Trade between Russia and Mongolia increases by 30% and seeks to expand
Bilateral and transit trade set to boom in wake of rapid growth in Russian-Chinese trade
Sergei Glaziyev, a member of the Integration and Macroeconomics Panel of the Eurasian Economic Commission, spoke on bilateral trade relations between Russia and Mongolia at the forum “Russia-Mongolia: Partnership in the New Reality”, held in Ulan – Ude, near the Mongolian border.
He said that Russia and Mongolia will draw up a trade, economic and investment cooperation plan for the period up to 2025 in the coming months. “We want our new cooperation plan until 2025 to pave the way for new achievements, new opportunities to expand our trade, economic, cooperative and investment relations. Our mutual trade is modest today, amounting to only 2 billion US dollars, but it shows a strong trend of growth.
Trade between Russia and Mongolia increased by 30% in 2021, Glaziyev said, adding that there was also positive momentum in the first quarter of 2022.
“However, this level is considerably below the potential of our economic spaces. 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 optimistic about Asian 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 3,452 km border with Russia and is separated from Kazakhstan only by a small 50 km strip of land, part belonging to China’s Xinjiang province and part to Russia. This western region is remote; with mainly nomadic reindeer herders populating the area and allowed to cross borders during the year in search of pasture and winter shelter.
Most trade between Russia and Mongolia passes through the Trans-Mongolian Railway, which begins in Moscow and stops in Ulaanbaatar, the Mongolian capital, before ending in Beijing. From each end, it can access the respective and extended national rail networks. There have been discussions about expanding the capacity of the route.
Glaziyev said that the ongoing changes in the structure of the global economy are opening up vast opportunities for Asian countries. “New opportunities are opening up for trade in consumer goods, including traditional Mongolian goods. We could also talk about deeper industrial cooperation. We hope that our plan for the period up to 2025, which we should be developing in the coming months, will take into account these new horizons and paths of cooperation.
Mongolia was one of the first states with which the EAEU signed a memorandum of cooperation. In 2021, Russia’s top exports to Mongolia were refined petroleum, crude iron bars, rail freight wagons, electricity, and insulated wire. Russia’s main imports from Mongolia were feldspar, knitted socks and hosiery, knitted sweaters, other engines, and freight cars.
Russia and Mongolia share ten official crossing points. Two of them are level crossings, but only one (Naushki) has passenger traffic. Three highway border crossing points are designated as “multilateral”, for all passport holders (Tashanta-Tcagaan Nur, Kyakhta-Aganbulag, Solovjovsk-Erentsav). Five other motorway border crossing points are designated as “bilateral”, meaning that they are only open to citizens of the two neighboring countries, and not to third-country nationals.
Mongolia in particular stands to benefit as a transit country between Russia and China, with Sino-Russian bilateral trade expanding rapidly. Ulaanbaatar remains the commercial center, while a free trade zone in Altanbulag is located about 25 km from the provincial capital of Sükhbaatar, on the border with Russia opposite the town of Kyakhta.
Briefing Russia is written by Dezan Shira & Associates. The company has 28 offices across Eurasia, including China, Russia, India and ASEAN countries, assisting foreign investors in the Eurasian region. Please contact Maria Kotova at [email protected] for Russian investment advice or assistance with market information, legal, tax and compliance issues throughout Asia.