CAREC ministers gather to adopt regional declaration www.ubpost.mn

Ministers and senior officials from the Central Asia Regional Economic Cooperation (CAREC) program’s member countries met in Ulaanbaatar on September 28 for the program’s 25th anniversary Ministerial Conference. It is the centerpiece of a week of events hosted by Mongolia, this year’s CAREC chair, running from September 28 to October 2. The conference was set to produce the Ulaanbaatar Declaration, which reaffirms the CAREC 2030 strategy and lays the groundwork for cooperation toward the CAREC 2050 vision. 

The conference brought together government officials, ministers and high-level representatives of member countries, along with Asian Development Bank (ADB) leadership and representatives of international and regional organizations and development partners. First Deputy Prime Minister and Minister of Economy and Development J.Enkhbayar delivered the opening remarks, and ADB President Masato Kanda gave the keynote address. The conference reviewed 25 years of cooperation and discussed next-generation priorities: implementing CAREC 2030, the post-2030 vision, green and digital economic corridors, private sector participation, regional public goods, and sustainable, resilient and inclusive growth. Bilateral meetings took place between Mongolian government members and ministers from member countries, development partners and international organizations.

The week opened on Monday with a Development Partners’ Dialogue under the theme “Boosting Trade, Tourism, and Regional Competitiveness”, It was jointly organized by the Ministry of Economy and Development, the ADB and the United Nations Development Programme (UNDP). Deputy Minister of Economy and Development S.Davaasuren delivered remarks on the first day’s proceedings. He highlighted that since joining CAREC in 2003, Mongolia has implemented major projects in regional transport connectivity, as well as infrastructure for roads, border crossings, ports, trade and logistics.

Participants discussed trade facilitation, cross-border transport and logistics, customs cooperation, “Single Window” systems, regional value chains and investment. Tourism was singled out as a new growth driver. CAREC members share Silk Road heritage, the history of nomadic and sedentary civilizations, and distinctive landscapes, and could market them as a unified regional brand with joint tourism products. CAREC’s tourism policy identifies clusters that include Mongolia, such as the “Altai,” “Gobi” and “Steppe” zones.

Business Forum opens 

The CAREC Business Forum opens on September 30 and runs through October 1. It is the first time Mongolia has hosted the event. About 400 delegates from 10 countries have registered, representing governments, international organizations, entrepreneurs, investors, chambers of commerce, business associations and development partners. Pre-event trade coverage had put expected attendance at around 250.

CAREC cooperation has focused mainly on intergovernmental dialogue and infrastructure, but the program is shifting toward private sector participation, investment, innovation and business-to-business (B2B) and business-to-government (B2G) collaboration. Today’s sessions, themed “Scaling Up Investment - Accelerating Infrastructure Transformation,” cover clean energy and regional energy connectivity, smart transport and logistics, and value chains for critical minerals and manufacturing.

A memorandum of understanding to establish the CAREC Chamber of Commerce and Industry Alliance (CCA), an initiative of the Ministry of Economy and Development, is to be signed at the opening. Its inaugural meeting is scheduled for Thursday. The alliance would be a permanent mechanism linking chambers of commerce and business organizations across member countries. 

Trade publication Highways Today reported that CAREC’s current work reaches beyond physical infrastructure into digital logistics, border modernization, energy interconnection, critical minerals value chains and the financing structures needed to draw in private capital. It noted that preparations included a senior officials’ meeting in Ulaanbaatar in June, followed by August discussions on border upgrades, a CAREC Digital Corridor and a Critical Minerals to Manufacturing Financing Partnership Facility. The same outlet cautioned that a wide gap remains between presenting a project pipeline and turning those projects into reality.

Mongolia signaled its aims for the chairmanship early. In December 2025, State Secretary of the Ministry of Finance J.Ganbat said Mongolia was committed to working with all members to build a stable, prosperous and investment-friendly region. ADB set out its own direction at last year’s conference in Bishkek on November 20, 2025, where Kanda announced more than 10 billion USD in ADB financing through 2030 and described the vision as a region that is “economically resilient, environmentally sustainable, socially inclusive, and digitally connected”.

Launched in 2001, CAREC unites 11 countries: Afghanistan, Azerbaijan, China, Georgia, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan, Tajikistan, Turkmenistan and Uzbekistan, along with development partners. Between 2001 and 2025, some 57.9 billion USD was invested in 300 regional projects: 19.7 billion USD from the ADB, 26.5 billion USD  from other development partners and 11.7 billion USD from member governments. The money supported transport corridors, energy connectivity, and border crossing, port and trade facilitation infrastructure. The region is home to 1.8 billion people and an economy of about 20.6 trillion USD, or 16.3 percent of global GDP. Intra-regional trade rose from 1.9 percent in 2001 to 4.9 percent in 2024, and mutual investment from 0.5 to 3.3 percent. The share of people living on less than three USD a day fell from 54.5 percent in 2001 to 17 percent in 2025.

U.S. Department of State Releases 2026 Investment Climate Statement for Mongolia www.mn.usembassy.gov

The U.S. Department of State today announced the publication of the 2026 Investment Climate Statements (ICS), a comprehensive annual report analyzing the business and investment environments of more than 170 countries and economies, including Mongolia. The full report is available HERE https://www.state.gov/reports/2026-investment-climate-statements/mongolia/  

Prepared by economic officers at U.S. embassies and consulates around the world, the Investment Climate Statements help U.S. companies make informed decisions when considering overseas markets. The reports identify potential barriers and market distortions, assess risk, and highlight opportunities to support high-quality investment. They are also a resource for host governments seeking to build business environments that ensure fair treatment for U.S. companies and investors.

