Belt and Road Initiative no Marshall Plan, Chinese FM says

Special: Belt and Road Five Years The Belt and Road Initiative (BRI) is not a geopolitical strategy but international public goods offered by China to the world, visiting Chinese State Councilor and Foreign Minister Wang Yi said on Thursday.
The initiative is not China's Marshall Plan, Wang said when meeting reporters with his Mongolian counterpart Damdin Tsogtbaatar.
Since the launch of BRI, China has adhered to the principles of extensive consultation, joint contribution and shared benefits, upheld the spirit of transparency, openness and inclusiveness, and abided by international rules and laws of every country, Wang said.
China has also been seeking green and sustainable development, committed to high quality and high standards in its projects and paying great attention to fiscal sustainability, Wang added.
These are in line with China's long-term strategy featuring mutual benefits, win-win results and openness, Wang said.
BRI is aimed to explore new cooperation and development opportunities by integrating the development strategies of different countries, so as to achieve common development and prosperity. In this process, China is willing to share its development opportunities with other countries and welcome all to ride on China's "express train of development," he added.
In response to a question on the cooperation between China and Mongolia, Wang said Mongolia is a natural partner in the Belt and Road construction and Mongolia's participation will give itself new development impetus.
China and Mongolia have signed an agreement on aligning the BRI and Mongolia's Prairie Road development initiative. China is willing to accelerate the alignment of the two initiatives and jointly build BRI, Wang said.
At first, Wang said, China would like to support infrastructure construction in Mongolia and help remove development bottlenecks to create conditions conducive to development.
Second, China would like to focus on improving the livelihoods of local people, enabling every Mongolian to enjoy tangible benefits from the Belt and Road construction.
Third, China would focus more on environmental and ecological protection and together with Mongolia build a green Silk Road, ensuring the protection and development of Mongolia's green mountains and rivers.
Fourth, China is willing to help Mongolia translate its natural resources into development advantage, promote the country's manufacturing and processing industry to realize diversified development, and improve its capacity of independent and sustainable development, he said.
The cooperation between China and Mongolia is like mutual help between friends and mutual support between neighbors, Wang said.

Source:http://www.ecns.cn

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China, Mongolia agree on extensive cooperation

ULAN BATOR, Aug. 24 (Xinhua) -- Chinese State Councilor and Foreign Minister Wang Yi said here Thursday that China and Mongolia have reached consensus on expanding bilateral relations and cooperation.
Making the announcement at a joint press conference with Mongolian Foreign Minister Damdin Tsogtbaatar, Wang said China appreciates the new Mongolian government's more clear-cut and resolute policy toward China.
Wang said the purpose of his visit is to have an in-depth exchange of views with the Mongolian side and implement the important consensus reached by the leaders of both sides.
To enrich the China-Mongolia comprehensive strategic partnership, both sides should enhance political mutual trust and support, Wang said, adding that the two countries should closely work on developing the Belt and Road Initiative (BRI).
The visiting Chinese foreign minister said both sides agreed to respect each other's core interests and jointly safeguard the political foundation of China-Mongolia relations.
The Mongolian side reaffirmed their firm adherence to the one-China policy and agreed that both Tibet and Taiwan are inalienable parts of the Chinese territory, he said.
For China, it promises, as always, to respect Mongolia's independence, sovereignty and territorial integrity and the Mongolian people's independent choice of their development path in line with their national conditions, Wang said.
China and Mongolia agreed to maintain high-level exchanges. Wang said China welcomes Mongolian President Khaltmaa Battulga to pay a state visit next year. He invited Tsogtbaatar to visit China at an appropriate time next year.
In addition, both sides agreed to accelerate the integration of BRI and Mongolia's Prairie Road development initiative, and work out specific plans.
The two countries have agreed to launch a joint feasibility study on a free trade agreement (FTA) next month, and speed up building a cross-border economic cooperation zone.
Both sides also agreed to deepen pragmatic and mutually beneficial cooperation and achieve a 10-billion-U.S.-dollar target for bilateral trade by 2020.
Wang said the plan to build a waste water processing plant in Ulan Bator was progressing and joint efforts were being made to start the construction within this year. Also, the China-funded project to renovate Mongolia's shantytowns had entered the initiation phase with construction expected to start next year.
Wang said China will consider Mongolia's call for more export of animal husbandry products and mineral products to China, and continue to provide support for Mongolia in cross-border transportation and access to the sea.
In 2019, Mongolia and China will celebrate the 70th anniversary of the establishment of diplomatic relations. The two sides will carry out exchanges among youths and in culture, education, science and technology, Wang said.
Both countries agreed to strengthen China-Mongolia-Russia cooperation, accelerate the construction of the China-Mongolia-Russia economic corridor, and commit to the revitalization and development of the region.
China will continue to support Mongolia's participation in international and regional affairs and the two will jointly play a constructive role in ensuring peace and stability in Northeast Asia as well as the rest of the world.
China and Mongolia also agreed to support international justice and the overall interests of developing countries, and jointly safeguard multilateralism and a rule-based global free trade system.

