Liquidity Lifeline versus Leverage Trap: Navigating Financial Risk
Mongolia Strengthens Economic Ties with China through New Agreement
Mongolia recently ratified a comprehensive agreement with China, which includes the development of the Gashuunsukhait-Gantsmod (GSK-GMD) railway, coal trade, and the expansion of the Tavan Tolgoi coal mine. This move signifies a significant deepening of economic ties between the two countries.
While this agreement offers the potential for short-term gains through increased trade, it also raises concerns about Mongolia’s long-term strategic autonomy and its susceptibility to Chinese influence. The deal, signed in Harbin on February 14, 2025, and ratified by Mongolia’s parliament on March 27, 2025, comes after years of negotiations and is seen as a major achievement for Prime Minister Oyun-Erdene’s government.
The agreement marks a milestone in Mongolia’s economic relations with China, but it also begs the question of whether the country is trading its economic prosperity for potential vulnerability to Chinese leverage. As Mongolia moves forward with this agreement, it will be essential for the government to carefully navigate the balance between economic growth and safeguarding its national interests.