The Mongolia chapter reflects the U.S. Embassy’s ongoing assessment of the country’s business climate, an issue the Embassy has prioritized in its engagement with the Government of Mongolia and the private sector. Speaking earlier this year to the American Chamber of Commerce in Mongolia, U.S. Ambassador Richard L. Buangan underscored the urgency of translating reform pledges into concrete results:

“Mongolia needs to move past quick fixes and bandage solutions,” he said. “It must deliver a predictable legal environment where contracts are fiercely protected.”

The Embassy continues to work closely with the American Chamber of Commerce in Mongolia and other stakeholders to advocate for a transparent, predictable, and fair investment climate that benefits both Mongolian and American businesses.

Please see the executive summary below.

EXECUTIVE SUMMARY

Mongolia’s government and Parliament delivered no substantial improvement to the investment climate in 2025. While this frontier market continues to offer potentially lucrative opportunities in the natural resource sector, caution is warranted due to:

Vulnerability to external economic and financial shocks

Ineffective dispute resolution

Lack of input from stakeholders during rulemaking and

Increased risk of expropriation

Investing in such potentially lucrative but politically sensitive sectors as mining and energy carries substantial political risks. More positively, Mongolia imposes few market-access barriers, and investors face few investment restrictions, enjoying mostly unfettered market access. Franchises such as fast food and convenience stores have outperformed expectations, suggesting that investors can bring successful international business models to Mongolia. The agricultural and livestock sectors also show strong promise. Mongolia attracts investor attention but has trouble converting interest into investment. Unless and until Mongolia embraces a stable business environment that transparently creates and predictably implements laws and regulations, investors may find Mongolia too risky and opt for more competitive countries. Businesses face substantial and unpredictable regulatory burdens at every level and state that officials across ministries and agencies routinely contravene existing laws and regulations. Investors cite long delays obtaining court judgments, followed by equally long delays enforcing decisions, and report that such administrative bodies as the General Tax Authority are so chronically unable and unwilling to resolve disputes that their behavior is an indirect expropriation risk. Investors are particularly concerned about a tax process that effectively lets officials issue excessive, confiscatory tax assessments to coerce settlements. The perception that the government favors its own state-owned entities over private sector companies discourages existing investors from expanding, and new investors from coming. Finally, Mongolia passed a 2024 package of laws aimed at reestablishing its sovereign wealth funds by, among other steps, limiting each private sector owner to no more than 34 percent of mining assets designated by Parliament as strategic deposits and requiring private owners to transfer no less than 34 percent to the state without compensation. Investors consider these requirements expropriatory and fear the government could apply them to all mining projects and potentially to sectors outside resource extraction. Investors have asked government and legislative leaders to amend these provisions while ensuring a balanced sharing of mining benefits, including revenues. Businesses and investors state that the government’s public demands for 60 percent of all mining revenues, if enacted into law, would drive exploration and mining entities away from Mongolia. In 2026, Parliament passed legislation to streamline permitting and licensing processes and remove other bureaucratic burdens. However, these laudable efforts come without any commitment to improve implementation, making government and Parliament actions more symbolic than practical.

Cable Car Transport to Be Commissioned on December 15 www.montsame.mn

 The "Cable Car Transport" project is being implemented to diversify public transportation in Ulaanbaatar, improve service standards, increase accessibility, and reduce traffic congestion.

Construction and assembly work for the project is fully complete, with overall progress currently reaching 90 percent. The cable car line is scheduled to open on December 15. Running along the Yarmag–Kharkhorin route, the 4.2-kilometer system with two stations will transport 2,320 passengers per hour using 98 cabins.

Munkhbayasgalan B., Project Manager at Monnis Engineering, stated, "The mechanical assembly of the cable car transport is fully finished. Safety testing and calibration are currently underway. Under our subcontracting agreement with France's Poma Group, our company is executing its assigned work on schedule. By December 15, the cable car will be ready for public use. A team of 56 personnel is currently working on-site."

Additionally, 48 rules and regulations necessary for starting passenger operations have been received from the main contractor, the Poma Group of France, and translated into Mongolian.

Japan, Mongolia agree on airport, energy cooperation www.nhk.or.jp

The leaders of Japan and Mongolia have agreed on support for the expansion of Chinggis Khaan International Airport near the Mongolian capital and to cooperate in the field of energy.

Japanese Prime Minister Takaichi Sanae met with her Mongolian counterpart Nyam-Osor Uchral at the Prime Minister's Office in Tokyo on Tuesday.

At the outset of the summit, Takaichi said Japan will continue to support Mongolia's freedom to decide for itself and resilience under the updated "Free and Open Indo-Pacific" vision as a peace-loving nation as well as Mongolia's most important "third neighbor."

The leaders have agreed that Japan will provide assistance through the yen loan to expand the international airport near Ulaanbaatar. They also concurred that the two countries will actively work together in the fields of oil reserves and renewable energy, in light of Mongolia's dependence on Russia for oil products.

Both sides affirmed that they will advance discussions on cooperation in other fields, including security and artificial intelligence. They also confirmed that the Japan External Trade Organization, or JETRO, will work to open a Mongolian office.