Source:Xinhua news agency

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Chinese FM meets Mongolia's parliament speaker

ULAN BATOR, Aug. 24 (Xinhua) -- Chinese State Councilor and Foreign Minister Wang Yi here on Thursday met with the speaker of the Mongolian parliament Miyegombo Enkhbold.
Wang conveyed greetings from Li Zhanshu, chairman of the Standing Committee of the National People's Congress (NPC) of China, to Enkhbold.
He said China has always treated Mongolia as a good friend and a good partner.
In 2019, Mongolia and China are set to celebrate the 70th anniversary of the establishment of diplomatic relations.
China is willing to take the opportunity to work with Mongolia in order to maintain close high-level exchanges, deepen pragmatic cooperation, promote people-to-people and cultural exchanges, and accelerate the development of bilateral relations, Wang said.
Wang said China appreciates Mongolia's strong support for and active participation in the Belt and Road Initiative (BRI), adding that the joint construction of BRI has provided new opportunities and opened up new space for bilateral cooperation.
China is willing to strengthen cooperation with Mongolia in areas such as infrastructure construction within the framework of BRI in accordance with Mongolia's development goals and people's needs, and help Mongolia transform its resource advantages into development impetus, achieve breakthroughs in development and improve people's livelihood, Wang said.
Wang expressed his hope that the Mongolian parliament will contribute to promoting understanding and friendship between the people of the two countries, and thus consolidate bilateral cooperation.
Enkhbold said Mongolia is satisfied with the fruitful results achieved in developing a comprehensive strategic partnership between Mongolia and China in recent years.
He said that only when the two sides understand and support each other's core interests, can bilateral relations develop in a healthy and sound manner.
Mongolia's firm adherence to the one-China policy will not change, he added.
Enkhbold said Mongolia is willing to dovetail its Prairie Road Development Initiative with BRI, strengthen bilateral cooperation in the fields of infrastructure, energy and electricity, and accelerate the implementation of the Mongolia-China-Russia economic corridor plan.
The Mongolian parliament is ready to deepen friendly exchanges with the NPC, and the ruling Mongolian People's Party is willing to strengthen communication with the Communist Party of China so as to deepen friendship between the people of the two countries, he added.

Source:Xinhua news agency

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Chinese FM meets Mongolian governors on local-level cooperation

ULAN BATOR, Aug. 24 (Xinhua) -- Visiting Chinese State Councilor and Foreign Minister Wang Yi on Friday met with the governors of five western provinces of Mongolia on how to strengthen local-level exchanges and cooperation between the two countries.
The five provinces -- Uvs, Khovd, Bayan-Ulgii, Zavkhan and Govi-Altai -- are adjacent to China. Their cooperation with the Chinese side, especially Xinjiang Uygur Autonomous Region in western China, has deepened in recent years with remarkable results, Wang said.
The comprehensive strategic partnership between China and Mongolia has entered the fast lane, and the two sides are accelerating the alignment of the Belt and Road Initiative (BRI) with Mongolia's Prairie Road development initiative, he said.
Wang said the five provinces can seize the opportunities and deepen cooperation with China, especially Xinjiang, which is at the core of the Belt and Road construction and a key area for China's development strategy in the western region.
China will continue to encourage Chinese companies to invest in the five provinces to improve the livelihood of the people there so that the China-Mongolia comprehensive strategic partnership can bring more and better benefits to them, he said.
The governors expressed their readiness to strengthen local-level exchanges and cooperation and said the five provinces admire China's development achievements and support BRI, which was proposed by Chinese President Xi Jinping in 2013.
They said they hope to participate in the Belt and Road construction and deepen their cooperation with the Chinese side in agriculture, animal husbandry, the processing industry, tourism, border trade, cultural exchanges and infrastructure construction.


