President Kh.Battulga is in Russia heading a Mongolian delegation at the third Eastern Economic Forum (EEF) held in the eastern Russian city of Vladivostok on Wednesday and Thursday.

It is no coincidence that the maiden trip abroad for President Kh.Battulga would be Russia. One of the major platforms that the incumbent President ran on is the threat of economic dependency on China.

The President has publically said that stronger ties with Moscow will help alleviate the supposed threat of economic dependency. It has been glaringly evident ever since he was elected that the President’s foreign policy would vastly differ to that of his predecessor. Former President Ts.Elbegdorj maintained a relatively neutral foreign policy that sought to maintain good relations with both China and Russia while also seeking out “third” neighbors.

How is China reacting to these changes and what will Mongolian-Sino relations look like moving forward?

According to many analysts and pundits, President Kh.Battulga’s statements about China and the trade deficit have not been well received by Beijing. Others say that the heavy anti-Chinese rhetoric used during the election was off putting to China. Recent moves by Beijing seem to indicate that there is at least some contempt by the President’s statements.

Beginning on July 1, the Chinese government restricted the import of coal through second-class border crossings and doubled-down on regulations and security at other crossings. The Chinese side is also reportedly only keeping one or two gates open, whereas previously there were four operational gates processing trucks. This has caused a 150-km logjam of heavy-load trucks carrying Mongolian coal waiting to cross the border into China.

According to Reuters, exporters of other commodities have not experienced any issues at the border. Copper shipments from the Oyu Tolgoi mine run by Anglo-Australian miner Rio Tinto, which uses the same road and border crossings for exports, have not experienced any new delays, an official at the mine told Reuters in July.

With Chinese border officials also doubling down on security at Zamyn-Uud to Erenhot border crossing, it is clear that the logjam at the Gashuunsukhait border is not a separate incident. It could very well be that Beijing decided that their border security at the Mongolian border needed tightening, but the timing of the move has many questioning the motive.

Publically, China has been supportive of President Kh.Battulga’s efforts to “cast a wider net to balance trade ties” according to the Chinese state-run newspaper Global Times. It is no wonder that Beijing has been careful when treading this issue.

At this juncture in international relations, the partnership between China and Russia is mutually beneficial for both superpowers. Strong Sino-Russian relations are seen by both governments as an important strategic partnership that helps offset the power and influence of the West not only in the region but globally. Therefore, Beijing will not outright criticize President Kh.Battulga’s moves to cozy up to Russia.

However a Global Times op-ed by Li Chao on September 5 was quick to point out the disadvantages of pursuing stronger economic ties with Russia.

“Levels of Russian investment in Mongolia’s foreign trade have dropped from 80 percent in 1990 year-on-year to just 13 percent in 2015, while Mongolia’s trade deficit with Russia has increased year-on-year. The trade deficit in 2013 reached 1.5 billion USD, accounting for 71.8 percent of Mongolia’s total trade deficit. In addition, Mongolia has been concerned about the export of meat products to Russia, especially to the Siberian market, which has failed to make substantial progress,” outlined the article.

Chao goes on to state how beneficial Mongolian-Sino trade has been.

“By contrast, Sino-Mongolian trade volume has been growing steadily. Sino-Mongolian trade volumes accounted for 60 percent of Mongolia’s total foreign trade in 2016 and Mongolia has always maintained a large surplus with China. In this context, Battulga is eager to improve economic ties between Mongolia and Russia,” the article continued.

“We should not over-interpret whether Battulga’s choice of Russia as his first port of call as president implies some bias. China is Mongolia’s largest trading partner and an important investment partner. The development of friendly relations with China has long been an important factor in Mongolia’s security and foreign policies. At the same time, we should not resort to zero-sum thinking. Sino-Russian relations have never been more positive and improving economic and trade cooperation levels between Mongolia and Russia to develop their closer relations will provide fertile conditions for the three countries to jointly develop the proposed China-Mongolia-Russia Economic Corridor,” the article concluded.

Even though Chao’s Global Times editorial is not an official statement by Beijing, the newspaper is widely regarded internationally as the informal mouth-piece of the Chinese politburo.

Due to relations of strategic importance with Russia, China will not jeopardize or muddy relations with Russia by going on the offensive against President Kh.Battulga’s foreign policy. The Global Times article sent a subtle message to Mongolia, basically saying that even though Russia, China, and Mongolia have great relations, Mongolia mustn’t forget about how important China is to its economy.

1 COMMENT

  1. How convenient the China Op-Ed mentioned here stated how Russia-Mongolia trade collapsed since 1990, totally leaving out the context of that time period marking the collapse of the USSR and the end of it’s support/influence over Mongolia. Well anyway, I think everyone… Mongolia, China, Russia… figures that China will remain Mongolia’s largest trading partner for quite some time so that’s not the issue. The real issue is greater diversification in trade and reducing Chinese economic leverage over Mongolia below its present state, and THAT’S what’s bothering China’s gov’t (because like most oversized gov’ts they like to control EVERYTHING). Going from 60% of trade with China to, say, 40-45% for example would give Mongolia more freedom and options in its economic and international relations efforts while still keeping China as its largest trade partner. Provided the President frames this as an effort to grow more ties to other countries and not as any deliberate snub to or cold shoulder to China, then I think he’s probably on the right course.

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