Additionally, Takaichi expressed her gratitude for Mongolia's understanding and cooperation on the abduction issue of Japanese nationals, as the country has friendly ties with North Korea.

Japan-Mongolia Summit and Working Dinner www.mofa.go.jp

On September 29, commencing at 5:45 p.m. for approximately 35 minutes, Ms. TAKAICHI Sanae, Prime Minister of Japan, held a Summit with H.E. Mr. Nyam-Osor UCHRAL, Prime Minister of Mongolia, who is on an official working visit to Japan.  Following the meeting, the two leaders had a working dinner for approximately 60 minutes.

At the outset, Prime Minister TAKAICHI welcomed Prime Minister Uchral’s visit to Japan his first bilateral visit since taking office and stated that, as the most important “Third Neighbor”, Japan would continue to support strengthening Mongolia’s freedom to decide for itself and resilience under the Updated “FOIP”. In response, Prime Minister Uchral highly appreciated Japan’s long-standing contributions to peace and stability of the international community as a peace-loving nation and stated that Mongolia would steadily implement the 2022 Joint Statement.
The two leaders concurred to pursue further cooperation under “the Special Strategic Partnership for Peace and Prosperity ”, and concurred on further discussing cooperation in the security field as well, and, moreover, in new fields such as Artificial Intelligence.
Marking the 55th anniversary of the establishment of diplomatic relations’ next year, with this Summit as a kick off, the two leaders concurred in jointly reviewing progress in areas of cooperation, particularly in the economic sector, and strengthening their collaboration. Furthermore, in light of Mongolia’s robust economic growth in recent years, the two leaders discussed how to further deepen bilateral economic cooperation under the Updated “FOIP”. Furthermore, the two leaders concurred in deepening discussions utilizing the Japan-Mongolia Government and Business Sector Joint Committee scheduled for November this year, in order to promote the improvement of the business environment championed by Prime Minister Uchral, and to promptly commence negotiations with a view to concluding a bilateral tax convention in order to develop cooperation in the economic field. They also concurred in holding preliminary consultations on a social security agreement in the future. Furthermore, Prime Minister Uchral requested the opening of a JETRO office in Mongolia, to which Prime Minister TAKAICHI responded that Japan would cooperate towards its establishment. In addition, Prime Minister TAKAICHI announced that long-term dispatchment of the “NIHONGO Partners” would commence this year, to which Prime Minister Uchral expressed his gratitude.
The two leaders welcomed the signing and exchange of the Exchange of Notes (E/N) concerning the yen loan for the expansion of Chinggis Khaan International Airport, in which Japanese companies are involved in its operation and concurred on the importance of cooperation between Japan and Mongolia at the airport, which is key to improve air connectivity. This cooperation will help to promote trade and business of Japanese companies with Mongolia.They also concurred to actively cooperate in the fields of oil reserves and renewable energy under the POWERR Asia.
The two leaders concurred to further strengthen cooperation in international fora, including the United Nations, and to work together to promote regional peace and stability. Prime Minister TAKAICHI also expressed support for Mongolia’s candidacy for the Security Council of the United Nations in 2047. Prime Minister TAKAICHI once again expressed her appreciation for Mongolia’s understanding and cooperation on the abductions issue.

Critical minerals will define the next industrial era www.mongolianminingjournal.com

The proposed amendments to the Minerals Law are expected to formally establish a critical minerals category and list, creating a new legal framework to support investment in the sector. The Ministry of Industry and Mineral Resources and the National Geological Survey have announced that preparations are underway to include 19 types of minerals on the country's critical minerals list.

Reflecting the transition to renewable energy and global market demand, the proposed list will primarily include copper, non-ferrous metals, and rare earth elements.

However, the geology and exploration sector—the foundation for implementing these policy reforms—has stagnated, continuing to limit the potential for major new discoveries.

Of the 2,817 valid mineral licenses nationwide, 1,778 are mining licenses, while only 1,039 are exploration licenses. The number of exploration licenses is nearly half that of mining licenses, indicating that the continuity of geological exploration has been disrupted and the pace of exploration has slowed.

Although the government has increased funding for basic geological surveys, investment from the state budget remains limited. Ultimately, it is clear that reviving the exploration sector will require attracting private investment.

Mineral exploration frequently faces local opposition due to a widespread perception that exploration inevitably leads directly to mining. The minister said the proposed amendments therefore include specific provisions to clearly distinguish the lower-impact exploration stage from mining, while also addressing environmental, social and governance (ESG) considerations and ensuring that socioeconomic benefits remain in local communities as projects transition to the mining stage.

By simplifying the exploration licensing process and making engagement with local communities more transparent and institutionalized, Mongolia could accelerate geological exploration for the next generation of strategically important deposits comparable to Oyu Tolgoi and Erdenet. By unlocking its vast reserves of strategic minerals such as copper, rare earth elements and lithium, the country could strengthen its position in the global critical minerals network and emerge as a key player in global supply chains.

Its geographic proximity to major Asian consumers such as China, South Korea, and Japan offers a significant advantage in reducing export costs and expanding strategic partnerships. Moreover, Mongolia has considerable potential to move beyond simply extracting and exporting raw materials by processing them domestically and adding value.