Source:Xinhua news agency

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China urges Mongolia to speed up FTA talks

Chinese State Councilor and Foreign Minister Wang Yi urged Mongolia to speed up the free trade agreement (FTA) talks when he was meeting Mongolian President Khaltmaa Battulga on Thursday.

Wang said the two countries should expedite the talks on the signing of a FTA, so as to bring substantial benefits to both peoples.

Chinese Premier Li Keqiang made the call when he was hosting Mongolian Prime Minister Ukhnaa Khurelsukh in Beijing in April. Li said China and Mongolia should begin research into a free trade agreement and speed up the launch of a cross-border cooperation zone in a bid to make use of the two countries' complementary advantages.

The bilateral trade volume reached 6.7 billion US dollars in 2017, accounting for 63 percent of Mongolia's total trade. The two countries have set a 10 billion US dollar target for 2020. 

Wang is currently on a three-day visit to Mongolia.

He praised the bilateral ties, saying China and Mongolia are close neighbors linked by mountains and rivers. Next year marks the 70th anniversary of the establishment of diplomatic relations, and China is willing to take the opportunity to lay out a new blueprint for the future development of bilateral ties, Wang said.

Battulga echoed Wang's calls. The president said Mongolia always regards the bilateral ties as diplomatic priority.

Mongolia hopes to strengthen collaboration in such fields as agriculture, animal husbandry, economy and trade, tourism, and infrastructure construction, so as to bring benefits to both peoples, Battulga said.

'Belt and Road Initiative is no Marshall Plan'

Regarding China's proposed Belt and Road Initiative, Wang Yi applauded Mongolia's active participation and called on efforts to deepen collaboration under the framework.

China is ready to strengthen interconnection and mutual trust with Mongolia within the framework of the Belt and Road Initiative, improve both peoples' livelihood, boost people-to-people exchanges, and continuously promote the cooperation between China, Mongolia and Russia, Wang said.

Wang stressed the Belt and Road Initiative emphasizes public goods that China wants to provide to people all over the world.

It is neither China's Marshall Plan nor a geopolitical instrument, Wang told reporters at a joint press conference with his Mongolian counterpart Damdin Tsogtbaatar.

The Belt and Road Initiative is always based on mutual benefits and trust, transparency and green growth, and the framework abides by international rules and laws in different countries, Wang stressed. 

Landlocked Mongolia has also been using China’s transport network as well as its commodities exchanges in order to gain access to foreign markets.

In March, the two countries started another freight trade service linking Caofeidian port in north China's Hebei Province and Mongolia's capital city Ulan Bator. The two sides also signed a strategic cooperation agreement to promote the China-Mongolia-Russia economic corridor. 

Wang also met governors from five provinces in western Mongolia on Friday and they exchanged views on regional cooperation.

The five provinces in western Mongolia are bordered or adjacent to China. In recent years, their cooperation with China, especially China's Xinjiang Uygur Autonomous Region, has been fruitful, said Wang.

He said China will encourage more Chinese enterprises to invest in the region and the five provinces should take the opportunities brought by China's Belt and Road Initiative.

The five governors expressed their willingness to enhance cooperation with China in areas like husbandry, border trade, tourism and infrastructure construction via the Belt and Road Initiative. 

Source:CGTN or China Global TV Network

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China, Mongolia see great potential for cashmere trade

Li Chao Photo: Courtesy of Li Chao

Editor's Note:

Mongolia has long pushed to diversify its economy and increase the economic viability of its livestock sector, particularly its wool and cashmere business. This is also important for China. Although China sits atop the global cashmere production rankings, well ahead of second-placed Mongolia in output terms, Chinese traders are still the biggest purchasers of Mongolian cashmere. During the 18th Shanghai Cooperation Organization Summit in the coastal city of Qingdao, East China's Shandong Province in June, Mongolian President Khaltmaagiin Battulga proposed cooperating with China in areas including the cashmere industry as the two countries account for 95 percent of the world's market for raw cashmere, according to the Office of the President of Mongolia.

