Экспертные оценки

14.07.2017, 14:53 | Автор: Евсей Васильев, кандидат политических наук, доцент кафедры международной безопасности РГГУ
29.04.2017, 13:07 | Автор: Светлана Погорельская, к.п.н., д.филос. (Боннский университет, ФРГ), с.н.с. ИНИОН РАН, с.н.с. Институт Европы РАН
26.04.2017, 15:10 | Автор: Александр Арский, кандидат экономических наук, доцент МФЮА
25.04.2017, 21:23 | Автор: Иван Рыскаль, Институт стран Азии и Африки МГУ
And who said only Romans built straight roads?
27.02.2017, 22:04
The consistency of Chinese policy towards Mongolia is both understandable and an inspiring opportunity

The economic climate in Mongolia was optimistic right up to the last two years. As the EBRD report asserts, macroeconomic indicators took a dive on the back of the recent fall of commodity prices. Growth is seeing a sharp decline (see attached table) and the same can be seen for the current account. All in all, Mongolia is not seeing the best of times. China is Mongolia’s largest trading partner, soaking up $4.9 billion annually, that is 80% of Mongolian total export value. Needless to say, Mongolia is in deep primary product dependency. This picture is the redrawn version of historical context of the region. The same can be said for the Chinese reaction. Global Times, the unofficial mouthpiece of the Chinese Communist Party, voiced a strong suggestion that China could bail out Mongolia if it were to fully buy into the ‘One Belt One Road’ programme. This was echoed by Mongolian media and is also a move similar to more ancient Chinese policy in the region. Perhaps historical consistency means the general trend in Mongolia is predictable? Predictability and stability in the region is good for Russia. Not only good, it is an invaluable long term opportunity and not to be missed.


Historical Perspective

The economic problems the current Mongolian government faces are not new. The primary product dependency on their southern neighbour is not something out of the ordinary. Mongolia has been economically tied to China for many hundreds of years. The reliance on exchange of primary products for manufactured is a stable paradigm of trade on the northern Chinese border. While the goods in question have changed from horses and animal products to ores and minerals, the essence of the issue remains. The solutions pursued by Mongolia, too, are unironically identical. When in doubt – open huge mining initiatives! In 1900, when the Mongolian economy was under huge pressure from regional political instability and falling demand (therefore prices) for exports, the Qing government resorted to opening the first state mining company – Mongolor. The resentment of Mongols towards miners and mining was simmering throughout the 19th century but boiled over during the civil war in 1911, among a bubbling of smaller rebellions in the decades prior. Currently, western observers like the EBRD are placing their bets on the Oyu-Tolgoi copper mine, a third of Mongolia’s GDP in value, to pull Ulaanbaatar out of the current quagmire. Growing civil society disgruntlement has been steadily increasing and boiled over into protests, some violent. It seems, however, the government is sticking to its course, increasing copper ore exports, already 42% of total exports.

The ‘third neighbour’ strategy was supposed to help put an end to the vicious cycle. Foreign direct investment should have helped diversify both trading partners and exports. Steps are still being taken in this direction, for example, the recent bilateral agreements with South Korea and Japan. Western press is also fond of this idea, echoing the Atlanticist perspective, speculating that Mongolia could benefit from a way to export raw materials to Korea and Japan via Vladivostok. Intentions and results often differ, and they do so in this instance too. Instead of shifting course, Mongolia’s economy became more dependent on export to China as foreign investment flowed into the most lucrative industries with disregard to long term consequences – into mining. Irony being lost to policy-makers, worldwide attention and hope was heaped upon Oyu-Tolgoi, developed by Rio Tinto, a Canadian firm. The five billion initially invested and billions earned from extraction should have propped up the Mongol state, despite its minority stake in the enterprise (34%). Yet, it has been four years since 2013, and the economy has not bounced back. It would benefit the economic complexity of the whole region, including the Russian Far East, if Mongolia was to stop this cycle of export ore – lose profits (due to external factors) – export more ore to make up for it – cause social schism. Perhaps the recent elections sweeping away the old Democratic Party government could be the national mandate to do just that?