ADB LAUNCHES NEW FUND TO STRENGTHEN SUPPLY CHAINS

We have been talking about "critical" minerals for quite some time. Although Mongolia has yet to officially announce which minerals will fall into this category, the rest of the world is already taking an interest. According to the Asian Development Bank's (ADB) Market Assessment of Critical Minerals in Mongolia, Mongolia is currently active at the extraction stage for only a limited number of minerals, primarily copper and fluorspar.

Yet the country has vast mineral resources, including 61.4 million tonnes of copper, 37.4 billion tonnes of coal, and around 1.2 billion tonnes of iron ore. It also hosts major rare earth deposits such as Khotgor and Khalzan Buregtei, with combined resources of around 3.5 million tonnes. Beyond these, Mongolia has substantial geological resources of critical minerals, including copper, lithium, rare earth elements, tungsten, uranium, fluorspar, graphite, and nickel.

The Critical Minerals-to-Manufacturing Financing Partnership Facility, established at the 59th Annual Meeting of the Asian Development Bank (ADB), aims to help the region move beyond mineral extraction into processing, recycling and other higher-value-added activities.

In other words, it seeks to help countries across Asia and the Pacific become not merely suppliers of raw materials, but value creators in global critical minerals supply chains.

ADB President Masato Kanda said, "Critical minerals will shape the next industrial era. Asia and the Pacific should be more than a source of raw materials. The region should also capture the jobs, technology, and value these minerals provide." He added, "This facility is about urgency and fairness: building responsible supply chains now, so our developing member countries can compete in advanced manufacturing and create opportunities at home."

The facility has two main components. Grant Window: This window will fund early-stage project activities, including feasibility studies, environmental and social impact assessments, technical assistance, and knowledge-sharing. The Government of Japan has committed $20 million to the Grant Window, while the Government of the United Kingdom has committed $1.6 million.

Catalytic Finance Window: This window is designed to bring in cofinancing and risk-sharing from other financing partners. Korea Eximbank and the Korea Trade Insurance Corporation (K-SURE) each signed a $500 million memorandum of understanding, becoming the facility's first partners.

The facility builds on ADB's 2025 strategy to support responsible and sustainable critical minerals-to-manufacturing value chains across the region. ADB is already supporting several projects, including geological data mapping in Mongolia.

DEMAND FOR SOME CRITICAL MINERALS TO RISE SEVERAL-FOLD

Over the next 25 years, global demand for some minerals is projected to increase several-fold. Compared with 2024 levels, demand for platinum group metals is expected to rise 66-fold, while demand for lithium could increase 8–13-fold and manganese 18–29-fold.

However, ADB estimates that by 2040, current production capacity will meet only 35% of lithium demand, 59% of copper demand, 70% of cobalt demand, and 76% of nickel demand, highlighting the risk of a significant global supply shortfall.

According to several studies, mine production is expected to continue rising until 2030, peaking at 27 million tonnes. However, unless major new deposits are developed, declining ore grades at existing mines could cause output to steadily fall after 2030, reaching 22 million tonnes by 2040.

Over the same period, the supply of secondary, or recycled, copper is expected to rise from 4 million tonnes in 2025 to 10 million tonnes by 2040, but this will not be enough to keep pace with rapidly growing demand. By 2040, global copper supply is projected to reach 32 million tonnes, compared with a demand of 42 million tonnes, leaving a supply shortfall of 10 million tonnes.

ENERGY INFRASTRUCTURE CHALLENGES

Despite rapidly growing demand and the discovery of new deposits, there are several reasons why mining and processing have yet to get fully underway. Inflation has driven up project costs, while permitting procedures and ESG requirements have lengthened development timelines. At the same time, tighter lending conditions and higher interest rates have made financing more difficult. A range of other factors, from commodity price volatility to government policy, may also warrant closer scrutiny.

In fact, mineral smelting and refining are highly energy-intensive processes. For example, energy accounts for around 25% of the operating costs (OPEX) of copper smelting and refining, giving countries with access to low-cost, reliable electricity a competitive advantage.

China currently dominates global mineral processing, accounting for 100% of the world's processing capacity for natural graphite and dysprosium, more than 90% for manganese, 70% for cobalt, nearly 60% for lithium, and 40% for copper.

For Mongolia, constraints in basic energy infrastructure currently limit its ability to provide processing plants with a continuous and reliable power supply. In addition, flawed government policy decisions, a lack of policy continuity, and frequent changes to the legal and regulatory environment are sending signals of political risk to international markets, making it increasingly difficult for Mongolia to attract investment.

By O. Dulguun

Construction of President Sports Complex Begins www.montsame.mn

 Construction of the “President” Sports Complex, named after the heads of state of Mongolia and China, has officially begun. The project is a major development aimed at strengthening friendly relations and cooperation between Mongolia and China and making a tangible contribution to the development of physical education and sports.

The sports complex will provide children, young people and the public with opportunities and facilities to engage regularly in physical education and sports, while supporting athletes’ training and contributing to the advancement of sports development and cooperation. The project is also intended to further strengthen friendship, mutual understanding and long-term cooperation between the peoples of the two countries through sports and physical education, while creating a lasting facility for future generations.

The complex will be built in a green recreational area east of the Dunjingarav Shopping Center and in the northern part of the National Garden Park. The complex will have a daily capacity for around 4,500-6,000 children and young people to engage in sports and a total service capacity of 8,000-10,000 people. It will have a capacity to accommodate 1,327 people at a time.

