China is not all-powerful. China has an alarmingly accelerating debt bubble in its financial system, capital fleeing from its shores, horrid pollution problems, an aging demographic, a domestic powder-keg of many millions of workers without enough work to go around, its own brand of systemic government corruption that breeds inefficiency and resentment in their society, and is also on-course for an arms race (and possibly even conflict) with the US and Japan. It has over a dozen neighboring nations on its borders and quite a few others in close proximity in the Pacific, several of which are fairly large and have competing interests and/or are potential adversaries. I know its not a flattering statement, but Mongolia is simply not high on China’s list of priorities or list of things to be concerned about. Yes China will likely always have an uncomfortable degree of economic leverage over Mongolia, but that’s not the same as control. Apart from some hypothetical scenario of the Russian Federation collapsing, the biggest risk for Mongolia being effectively overtaken by China rests with the Mongolian politicians being bought out. While I expect some minor ‘selling-out’ in that arena, the anti-China sentiment among the public and elements in the government is strong enough to where selling out to Chinese interests in a major way is likely to get a politician dragged from their house by an angry mob. To sum up, there’s a lot of factors at work here… too many to just assume Chinese dominance as a given.

        • “Apart from some hypothetical scenario of the Russian Federation collapsing”
          They are working on this, and whenever the window of opportunity opens China will roll into Siberia. Mongolia is just the ham in the sandwich. As for defeatism, nah, I’m not Mongolian and will be out of here before it’s too late. Just feel sorry about my Mongolian family, friends, students, just like I feel sorry for the Tibetans that I never had the chance to meet!

  2. While I hate the Chinese Communists and their totalitarianism, a great trading route to the West for Mongolian products subverts their ability to control you. With sufficient Defense measures in place, this could be a win by cracking open alternative export routes. Think about it hard.

      • Alliances with the U.S. and possibly Russia. An alliance of like-minded-countries need to surround China so that they don’t feel free to absorb more countries like they did Tibet. A nice big joint Mongol / U.S. Air Base near U.B. would help. Training facilities for some of our airborne troops. Perhaps invite the Russians in for three-way exercises. Etc.

        Further, a highly mobile modern cavalry suits the Mongol military history and geography. Should China ever attack, fall back, fall back, fall back, then pinch them off from the sides in winter when their supply lines are long. This is one of Chinggis Khan’s strategy, and you know it better than anyone. Mongol cavalry must be fast and mobile. The Chinese will not, because of their military history, narrow mindset, and need for hierarchical political control.

        China seems to want to expand its geography and influence, and is not friendly when it does so. They dominate. I recommend Mongolia seek out all counter-weights to China so that you are not dependent on a country that does not have your best interests at heart.

        I’m not a brilliant military strategist or anything. But I recommend good long-term planning against the possibility of Chinese invasion. If you can secure yourselves to your own satisfaction, then a road funded by the Chinese could make lots of sense.

        JUST BE VERY CAREFUL WITH THEM.

  3. Mongolia is on its condition to be ready for bailing out when even though Mongolia has a lot of resources of asset such as un imaginable gold, copper etc…
    It is hard to see my own country sitting on its knees due to hard competition of world wide economy. It has been challenge to survive and to get developed within the zero sum market and in betweem huge monsters Russia and China. I personally believe that Mongolia cannot stay along on its own because Government is fraud, and many of previous senates took a lot of money, got US passports, and are living in the US right now. Mongolia has very small market with only total amount of 2.5 million dollars. Mongolia has 19th largest area of land. In terms of asset, Mongolia is huge. It is sad to see Mongolia is evetnually getting acquired by the China. I hppe that US , or Japan could give Mongolia a hand and compete with China. Mongolia God bless you.

    • China is literally ‘buying’ large African countries with much larger economies and very far away from Asia. Due to its geographical location, small economy and extreme government corruption Mongolia can only be sucked into the Chinese leviathan. As I have a Mongolian family I feel sympathy for the loss of sovereignty, but frankly speaking I see no way out. To add insult to injury the unpatriotic Mongolian uber-wealthy tacitly welcome becoming one with the dragon. They don’t make people like the Mad Baron Ungern-Sternberg anymore!

  4. Mongolia is doomed and the blame solely resides on Mongolia’s corrupt leaders. With the recent political turnover a new wave of con artists have stepped into the parliament and ministries. They are doing everything they can to find ways to line their pockets before the next round of musical chairs begin.

    Jeremy O. Bayaraa is correct that previous leaders like Bayartsogt, Enkhbayar, Gonchigdorj, Bayar, and countless others have stolen millions of dollars from the Mongolian people. They own houses in South Korea, London, and USA. Their kids attend elite institutions and network amongst themselves. Some of them will even lament the state of Mongolia but words are cheap.

    It will take someone who has long term vision and integrity to lead the country to self sufficiency and improved living conditions. New leaders will bicker amongst themselves for scraps from their Chinese masters to line their pockets before stepping off. Their personal gains will be good. Their children will travel the world and marry amongst themselves. But their cowardice and hypocrisy will put foul blood in their legacy for they were people of simple minds and evil intentions.

    The hope is that honest and decent people will come together and ask the hard questions. It will take a greater man to put country before self.

    God bless Mongolia and her poor people.

  5. Why doesn’t Mongolia carry out the promise made to brand itself, as put forward by former PM N.Altankhuyag at the Economic Forum of 2013?

    In his opening speech he proclaimed “Despite its vast mineral wealth and increased mining activity, Mongolia is a country of agriculture.” How true, but he was only repeating in essence what the Asian Development Bank and World Bank had been repeatedly saying for years.

    The former PM elaborated on his theme, saying “Mongolia should develop a rainbow-like economy, rich in size and diversification,”….“It is very important that the state, entrepreneurs and civil society sit together to exchange ideas and information. If Mongolians could produce goods themselves, they could become the main driver of unstoppable growth in this country.”

    In 2016, WB published the Bangladesh success formula in these terms: “……more efficient markets, and mechanization, enabled by policy reforms and investments in agriculture……… have driven the sector’s growth. [It]….. is a major source of rural jobs…….two thirds of rural households rely on both farm and non-farm incomes. Pro-poor agriculture growth has stimulated non-farm economy…… a 10 percent rise in farm incomes generates a 6 percent rise in non-farm incomes. As non-farm incomes continue to grow, the government needs to focus on fostering a more robust rural non-farm economy.”

    Mongolia’s vast livestock resources could become the driver for diversification, but badly lack investment in just about every area of support, from finance, market infrastructure, vet care, and promotion of related non-farm enterprises.

    In his 2013 Forum speech titled ‘National Brand and Mongolian Development,’ the Economic Development Minister N.Batbayar disclosed how he promoted Chinggis bonds to other nations. “Last year [2012] Mongolia successfully released its first government bonds worth 1.5 billion USD. We promised those that purchased our bonds that we would use this money for great development. The time of Mongolia to establish its name and brand has come. Agriculture and animal husbandry are the brands of Mongolia.”

    The way forward has always been there, but the will has not and still is not. If Bangladesh has done it – why can’t Mongolia?

  6. Totally agree with the argument. Thanks Brau for reminding that agriculture and animal husbandry are keys to economic growth of Mongolia.

  7. Actually, Zen, it was ‘Factum’ who pointed to agriculture and animal husbandry as the way forward. And he’s absolutely right, it’s badly managed and underfunded.
    If given the right support by those in government who really understand the fundamentals of good animal husbandry, then to act on advice from expert external organisations like Asian Development Bank, World Bank, Swiss Development Coorporation, Mongolia could indeed gain its much needed brand, for quality meat and many other marketable byproducts from livestock.

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