Preface
"Geography determines your destiny." — Napoleon
Mongolia, a landlocked country, is more than 650 kilometers away from the nearest coastline. However, it manages to successfully export up to 600,000 tons of minerals to Japan and South Korea each year. How is this seemingly impossible task achieved? In this article, we will delve into how Mongolia overcomes its geographical challenges and successfully completes international trade with the help of China and Russia.
I. Mongolia's Geographical Predicament and Resource Advantages
The geographical location of Mongolia can be described as "two steps to the left when you go out, it's either China or Russia." As the second-largest landlocked country in the world, Mongolia is firmly surrounded by the two giants, China and Russia. To the north lies the icy expanse of Russia, and to the south is the bustling Greater China, with the nearest coastline being 650 kilometers away.
This "inland and far from the sea" geographical isolation directly leads to some "tough" challenges for Mongolia in foreign trade. To export anything, it is either necessary to consult with China or Russia or to traverse thousands of kilometers. This geographical position makes it difficult to transport minerals, not to mention developing the tourism industry.
This "sea-less" geographical pattern brings a lot of trouble to Mongolia's foreign economic development. Geographical isolation puts Mongolia at a "natural disadvantage" in international trade, akin to running a marathon where other countries are running on flat ground, while Mongolia has to climb a mountain first.
Lacking a seaport means high maritime transportation costs, long transportation times, and significantly reduced competitiveness. Therefore, in the context of globalization, this geographical isolation is like "putting shackles on Mongolia's economy."
Although not geographically blessed, Mongolia possesses enviable mineral resources. The underground "treasure trove" of this country includes more than 80 types of mineral resources such as coal, copper, gold, and rare earths, with as many as 6,000 mining sites. These mineral resources are so abundant in reserves that they can rank among the top in the world.When it comes to coal mines, the Tavan Tolgoi coal mine, located just 250 kilometers from the Chinese border, is one of the largest coal mines in the world. Copper mines are no less impressive, with the Oyu Tolgoi copper-gold mine and the Erdenet copper-molybdenum mine, among others, not only being world-renowned but also serving as the backbone of Mongolia's economy.
Not to mention rare earths, Mongolia's rare earth reserves amount to a staggering 31 million tons, accounting for one-fifth of the global total. With these resources, Mongolia has gained considerable influence in the international market.
Due to the limited domestic market and a population of only 3.447 million, Mongolia's economic structure is inevitably geared towards "relying on exports for sustenance," particularly the export of mineral resources, which has almost become the "lifeblood" of Mongolia's economy.
With limited domestic purchasing power, Mongolia is unable to support its domestic market and must look overseas. The export of ores has become the economic pillar of Mongolia, supporting the country's finances and helping Mongolia to establish a firm foothold in the global mineral market.
Mongolia's export-oriented economic model largely depends on its abundant mineral resources. Although its geographical location has created numerous challenges, these "underground treasures" have given Mongolia the "confidence" for foreign trade. It is precisely because of this that Mongolia has been able to find its place in the global economy. No matter how poor the geographical conditions, they cannot hinder its "ore diplomacy."
II. Mongolia's Dependence on Sino-Russian Trade Routes
Before the dissolution of the Soviet Union, Mongolia's trade routes were mostly inseparable from Russia. At that time, Mongolia's ores, coal, and other resources were mainly exported through the Russian port of Vladivostok.
Mongolia's situation at the time was somewhat akin to "carrying ores to visit neighbors," except that this door was opened in Russia's Far East. Although the journey was long, there was still an outlet to the sea, allowing Mongolia's goods to be smoothly delivered to the international market, especially to Japan and South Korea.
In 1991, with the dissolution of the Soviet Union and the dramatic changes in Eastern Europe, Russia itself fell into an economic predicament, and the construction of the port of Vladivostok almost came to a standstill. At this time, Mongolia seemed to have suddenly lost the help of its "big brother," and its trade routes became extremely unstable.
Under these circumstances, the importance of the two neighboring countries, China and Russia, rapidly increased. Mongolia began to rely more on China's ports and Russia's railway system, especially China, which quickly became the new favorite for Mongolia's foreign trade due to its comprehensive infrastructure and convenient transportation network.Entering the 1990s, Tianjin Port became the "new favorite" for Mongolia's export cargo, as it is not only the largest port in northern China but also the main export channel for Mongolia to ship minerals to Japan and South Korea. The logic here is straightforward: Mongolia's minerals are first transported by rail to Erlianhot in China, then directly to Tianjin Port, and finally boarded onto ships heading to Japan and South Korea. The geographical location and solid infrastructure of Tianjin Port make it the core hub for Mongolia's exports, especially when global demand for minerals is strong.