Covering 58,560 square meters, the complex will offer facilities for 19 sports, including basketball, volleyball, football, swimming, tennis, table tennis, air tennis, squash, boxing, wrestling, rock climbing, fencing, shooting, archery, fitness, yoga, spinning, and cycling.

PM Uchral Expresses Commitment to Increasing Benefits of Mongolia-Japan EPA www.montsame.mn

As part of his official visit to Japan, Uchral Nyam-Osor, Prime Minister of Mongolia,  paid a courtesy call on Eisuke Mori, Speaker of the House of Representatives of Japan, on September 29, and exchanged views on bilateral relations and interparliamentary cooperation.

Prime Minister Uchral expressed Mongolia’s commitment to further strengthening friendly relations with Japan, an important “third neighbor” and close partner of Mongolia. He also highlighted his satisfaction that bilateral relations and cooperation have continued to expand to the level of a Special Strategic Partnership for Peace and Prosperity.

He expressed gratitude to the Parliament, Government and people of Japan for their longstanding and consistent support for Mongolia’s democratic, social and economic development, and underscored the importance of further intensifying interparliamentary relations and cooperation between the friendship groups of the two countries.

The Prime Minister also expressed his commitment to expanding trade and investment cooperation, increasing the benefits of the Mongolia-Japan Economic Partnership Agreement, boosting Mongolia’s exports, and attracting more Japanese investment, technology and know-how to Mongolia.

Speaker of the House of Representatives of Japan Mori noted that friendly relations and cooperation between the two countries have developed steadily. He also expressed his commitment to further strengthening interparliamentary relations, reciprocal visits and cooperation between the friendship groups.

During the meeting, the sides exchanged views on further expanding and developing Mongolia-Japan relations and cooperation, promoting interparliamentary exchanges, and increasing trade and investment cooperation. They also discussed plans to celebrate the 55th anniversary of the establishment of diplomatic relations between Mongolia and Japan next year on a large scale.

The China-Mongolia-Russia Economic Corridor: Politically Endorsed, Practically Stuck www.strategicspace.nbr.org

The China-Mongolia-Russia Economic Corridor (CMREC), first proposed by Xi Jinping in September 2014, is one of six flagship economic corridors under China’s Belt and Road Initiative. The corridor aims to improve transportation and infrastructure connectivity among the three countries, reduce freight times, and create new land and sea routes for the export of Mongolian goods and natural resources. In this Q&A led by Nathaniel Schochet, Mendee Jargalsaikhan provides background on CMREC, considers how it differs from China’s other major economic corridors, and discusses the impact on Mongolia and its relationship with China.

Can you explain the origins, objectives, and structure of the China-Mongolia-Russia Economic Corridor, and how it fits within China’s broader Belt and Road Initiative (BRI) and Global Development Initiative?

When China officially launched the Belt and Road Initiative in 2013, Mongolian leaders saw it as a great opportunity to advance the country’s transit connectivity dreams and immediately supported the initiative. Building on previous policies to improve transit connectivity—for example, the Transit Mongolia National Plan of 2008—the government quickly announced the Steppe Road initiative prior to visits in 2014 by Presidents Xi Jinping and Vladimir Putin. At that time, Mongolian president Elbegdorj Tsakhia proposed to hold the Ulaanbaatar Summit once every three years between the three leaders to discuss transportation and related infrastructure issues. However, both presidents made separate visits. President Xi visited in August and President Putin visited in September; nonetheless, both agreed to hold the first trilateral summit on the sidelines of the Shanghai Cooperation Organisation (SCO) summit in Dushanbe, Tajikistan, in 2014. Then, in Dushanbe all three countries agreed to incorporate China’s Silk Road Initiative, Russia’s Eurasian Infrastructure Development Plan (also known as the Greater Eurasian Partnership), and Mongolia’s Steppe Road initiative. 1

The following year, Mongolia was officially included in China’s Belt and Road Initiative as one of the six economic corridors, and the three presidents concluded a memorandum of understanding to establish CMREC during the SCO summit in Ufa, Russia. In 2016, at the SCO summit in Tashkent, the three presidents approved the CMREC plan, which included 32 projects, ranging from transit infrastructure connectivity to trade and customs coordination to various types of people-to-people exchanges. Furthermore, all parties agreed to establish a working group, to be led by deputy prime ministers, foreign ministers, or deputy foreign ministers and supported by a trilateral experts meeting. Importantly, parties agreed that the plan will be reviewed every five years and, if necessary, extended by another five years.

In 2025, the three countries held the seventh trilateral summit on the sidelines of the SCO summit in Beijing, where the three leaders agreed to extend the plan until 2031. Even though the main focus remains on previous projects, especially the north-south railway, roads, and connecting ports, parties discussed the possibility of including the trans-Mongolian gas pipeline to the project list. But in the end the gas pipeline project—known as the Power of Siberia 2 pipeline—was not included. This 2,600-kilometer natural gas pipeline is designed to transport Russian gas from the Yamal and Siberian fields through Mongolia to China. Apparently, the Chinese side has been only committed to the feasibility studies during this five-year planning cycle. At the SCO summit this September, President Khurelsukh Ukhnaa reiterated Mongolia’s desire to expand its transit capacity in separate meetings with Presidents Putin and Xi.

In terms of objectives, the three countries converge in some areas but diverge on certain interests. Since Mongolia shares the longest land border, extending from the Altai Mountains in the west to Manchuria in the east, the dimension of greatest shared interest is to increase trade between neighboring regions, provinces, and cities.