In a recent interview with the Global Times (GT), Li Chao (Li), a junior research fellow with the Russia and Mongolia Research Institute at the Inner Mongolia Academy of Social Sciences, shared his thoughts on the prospects for China-Mongolia cooperation in the cashmere trade.

GT: How important is Mongolia's cashmere push for the nation's diversification strategy?

Li: The push for a diversified economy has been a key issue for Mongolia and in recent years the country has put a greater emphasis on increasing livestock output. The Mongolian government's Action Program for 2016-20 calls for stepped-up implementation of the "Mongolian Livestock" national program. It is expected that the economic viability of the nation's livestock sector will be improved as a system is to be put in place regarding the collection, storage and transportation of wool, cashmere and leather, among other efforts.

That said, the cashmere business, in particular, means a lot to the nation's diversification drive. Due to Mongolia's harsh winter, the nation's goats grow longer hair which can be sheared into wool that is warmer than that of other breeds. This, in addition to Mongolia's natural-style livestock farming and cashmere production, renders Mongolian cashmere competitive in the global market. Cashmere is not just the Mongolian livestock industry's top export business, but the nation's second-largest export category after minerals.

In an effort to boost its cashmere industry, the government in February launched a four-year program aiming specifically to improve the manufacturing and technological innovation of cashmere products and to provide financial support for cashmere companies.

The Mongolian government not only hopes to increase exports of semi-finished cashmere products, but also wants to foster higher value-added exports and increase the profitability of the country's cashmere businesses. The cashmere industry could help to cut the economy's heavy reliance on mining exports.

GT: What are the challenges facing Mongolia's cashmere sector?

Li: The cashmere industry is increasing its role in Mongolia's economy but it still faces challenges. About two-thirds of Mongolian cashmere companies currently focus on the manufacturing of cashmere products for preliminary processing and there is only a small number of companies involved in making cashmere yarn and knitted products. The issue with preliminary processing is unlikely to be resolved overnight.

Additionally, drying surface waters have over the years aggravated desertification in Mongolia. Climate change and overgrazing are also believed to have resulted in the degradation of much of the country's pastures. This fragile ecological environment could hinder the growth of Mongolia's cashmere industry.

On top of that, there is a concern about fundraising for small and medium-sized businesses. Smaller cashmere processing companies in the country still don't have sufficient capital to purchase raw cashmere or upgrade their technologies. Although the national cashmere program will offer some financial support, the annualized loan rates it provides remain unaffordable for some companies. This suggests further fiscal and financial support will be essential for the country's cashmere businesses.

GT: What is the potential for the trade in cashmere between China and Mongolia?

Li: Last year, cashmere was Mongolia's fifth-largest export to China, behind coal, copper powder, crude oil and iron ore, according to official data. China's imports of Mongolian cashmere have risen steadily in recent years. Normally, Mongolian cashmere exported to China is processed further and turned into finished products for re-export. It could be said that the two countries' cooperation on cashmere mainly revolves around the trade of semi-finished cashmere products.

Owing to insufficient processing capacity, even if Mongolia upgrades its cashmere supply chain, its domestic factories remain weak in terms of further processing of raw materials. This means that exporting semi-finished cashmere products is still in the interests of the Mongolian economy. As the world's largest cashmere producer and consumer, China is also in need of raw cashmere from Mongolia. This matters not just in terms of quantity; it also suits China's need for different varieties of cashmere. In another sign of complementarity, Mongolian cashmere makers also import wool cashmere blends from China. The two countries' cooperation in this regard will be expected to effectively push for bilateral trade growth.

GT: What still needs to be done to build a closer partnership between the two countries in the cashmere trade?

Li: It is of vital importance for Mongolia to create a sound investment climate to attract Chinese cashmere businesses. That would require sufficient legal protection and stable investment policies for Chinese investors. Mongolia should also keep a close watch on China's cashmere consumption market and cashmere processing technologies. China, for its part, can encourage Mongolian cashmere makers to enter into the country's bonded warehouses, and can help in setting up sales channels for Mongolian cashmere finished products to be distributed across China. China might also transfer some of its preliminary processing capacities or technologies to Mongolia.

The two countries could also cooperate on the monitoring of quality management of raw cashmere and jointly explore the international market for finished products. More importantly, the two countries need to consider plans for strategic cooperation in the field of cashmere, which could involve the creation of an effective long-term mechanism highlighting bilateral exchanges in technologies, talent training and environmental protection so as to drive diversified development of Sino-Mongolian trade.

