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The big news in Mongolia this week is the visit by Chinese Foreign Minister Wang Yi. Mr. Yi was in the country to discuss matters of economic ties between the countries. During the visit Mr. Yi paid a courtesy visit to Mongolian President Battulga, where they discussed matters of bilateral cooperation. President Battulga make a request that Mr. Yi and China consider ways to support export of Mongolian agricultural products to China. Mr. Battulga also indicated that Mongolia remains open to Chinese investment in economic infrastructure, particularly in transportation across Mongolia connecting China with Russia.
Mr. Yi also met with Foreign Minister D. Tsogtbaatar where the two ministers signed a Cooperation Plan. Talks between the two ministers included bilateral comprehensive strategic partnership and increasing trade and economic ties between the two countries.
Specific measures discussed included increased Chinese investment in Mongolian mining sector as well as work toward a free trade agreement between China and Mongolia, as well as cooperation in development of Mongolia’s new Free Trade Zones ZamynUud and Erenhot, which are intended to attract Chinese investment much the same way China’s system of Free Trade Zones have attracted foreign investment into China.
The ministers specifically agreed to work toward increasing bilateral trade to at least USD 10 billion by 2020. It is expected that China will increase import of Mongolian agricultural and mining exports as part of meeting that target.
In connection to the 70th anniversary of diplomatic relations between Mongolia and China, which will fall next year, the President expressed interest in celebrating the anniversary with concrete outcome.
Also discussed was development of the “Mongolia-China-Russia” economic corridor, seen as part of China’s “Belt and Road Initiative”. The corridor is envisioned to increase Chinese connectivity with Russia, and eventually Europe, while for Mongolia, it would increase access to both Russia and China, Mongolia’s neighbors and major trading partners.
Both sides also took some time to recognize that 2018 will mark 70 years of official ties between the two countries.
Mongolia is a country of about 3 million between two larger economies. Mongolia’s quickest way to increase exports is to secure greater trade with these two countries. Often this will be China which has a larger population and faster growing economy than Russia. It is good to see the agreement here sees China pledge to import more agricultural products, not just more mining commodities. This goes back to trends we are seeing in Mongolia of efforts to diversify the economy so that the country is not so dependent on China’s demand for mining resources. It will be interesting to see what comes of cooperation with Mongolia’s FTZs, which have been a good idea in concept, but have been slow to develop in a meaningful way.
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