In terms of specific projects, however, Mongolia is solely focused on winning support from its neighbors to build infrastructure for rails, roads, pipes, grids, and cables in order to increase the transit trade between neighbors, reduce trade barriers (especially tariffs), and gain access to seaports. China seems to be looking at broader engagements, including people-to-people relations rather than merely physical infrastructure. Instead of investing in trans-Mongolian connections with Russia, China is seemingly more interested in the development of large mining deposits in Mongolia’s south and supporting infrastructure, such as rails and roads connecting to China’s industrial centers.

Even though the economic corridor idea aligns with Russia’s pivot-to-Asia strategy, the country wants to develop its own infrastructure connections in the Russian Far East rather than the infrastructure in Mongolia. However, because Russia has traditional leverage and geopolitical interests in Mongolia’s transit infrastructure (e.g., the trans-Mongolian railroad) and energy sector, it also wants to participate in the natural resource and related infrastructure development project. In fact, Russia holds a 50% share of the trans-Mongolian railroad.

It is important to note that the Central Asia Regional Development Cooperation (CAREC) Program, which is led by the Asian Development Bank (ADB), initiated the economic corridor, including agreements, customs facilities, and transit roads concepts. Mongolia joined CAREC in 2003 as an acknowledgment of its key location to connect China’s Xinjiang Uighur Autonomous Region through Mongolia to Russia’s Altai region and to connect Central Asia through Mongolia to Siberia. By 2025, ADB financed the construction of 750 km of roads linking China to Russia through Mongolian two provinces (Khovd and Bayan-Ulgii). Now this is the busiest road for trilateral trade and even links Kazakhstan to Russia through a 40-km land strip between Mongolia and Kazakhstan. CAREC also funded the construction of a logistics center in Zamyn-Uud—the central dry port between Mongolia and China and a rail and road transportation hub between China and Russia that transits through Mongolia.

Thus, on the Mongolian side, the corridor idea has been introduced and developed with the help of ADB’s project. Ultimately, CAREC helps improve Mongolia’s transit links, especially in the western part of the country, where Mongolia, China, Russia, and Kazakhstan are in need of transit connectivity.

How does CMREC differ from China’s other major economic corridors, particularly the China-Pakistan Economic Corridor (CPEC), in terms of strategic objectives, financing, governance, and geopolitical significance?

There are important differences between CMREC and CPEC. First, CPEC involves two countries with a long-standing partnership that could even be regarded as all-weather partners. In Mongolia’s case, CMREC involves three countries, two of which are traditionally geopolitical competitors, with recent memories of a militarized standoff in the 1960s–80s. The increase of influence over Mongolia remains an issue of concern for both great powers. Mongolia is the weak player in this trilateral dynamic. Second, the geostrategic and economic return of CPEC is very high for China—gaining direct access to the Arabian Sea, contributing to the stability of a key neighboring partner, and increasing trade and investment opportunities. Third, the coordination and administration of CPEC projects are more manageable than the economic corridor projects involving Mongolia. In the CMREC case, for example, the planning cycle is different for each country. China has a five-year cycle, Mongolia’s planning is dependent on the four-year parliamentary election cycle, and Russia’s cycle is subject to the president’s priorities and politics.

In my view, CMREC is quite similar to the China–Central Asia–West Asia Economic Corridor, which involves resource-rich, landlocked states of Central Asia. Here, we need to consider Chinese and Russian geopolitical and economic interests regarding the Central Asian states, especially Kazakhstan, the Kyrgyz Republic, and Tajikistan, which operate in the Sino-Russian sphere of influence. All Central Asian states are landlocked, like Mongolia, while sitting at the crossroads of Europe, Asia, and Caucasus. From Mongolia’s perspective, Kazakhstan has been playing the “game” very successfully, building important fast rail and road connections through ADB’s CAREC and China’s BRI. Kazakhstan gets along nicely with Russia, which is its largest, most important ally in Central Asia. Tajikistan demonstrates similar success by accommodating China’s and Russia’s interests while economically benefiting from BRI projects. But challenges in infrastructure development in Kyrgyzstan appear to be similar to those in Mongolia. For example, the trans-Kyrgyzstan rail connection to Uzbekistan and investment in large infrastructure projects have not been successful due to domestic politics and most likely Sino-Russian contests over the Kyrgyz Republic.

The significant difference between Mongolia and the Central Asian states, excluding Turkmenistan, is that all four states are members of both the SCO and the Russia-led Collective Security Treaty Organization (CSTO), while Kazakhstan and Kyrgyzstan are members of Russia’s Eurasian Economic Union.

Although I have not seen a comparative study of all of BRI’s economic corridors, the strategic objectives, geopolitical significance, and operationalization are different depending on the nature of external and internal politics and the economic significance. For example, Mongolia was a founding member of the Asian Infrastructure Development Bank (AIIB), but the AIIB has not financed any major infrastructure development project in Mongolia since 2015. If the AIIB is a key financial institution to fund roads, railways, and airports after assessing the benefits and feasibility, projects in Mongolia are deemed either risky or economically less attractive. Therefore, CMREC is politically endorsed but practically stuck compared with other corridors.

In November 2024, Mongolia, Russia, and China approved an updated list of 33 priority projects under CMREC. What are the most significant projects in this new phase of development, and what do they reveal about the corridor’s evolving priorities?