Tianjin Port's significant role in Mongolia's foreign trade is not solely due to its geographical advantage, as it boasts 32.7 kilometers of port waterfront and 213 berths, with a huge daily cargo throughput. Data shows that in 2023, Tianjin Port's container throughput reached 22.187 million TEUs, and the cargo throughput even reached 558 million tons. For Mongolia, such transportation capacity is a "timely rain," making mineral exports smoother.
However, reliance on Tianjin Port is not without issues. In recent years, with the advancement of the "Belt and Road" initiative, the cargo volume of the Eurasian Land Bridge and China-Europe Railway Express has surged, sometimes affecting Mongolia's cargo transportation. Coupled with the low logistics efficiency within Mongolia, there are occasional situations of cargo accumulation, which brings new challenges to Mongolia's exports.
If Tianjin Port is the "gateway" for Mongolia's exports, then the Erlianhot Port is the key "key," as it is the largest land port between China and Mongolia, with a large amount of cargo passing through here to various Chinese ports every year. This port's customs clearance capacity is quite strong, capable of handling 3.5 million tons of cargo, and it is a must-pass place for Mongolia's mineral exports.
With the increase in Mongolia's foreign trade demands, the pressure on the Erlianhot Port is growing, especially during the logistics peak season, when the port's customs clearance efficiency sometimes slows down the cargo transportation speed, causing Mongolia's cargo to accumulate domestically and fail to reach Tianjin Port in time. Coupled with Mongolia's own logistics system being not yet perfect, these issues undoubtedly bring considerable pressure to Mongolia's exports.
Nevertheless, the Erlianhot Port still plays an irreplaceable role in Mongolia's foreign trade. With future improvements in infrastructure and logistics efficiency, this channel will more smoothly serve Mongolia's mineral exports.
III. Exploration and Challenges of Mongolia's Diversified Trade Routes
With only China and Russia as its "neighbors," Mongolia obviously does not want to put all its eggs in one basket. Therefore, this country "surrounded by two giants" has launched a "big move"—the Third Neighbor Policy.The core of this strategy is: since China and Russia are not enough, it is necessary to find "distant relatives" to support, so Mongolia has targeted countries far away like Japan, South Korea, the United States, and Europe. It hopes to establish closer trade relations with these countries to reduce excessive dependence on China and Russia.
Although Mongolia vigorously promotes the strategy of the third neighbor in diplomatic occasions and tries to impress these "distant relatives" with strategic resources such as rare earths, it encounters many problems in actual operation.
Because Mongolia's geographical location is really a hard injury, far away from the coast, and the transportation infrastructure is not strong enough, which makes it a bit difficult to get along well with the distant "relatives".
Moreover, as Mongolia's neighbors, China and Russia have a natural advantage in geography. Even if Mongolia tries its best to engage in "distant diplomacy", it is difficult to completely get rid of its dependence on China and Russia.
In order to get rid of the shackles of geography, Mongolia has been working hard in recent years to open up new trade routes and send minerals to farther places. For example, Mongolia has tried to send minerals through the Far East ports of Russia and detour through Kazakhstan to find more trade opportunities to the west. These explorations have also achieved some results. Through these new routes, Mongolia has successfully exported some minerals to countries such as Japan and South Korea. Although the quantity is not large, at least it has started.
Mongolia has also strengthened trade ties with the United States, Japan, and South Korea, trying to use the strength of these economic powers to further expand the export market. Mongolia has even considered using ports other than China, such as transshipment to the Caspian Sea coast through Kazakhstan, and then exporting to Europe through Iranian or Turkish ports. It sounds very cool, but in reality, the cost of detours is not low, and the logistics efficiency is not high. In addition, the political risks of these routes lead to unsatisfactory results.
The future development of Mongolia's trade is likely to find a balance between China and Russia and new routes. Although the strategy of the third neighbor has indeed provided more options for Mongolia, from the actual situation, the constraints of geography and logistics make it difficult for Mongolia to completely get rid of its dependence on China and Russia.
The infrastructure and market of China and Russia are still indispensable for Mongolia, especially in the export of minerals, and the role of Erenhot and Tianjin Port is still very important.
On the other hand, Mongolia will not give up the effort to open up new trade routes. After all, everyone understands the principle that "you can't put all your eggs in one basket". In the future, with the advancement of the "Belt and Road" initiative and the improvement of Mongolia's own infrastructure, more countries and regions may become Mongolia's trade partners. However, this road is destined to be not easy. How to achieve a balance between China and Russia and "distant relatives" will be a key issue that Mongolia must face in its future development.
ConclusionMongolia, with its abundant mineral resources and the support of China and Russia, has successfully overcome geographical limitations and achieved a leap in foreign trade. Faced with an increasingly complex geopolitical environment and logistics challenges, Mongolia's future trade paths still need to find a balance between relying on China and Russia and exploring new routes. As this article discusses, Mongolia's geography may set limits for it, but wisdom and strategy also open up new opportunities.
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