China Is Strengthening Its Dominance in Mongolia’s Exports, Displacing russia

China is cementing its status as Mongolia’s key economic partner by sharply increasing purchases of Mongolian coal and financing new logistics routes, which increase Ulaanbaatar’s dependence on its southern neighbor and at the same time reduce russia’s role in regional trade.

Mongolia plans to increase coal exports to China by almost 20 % this year. According to government’s  forecasts, sales will reach 100 million tons, strengthening the resource sector, which already accounts for about 12 % of the country’s GDP. The government also declares proven oil reserves of 33.4 billion tons, but coal remains the most liquid item of Mongolia’s exports.

To support growth, both countries are promoting infrastructure projects: China and Mongolia have agreed to build a new railway line between Gashuun-Sukhait and Gants-Mod. Beijing is simultaneously building an approach to the Gants-Mod crossing on its side. These projects could boost Mongolian coal exports to 165 million tons per year, which is especially important for China as the world’s largest steel producer.

Beijing’s dominance in Mongolia’s foreign trade is growing rapidly. Currently, more than 90 % of Mongolian exports go to the Chinese market, compared to 64 % in 2022. By comparison, Switzerland, the second largest market, receives only 5.6 % of Mongolian exports.

russia – until recently one of Mongolia’s key neighbors and partners – has effectively lost its role. Its share of Ulaanbaatar’s exports has decreased  to 0.5 %, reflecting a shift in the region’s geo-economic balance and moscow’s gradual displacement from the Mongolian market.

Mongolia’s growing trade dependence on China indicates a profound transformation of economic priorities and a reformatting of the power field in Central Asia, where russia’s  influence continues to weaken amid Beijing’s active expansion.