Back in 2016, Mongolia, Russia, and China approved a plan that included 32 projects, as I mentioned earlier, with most of these projects aimed at conducting feasibility studies, developing legal frameworks, and promoting exchanges in various sectors. Following the joint assessment in 2023, the three parties agreed to eliminate some of the projects and added new ones.

The priority remains railroads, roads, and ports. The fourteen projects within these categories mostly aim to build new transit infrastructure and improve the existing trans-Mongolian railway and road. In 2024 the three parties removed three railroad projects from the old list: a railroad linking Mongolia’s central lane to Russia’s Tuva Republic, a railroad linking the western part of Mongolia to China and Russia, and a high-speed railway linking three capitals. I think this is a very practical decision.

All three countries then agreed to improve the main railway (the trans-Mongolian railway), which is about 1,060 km, was built in the 1950s, and is still struggling to accommodate the current increased trade volume, especially after the Russia-Ukraine war. Because it is the busiest rail, allowing for Mongolia’s sea access through China, trade with China, Sino-Russian trade, and domestic passenger trains, the work needs to be tightly scheduled. Now the three countries have agreed to prioritize modernization of this central (north-south) railway, including signaling, double track sections, electrification, and expansion of the transshipment facility.

Another important rail project that will increase the trade volume will be a 227-km link connecting the trans-Mongolian central link to Baotou—the second-largest city in Inner Mongolia, China. This link will provide Mongolia with a much-needed connection to the Chinese rail network to access China’s seaports and railways going to Central Asia through Kazakhstan.

However, in Mongolia’s case, building the railroad will take time. For example, the 240-km railroad linking the Tavan Tolgoi coal mine to China took about twenty years to construct due to the challenges of geopolitics and domestic politics. Even today, the railway faces ongoing challenges, as the two countries did not agree to construct the additional 32-km connection over the border to connect to the Chinese rail until June 2025.

Besides these projects, parties are also in discussions to continue the feasibility studies for connecting rails through the eastern part of Mongolia. There is an old 238-km rail linking Mongolia’s uranium deposits to the Russian city of Chita. Now Mongolians wish to connect this link to the Chinese rail network in Manchuria.

The transit road connection is the next priority. Notably, as I mentioned earlier, ADB funded the western transport link, the 204-km highway of the central transit road, and improvements to the port facilities along the Sino-Mongolian border. Besides, the Mongolian government’s own effort, ADB has played a key role in improving the transit roads. Relatedly, the other priority project for CMREC is to build special economic zones at the borders with Russia and China.

In addition to these priority projects, the remaining projects aim to promote cooperation in areas of trade, customs, agriculture, health, science, technology, and education as well as people-to-people interactions. In my opinion, although after the 2023 joint assessment the three countries agreed to improve the existing trans-Mongolian railways, their infrastructure, and connecting ports at each end, as well as building two more rail links with China, these projects will continue to take time. Despite the Mongolian government’s wishes, the soft projects such as people-to-people exchanges and political dialogue will be more successful than the projects to construct hard transit connections by the time of the next assessment.

How successful has CMREC been in aligning with Mongolia’s Steppe Road program?

Mongolia has a strong interest in aligning its transit dream with CMREC. Following the launch of BRI, the Mongolian government announced the Steppe Road project with the aim of becoming the land link between China and Russia and even dreamed of connecting Europe and Asia. It expressed its interests in five types of projects: rails, roads, power grids, oil and gas pipelines, and fiber-optic cables. Mongolia has also expressed interest in establishing air logistics hubs using its newly built Chinggis Khaan airport, which was funded by a Japanese soft loan.

However, Mongolia has run into several challenges. The first one was the pandemic, which slowed down all construction projects for at least two years. The second was the visit of the Dalai Lama and subsequent announcement (reincarnation) of Mongolia’s tenth Bogd—a religious leader for the Mongolian Buddhists. The Chinese Ministry of Foreign Affairs’ statements and reactions have definitely poured cold water on China’s initial enthusiasm for CMREC. A third challenge is Russia’s geopolitics of shifting the priorities of Mongolia’s railroad development strategy. Like in the other countries of its neighborhood, Russia still maintains at least half of the stake of the railroad in Mongolia. Mongolia’s railroad runs at 1,520-mm gauge, while China uses the international gauge of 1,435 mm. Russia pressured Mongolia to stick to the 1,520-mm rails, which means that any new rails need the transshipment facility, delaying Mongolia’s desire to connect its mineral deposits in the south to China’s rail network. Sadly, as Mongolia sank into heated domestic debates, it canceled railroad extension projects that even looked beneficial to the Deutsche Bahn (German Rail).

Meanwhile, Russia built two new rail lines linking its far east to China. It is hard to say now whether this was done based on the Kremlin’s geopolitics or led by a simple economic calculation, as both Mongolia and Russia compete to increase their coal exports to China. Finally, as noted earlier, domestic politics have hampered CMREC, especially the fight between the political economic factions that ensued due to the perception of transit projects as particularly lucrative. This covers everything from feasibility studies to construction to operation and maintenance. These factors have contributed greatly to delaying the CMREC projects.

Based on joint assessments in 2020 and 2023, CMREC has not been successful. But now, because of its ongoing war in Ukraine, Russia realizes it needs to increase its transit capacity through Mongolia and its far eastern railroads. So, there is a joint push by Mongolia and Russia to construct the Power of Siberia 2 gas pipeline through Mongolia. That could give some importance to CMREC projects. However, China is still thinking about the feasibility study of the gas pipeline in this round of its five-year planning. Whether the emerging conflicts in the Middle East could trigger China to reconsider the urgency of the gas pipeline project, that we still need to wait to see.