Old Problems – Old Solutions

Workable policy solutions can be deduced from the stable period of the 19th century up to 1878. The Qing government, together with their autonomous counterparts in Mongolia, worked towards creating a nodal logistical network across the steppe and facilitating international thoroughfare. Transit trade and the logistical industry brought valuable stimulus to the steppe economy, for a while even allowing it to remain mine-free, much to the happiness of pastoral nomads. Right up to the 20th century, Mongolian tribal chiefs worked together with Chinese ministerial officials to set up guard posts around areas which were to be protected against illicit mining. Until 1898, ‘a total of 24 guard posts strung between Uliastai and Zuunmod were subject to special patrols, including annual inspections of their arsenals’. As the explorer-general Pevtsov notes, state-funded Buddhist monasteries and small courts formed the only permanent structures in the steppe, forming a net and facilitating trade across the Gobi. The secondary industries sprouting around the rivers of caravans supported a positive multiplier effect over the course of the 19th century.

Hence, the recent Chinese suggestion to build logistical infrastructure in Mongolia is nothing new. The ‘One Road, One Belt’ initiative, as Beijing asserts, can bring real benefit to the Mongolian economy in the long run. Firstly, traffic brings in spending, at least to buy fuel and consumer goods. Secondly, cheapening the cost of transport will improve the competitiveness of Mongolia’s other goods by reducing cost and diversifying the portfolio of potential buyers, for example for goods like animal products. Thirdly, reducing transportation cost will improve the profit margin on mined goods that tiny bit more. Mongolian hesitation is purely political – no doubt heated up by its long-standing alliance to NATO and third neighbours. By weaving a nodal logistical network, Chinese firms are feared to ‘infiltrate’ Mongolia with a side effect of increasing Chinese political influence. Intertwining Mongolia regionally leaves its westernising ambitions vulnerable to the stern dissuasions of its older brothers. All in all, Mongolia, will gradually sacrifice its western links if it follows the Chinese suggestion for economic recovery. This is a fear of both Elbegdorj’s Ulaanbaatar and the collective ‘West’. The new People’s Party majority gives hope that this self-harming reluctance will be reversed.

Great Wall No More

China has shown remarkable commitment to its strategy in Mongolia, set out during the inception of ‘One Belt One Road’ in 2014. Since then, Beijing has been calling upon Ulaanbaatar to allow roads to criss-cross the Gobi, as President Xi stressed in December 2014. For more than three years, Mongolia has ignored China’s suggestions. Chinese consistency is understandable. Its interested in having Mongolia as the traditional allied trading partner – primary in return for secondary goods. For this splendid exchange, China can afford to help without charge. Exact figures are unnecessary to illustrate China’s physical dominance over Mongolia. Dr Chang noted back in 1973 that Mongolia plays a pivotal role in providing the resources required for China and Chinese interest was the maintenance of this relationship. Now, Mr Hu writing for Global Times echoes this sentiment, albeit more subtly, asserting that ‘China and Mongolia could adopt flexible forms, such as a resource-for-loans deals in which loans are repaid with resource goods, to push forward bilateral cooperation within the framework of the Belt and Road initiative’. Therefore, it can be said that success in convincing Mongolia into the ‘One Belt, One Road’ framework is a matter of time for China.

Current events are likely to add to China’s efforts in Mongolia and on the new silk road as a whole. The election of the outspokenly Sinophobic president Trump in America must be at least concerning Beijing. A complication of maritime logistics in the South China Sea seems ever more likely. The recent diplomatic spats over Chinse military bases on its southern border and Trump’s phone calls to Taipei further push Beijing to look to the relatively sleepy North for backup trade routes. The potential worsening of the international situation is enough for China to offer to bail out a country with the population of a quarter of its capital. Combined with the neglected state of Mongolian infrastructure, left to rot after the fall of the Communist government, the bailout package suggested by the Global Times could truly rejuvenate the Great Steppe.

Chinese consistency and chosen policy in Mongolia has historical context, obvious mutual economic benefit and longevity furthered by recent events. Russia should capitalise on this. Chinese consistency and hence predictability is a great gift. The predictable policy of a counterpart can be worked into national strategy. While China wants to intertwine logistically with Mongolia, Russian policymakers can adjust policy accordingly – in a way that expands sectors compatible with those China is interested in but does not impinge on Chinese influence. A logistical framework across Mongolia in accordance with international standards will bring benefits to the whole region, including facilitation of Russia-to-China trade across Mongolia. While regional demarcation and economic specialisation remains the way it is, a change in Chinese policy is unlikely. This is a great opportunity for the Russian Far East. Russia should renew efforts in building links with China through Mongolia, as well as coordination with China on its efforts to convince Mongolia into ‘One Belt, One Road’.


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Статья подготовлена при поддержке портала Новое знание.

Автор: Emil Pevstov, Durham University, UK
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