Russia – Mongolia Trade Up 30%, Looking To Expand

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Bilateral and transit trade set to boom in the wake of rapidly growing Russia-China commerce

Sergei Glaziyev, a member of the integration and macroeconomics panel of the Eurasian Economic Commission, has been speaking about bilateral trade relations between Russia and Mongolia at the “Russia-Mongolia: Partnership in the New Reality” forum, which is being held in Ulan-Ude, near the Mongolian border. 

He stated that Russia and Mongolia will draw up a plan for trade, economic and investment cooperation for the period through 2025 within the next few months. “We would like our new plan for cooperation until 2025 to pave the way for new achievements, new opportunities to broaden our trade, economic, cooperative, and investment relations. Our mutual trade is modest today, standing at a mere US$2 billion, but it shows a strong growth tendency.”

Russia-Mongolia trade increased by 30% in 2021, Glaziyev said, adding that there were also positive dynamics in the first quarter of 2022.

“However, this level is considerably lower than the potential that our economic spaces have.  You know what a difficult situation the world is facing today, and that the global economy is undergoing a profound transformation. Our Eurasian Economic Union (EAEU) is increasingly optimist about Asia’s markets, and we see Mongolia as a key partner in Asia for all EAEU members.” he said.

The EAEU includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. Of these, Mongolia shares a huge 3,452km border with Russia, and is separated from Kazakhstan by just a small 50km strip of land, part belonging to China’s Xinjiang Province and part, Russia. This Western region is remote; with mainly nomadic reindeer herders populating the area and permitted to cross borders during the year in search of grazing pastures and winter shelter.

Most Russia-Mongolia trade passes through the trans-Mongolian railway, which commences in Moscow, and stops off at Ulaan Baatar, the Mongolian capital before terminating in Beijing. From either end it can access the respective and extensive national rail networks. There have been discussions about expanding the route capacity.

Glaziyev stated that ongoing changes in the global economy structure are opening up vast opportunities for Asian countries. “New opportunities are opening up for trade in consumer goods, including goods which are traditional for Mongolia. We could also speak about more profound industrial cooperation. We hope that our plan for the period until 2025, which we should draw up within the next few months, will take these new horizons and avenues of cooperation into account.”

Mongolia was one of the first states with which the EAEU signed a memorandum of cooperation. During 2021, the main exports of Russia to Mongolia were Refined Petroleum, Raw Iron Bars, Railway Freight Cars, Electricity, and Insulated Wire. The main imports by Russia from Mongolia were Feldspar, Knit Socks and Hosiery, Knit Sweaters, Other Engines, and Railway Freight Cars.

Russia and Mongolia share ten official crossing points. Two of them are railway crossings, but only one (Naushki) has passenger traffic. Three highway border crossing points are designated as “multilateral”, for any passport holders (Tashanta-Tcagaan Nur, Kyakhta-Aganbulag, Solovjovsk-Erentsav). Another five highway border crossing points are designated as “bilateral”, meaning that they are only open to the citizens of the two bordering countries, and not to third-country nationals.

Mongolia in particular is set to benefit as a transit nation between Russia and China, with Sino-Russian bilateral trade rapidly expanding. Part of that transit opportunity comes with the April signing of Mongolia’s participation in the Trans-Mongolian gas pipeline deal. This pipeline takes gas from Siberia’s Yamal fields and allows Russia to transport it to markets in China. Ulaan Baatar remains the commercial hub, while a Free Trade Zone at Altanbulag is sited about 25 km from the provincial capital of Sükhbaatar, on the border with Russia opposite the town of Kyakhta.

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