Hence famous expression; whether you like it or not neighbours are eternal: China and Mongolia had been eternal neighbours for thousands of years and Russia is also Mongolia’s eternal neighbour in the north. Since the Crimean event, the energy route to Europe from Russia has been shifting, and just a month ago, the two giants, a consumer and a supplier, signed a USD30 billion gas deal to cement their cooperation in the changing international environment.
Few reckoned that Mongolia is being left out in the trilateral cooperation. However, soon after the gas deal, Russian Rosneft and Mongolian NIC signed a long-term petroleum deal. Moreover, last May Speaker of the Mongolian State Great Khural met the Chairman & CEO of China Investment Corporation Mr. Ding Xuedong. Two parties restated the importance of China’s investment for the country’s development, especially in infrastructure sector. Furthermore, the Chairman specified that coal gasification project that would require USD30 billion to develop believes that SGK will provide tax reliefs that would make the project possible. Mongolia has been contemplating coal to oil and coal gasification projects for sometime.
In the coming month, President of Russian Federation Vladimir Putin will visit the country on 75th Anniversary of joint Mongolian and Soviet Khalkhin Gol Battle against Japanese Empire. In conjunction, President of PRC Xi Jinping will pay high level official visit to the country. This could be a decisive and next level cooperation between the countries in the new changing economic and political environment. Also, it could be a stepping stone on country’s ambition on becoming integrated with newly establishing logistic route from Asia to Eurasia and Europe.
Bank of China, a first Chinese bank, opened its representative office in Mongolia last year, and this year, it would become eligible to open its official branch according to the country’s law. It already issued its multimillion dollar loan to local Tuushin Group earlier this year. Also, it would facilitate new investments in the country through project financing and short-term loans.
One of the vital negotiation during the two country’s presidents would be conducting trades in their respective currencies, Roubles with Russia, and RMB with China. Bank of Mongolia already in swap agreement with China on RMB. Also, it borrowed a billion dollar to ease the country’s currency depreciation. It has been said that it could borrow USD3 billion more if necessary.
In the times of financial and economic difficulties, trilateral and joint economic initiatives would be beneficial to all sides. Three of the neighbours need each other more than ever in these times.