Source:Global Times, online news site

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Mongolia eager to enhance ties with EU to diversify economy

ULAN BATOR, Aug. 21 (Xinhua) -- Mongolia is keen on enhancing relations and cooperation with the European Union (EU) to diversify its mining-dependent economy, Mongolia's Parliament Speaker Miyegombo Enkhbold said Tuesday.

According to the parliament's press office, Enkhbold made the remarks when meeting with the European Union (EU) ambassador to Mongolia Traian Laurentiu Hristea.

"Particularly, we are eager to closely cooperate with the EU to implement projects aimed at developing areas of agriculture, food, energy and infrastructure, and improving small and medium-sized enterprises as well as creating more jobs," he said.

During the meeting, the two sides agreed to discuss ways to strengthen bilateral ties and cooperation at the regular inter-parliamentary meeting between Mongolia and the European Parliament in September in Ulan Bator, the parliament's press office said.

Mongolia and the EU are set to celebrate the 30th anniversary of the establishment of diplomatic relations in 2019.

Source:Xinhua news agency

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K-Bank, KT team up to export internet banking to Mongolia

By Baek Byung-yeul
K-Bank, the nation's first internet-only lender, has teamed up with KT to export its banking services to Mongolia, the company said, Sunday.

The move is part of K-Bank's efforts to expand its business overseas. KT is the largest shareholder of K-Bank with an 18.01 percent stake.
The bank said that in cooperation with Korea's top fixed-line telecom operator, it has signed a contract with MCS Group, a Mongolian conglomerate, to transfer its internet banking technologies and services.
The five-year contract is estimated to be worth up to 5.5 billion won ($4.92 million), including 2.3 billion won in consultancy fees.
Established in 1993 as an energy sector consultant, MCS Group is one of Mongolia's largest conglomerates.
It has a wide business portfolio that includes telecommunications, engineering and infrastructure, real estate, mining and consumer goods distribution.
The Mongolian enterprise has been preparing to set up its first internet lender since early last year. K-Bank and KT will join hands to help MCS Group start the business tentatively titled "M Bank."
Under the contract, the Korean duo will take part in a wide range of projects to launch M Bank, including developing a business model, operation know-how of credit risk management systems and constructing an information technology system.
KT especially will help the Mongolian lender build its own credit scoring system (CSS).
"I am pleased that we can take the first step of expanding our business to the global market, which has been one of our main goals when initiating the internet-only lending business," K-Bank CEO Shim Seong-hoon said in a statement.
"As a major shareholder of K-Bank, KT has developed its own CSS and has accumulated knowhow on the system over years," Yun Kyung-lim, head of KT's global business office, said.
"Based on the company's enhanced technology and platform in the fintech sector, the company will expand its business overseas. We will also strengthen our partnership with MCS Group."

Source:http://www.koreatimes.co.kr

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Statement by the IMF Mission on the Fifth Review of Mongolia's Extended Fund Facility

August 7, 2018

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

An International Monetary Fund (IMF) staff team led by Mr. Geoff Gottlieb visited Ulaanbaatar from July 25 to August 6, 2018 to conduct discussions on the fifth review of the three-year Extended Fund Facility (EFF) arrangement approved on May 24, 2017, in an amount equivalent to SDR314.5054 million, or about US$434.3 million [1] (see Press Release No. 17/193).

The discussions focused on the implementation of the Fund supported program, the medium-term outlook, and policies and structural reforms needed for debt sustainability, the rehabilitation of the financial system, and high-quality growth while protecting the poor.

At the conclusion of the visit, Mr. Gottlieb made the following statement:

“The mission held productive discussions with the authorities on the policies needed to complete the fifth review under the EFF arrangement. Recent macroeconomic performance has been strong with key targets met and growth is reviving although significant vulnerabilities remain.

“Good progress has been made especially regarding structural reforms and policies to rehabilitate and strengthen the financial sector. Discussions including on the macroeconomic policy mix will continue in the near future.

“The team thanks the authorities for their cooperation, constructive dialogue, and hospitality during its stay in Mongolia.”

---

[1] The dollar amount is calculated based on the SDR-dollar rate of May 24, 2017, equivalent to $425mn at SDR-dollar rate of 1.35274 as of February 27, 2017.

IMF Communications Department

MEDIA RELATIONS

PRESS OFFICER: TING YAN

PHONE: +1 202 623-7100EMAIL: MEDIA@IMF.ORG

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Mongolian pickpocketers arrested before fleeing country

Three Mongolian men have been arrested and faced theft charges one day before they planned to leave Thailand, police said on Thursday. Tourist and Metropolitan Police Bureau police said Indermaa Ganbold, 31, Okhinsuren Bayarsaikhan, 39, and Tseddenbal Oyunbold, 34, were apprehended in Pathumwan area on Wednesday in an operation that included BTS skytrain staff. Mr Ganbold was captured at the Chit Lom Lom station. His arrest led to the roundup of the rest at an undisclosed location. 

Tourist police show a chart displaying the arrest of three Mongolian pickpocketers during a media briefing on Thursday. (Tourist Police Division photo) 

Cash of 100,000 baht in many currencies, including the baht and South Korean won, were seized by police. 

The arrest followed a complaint by a Korean tourist that he had lost his wallet with four credit cards and 50,000 won in cash at the BTS Phloen Chit station on July 25. 

Police tracked the gang from the footage of BTS security cameras and finally found Mr Ganbold. 

Two more members of the gang left the country on July 26 with five iPhone X phones bought with the credit cards of the Korean visitor to be sold in their country. The arrested three planned to return to Mongolia on Thursday.

Authorities interrogated them and said they had targeted foreign tourists, especially at BTS stations or crowded areas at department stores, because they were unlikely to report to police. 

The charges carry a fine up to 100,000 baht and/or a jail term up to five years. 

Source:Bankgkok Post

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China and Japan’s Investment Competition in Mongolia

Is the development competition between China and Japan beneficial or detrimental to Mongolia?

By Yiyi Chen

China and Japan are two of the most financially influential countries in Mongolia’s proximity. Both have a long history of trade and investment in the latter. Mongolia calls Japan its “Third Neighbor,” which is a term first used in 1990 by then-U.S. Secretary of State James A. Baker who referred to the United States as Mongolia’s “Third Neighbor.” Mongolia then adopted the “Third Neighbor” policy aim at broadening its foreign relations outside of China and Russia to other countries like Japan, the United States and European countries. Japan has traded with Mongolia since the 13th century through the Steppe Road and is currently Mongolia’s third largest source of imports. Since Mongolia became a democratic country in 1990, Japan has consistently provided aid and assistance for its transition to a market economy.
China is one of Mongolia’s closest partners and has traditionally been its biggest trader and investor. By July 2017, China directly invested $4.1 billion in the country which accounted for 30 percent of Mongolia’s foreign investment. However, as China asserts more economic influence in Mongolia via the Belt and Road Initiative, the Tokyo-Beijing relationship has become increasingly complicated. With China’s rise, Japan has felt the urgency to balance and compete with China in the region. Is the development competition between China and Japan beneficial or detrimental to Mongolia? And how can Mongolia maintain and expand its interests within this complicated relationship?

Since China began its comprehensive strategic partnership with Mongolia four years ago, their partnership expanded their economic cooperation, prioritizing natural resources and infrastructure. They also pledged to strengthen security cooperation through increased political communication. In 2014, President Xi Jinping first initiated the China-Mongolia-Russia Economic Corridor (CMREC) as part of the Belt and Road Initiative, furthering its goal to develop infrastructure and industrial projects to establish free trade and economic cooperation zones in cross-border cities. Some of the more well-known projects include the China-Mongolia Cross-border Economic Cooperation Zone from Erenhot to Zamiin Uud, and the Northern Railway Corridor which extends the national rail network to connect Mongolia with Russia and China.
By contrast, Japan started its development projects in Mongolia in the late 90s and early 2000s. In 2003, Mongolia joined the Central Asia Regional Economic Cooperation (CAREC) Program implemented by Asian Development Bank (ADB) in which Japan is one of the two largest voting powers with 15.6 percent. So far there are 301 ADB projects in Mongolia. Just one year after China announced CMREC, Japan’s Prime Minister Shinzo Abe signed Japan’s first economic partnership agreement (EPA) with Mongolia in 2015. He pledged to reduce tariffs and provide an additional $330 million in loans of 0.1 percent annual interest rate for the construction of a new international airport in the nation’s capital city Ulaanbaatar. Potentially inspired by the CAREC, China’s CMREC intends to compete with it while targeting specifically development in Mongolia instead of all Central Asian countries.
Sino-Japan Competition Open Doors
While China and Japan are funding different projects through their respective frameworks, the results of their projects have the potential to complement each other. For example, while Japan provided $500 million in soft loans to construct a new airport in Ulaanbaatar, the Export–Import Bank of China funded $140 million in soft loans to build a highway connecting the airport to the city. These two projects are inseparable — while an airport without a road leading to it is useless, a road leading to nothing is futile. Together they improve the effectiveness of the country’s infrastructure.
Their competition also provides more options for Mongolia. In 2016, Mongolia invited the Dalai Lama to give lectures on Buddhist teachings to the people. At the time the country was going through a debt crisis and sought a large loan from China, the only country willing to lend money with low interest rates. In order to solicit the loan, Mongolia, a country with ancient ties to Tibetan Buddhism, apologized to China and pledged not to invite Dalai Lama again. This incident demonstrated Mongolia’s dependence on China to the extent that it was willing to forsake faith in search of financial assistance.
Japan can provide this diversity of partnership to alleviate this pressure. While Mongolia and China’s relations were strained by the incident with the Dalai Lama, Japan was able to utilize its resources in financial platforms to help create an international aid framework providing Mongolia approximately $5.65 billion. This framework is backed by the International Monetary Fund, the World Bank, the Asian Development Bank, Japan, South Korea and China to relieve the financial challenges faced by Mongolia. During a time of political tension, diversification of loan sources helped Mongolia.
China and Japan’s Complementary Investments
It is interesting to note the difference between China and Japan’s investment strategy. While China’s investment in Mongolia is done mostly in direct lending between the two countries or through several new Chinese-led multilateral frameworks such as the Asian Infrastructure Investment Bank (AIIB) in which China has 26.6 percent of voting power, Japan contributes through multilateral organizations that have established longer reputation with more experiences such as the Asian Development Bank, the World Bank and the International Monetary Fund.
Each has their own strengths and weaknesses. China’s accumulated experiences in financing and building infrastructure projects and its ambitious Belt and Road Initiative will enable Mongolia to be more connected with Europe and rest of Asia through roads and access to the sea via ports. However, some Chinese investment lacks international oversight and comes with political strings like in the case of the Dalai Lama incident. Meanwhile, Chinese investment in large infrastructure projects drove Mongolia’s capital expenditure surge in 2013, thus contributed to an abrupt rise of debt-to-GDP ratio from 2015 to 2016.
Japanese funding comes from more transparent sources that can help diversify the risks for the borrowing country, in turn providing global knowledge transfer and technical assistance to promote sustainable development. The downfall is that it has a higher threshold for Mongolia whose credit rating is low and whose public debt reached almost 100 percent of GDP last year.
For Mongolia, this is an opportune time to work through China, Japan, other “Third Neighbor” countries such as South Korea and Canada, and international financial institutions to diversify away from raw materials, being selective about the projects that can provide long-term sustainable benefits such as investing in human capital and technology advancement. In this trilateral relationship, each country has something to offer and Mongolia needs to establish its own development strategy based on its national interests in order to prevent itself from being caught between its two stronger neighbors.

Yiyi Chen is a master’s candidate at the Fletcher School of Law and Diplomacy at Tufts University. She studies international law, East Asia foreign affairs, and development economics.

 

Source:thediplomat.com

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Mongolia to support startups to diversify economy

ULAN BATOR, Aug.1 (Xinhua) -- Mongolia will support innovative startups with tax-exemption policies to diversify its mining-dependent economy, Minister of Education, Culture, Science and Sport Tsedenbal Tsogzolmaa said Wednesday.
Startups will be exempt from value-added tax and import tariffs on their high-end equipment, she said at a press conference after a government meeting.
"Mongolia's economy is on track to stabilize," the minister said. "So it is important to implement a multi-pillar development policy based on science, technology and innovation to ... stabilize and diversify the economy (more)."
The mining industry contributes to about a quarter of the country's GDP and more than 90 percent of its exports.
Mongolia's non-mining economy was particularly weakened between 2014 and 2016 by falling investment and declining private consumption, according to the World Bank.

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