The other crucial problem is the coordination mechanism for CMREC, which is still not streamlined. The Chinese side will wait for the next five-year planning cycle. It would be difficult to imagine that Russia will be spending money for projects in Mongolia, given the ongoing war in Europe. Even if Russia has funding, it would prefer to devote such resources to its own economic corridor links with China. Another factor will be how Mongolian politics play out in the presidential election in 2027 and parliamentary elections in 2028, as well as how the state of the economy will appear in the coming years.

Beyond physical infrastructure projects, there is also the soft infrastructure and other domains of BRI integration linking Mongolia to China, including financial flows, people-to-people exchanges, and trade. What impact have these developments had on Mongolia and its relationship with China?

If Sino-Mongolian relations are viewed across the long spectrum of over two thousand years, followed by the fairly recent two decades of Sino-Soviet tensions during the Cold War, this is probably the most amicable the two countries have been. Both have been enjoying the frequency of bilateral exchanges at the provincial or local levels. Despite Mongolia’s reluctance to permit China’s major banks from operating inside the country, both national banks renewed their bilateral currency-swap arrangements. Mongolians also enjoy visa-exempt entry, access to medical facilities, and tourism opportunities in China.

China has become a competitive destination for Mongolian students, considering its proximity and the availability of tuition provisions compared with schools in North America and Europe. However, South Korea, Japan, and Taiwan remain the favored destinations in Asia for Mongolian students. The Confucius Institutes, which are vital instruments of Chinese external influence and teach Mandarin and Chinese culture to local students, expanded their foothold in Mongolia—not only in Ulaanbaatar city but also in the far western Khovd Province as well as in eastern Dornod Province.

China is undeniably the most important source for Mongolia’s trade and investment and an essential destination for imports. In fact, Mongolia’s reliance on China’s fuel and electricity is on the rise as Russia struggles domestically because of the war in Ukraine. To overcome the scarcity of the fuel provided by Russia, the Mongolian government increased its fuel imports from China. Even Mongolia’s largest copper mine, Oyu Tolgoi, now relies on China for electricity. The flow of Mongolian travelers to China and South Korea is expected to steadily increase, while Russia has already become less attractive to Mongolians.

Nevertheless, there continues to be a trust deficit in the two countries’ bilateral relations. Because of historical memories, the asymmetry of power, and emerging geopolitical narratives, both countries adopt a somewhat cautious stance toward each other. Beijing likely does not approve of Mongolia joining the U.S.-initiated Board of Peace, even as it remains reluctant to endorse China’s global initiatives, such as a shared destiny or the SCO. The latter could easily trigger a heated debate over the country’s principled stance of nonalignment and complicated long history with its neighbors. Regrettably, negative comments and narratives in the Chinese and Mongolian blogospheres, as well as some incidents against nationals in the other country, can easily contribute to mistrust and reinforce negative attitudes on both sides.

Does CMREC provide Mongolia with greater economic opportunities and strategic autonomy, or does it risk deepening Mongolia’s dependence on Russia and China?

The best answer is probably that it depends on how Mongolia negotiates with these two great powers—particularly over the construction of transit railways, roads, pipelines, and electricity grids. I do not think that Mongolia could reduce its dependency on its two larger neighbors. Under any circumstances, China and Russia will have strong political, economic, and security leverage over Mongolia. Nevertheless, I would argue that CMREC will also increase or facilitate Mongolia’s wish to be connected to markets not only in its immediate neighborhood but also in Central and Northeast Asia.

BY
Mendee Jargalsaikhan is an adviser at Global Nomads of Mongolia. He previously served in senior research and leadership positions at the Institute for Strategic Studies and Defense Research Institute. His research focuses on Mongolian foreign and security policy, small-state security, geopolitics, critical minerals, and the political and socioeconomic impacts of extractive industries.

This Q&A was conducted by Nathaniel Schochet, a senior project associate with the Political and Security Affairs group at NBR.

Fuel reserves dip again www,ubpost.mn

Queues have reappeared at Ulaanbaatar filling stations after national fuel reserves slipped from an 11-day supply back down by one or two days, the Fuel Emergency Task Force reported at a briefing on September 25, blaming reduced shipment volumes from Russia. 

State Secretary of the Ministry of Industry and Mineral Resources B.Dashpurev mentioned that 987 tonnes of fuel were distributed to 105 filling stations in Ulaanbaatar and 815 tonnes of AI-92 petrol to 82 rural stations over the past 24 hours. He said 162 tank cars, carrying 9,720 tonnes of AI-92 petrol, remain within the Ulaanbaatar Railway system, with a further 32 tank cars ready at unloading stations. 

B.Dashpurev added that 18,000 tonnes of petrol ordered from Russia had yet to arrive with five days left in the month. A separate 8,000-tonne order from China has reached Zamiin-Uud station, where transshipment is under way.

Asked how long the queues would last, B.Dashpurev replied that reserves had been built up to a 42-day supply between April and June to meet rising domestic tourism demand, but fell to as low as six days after shipments from Russia dropped amid the war there, forcing people nationwide into overnight queues. 

He informed that the government is negotiating through all available channels to secure Russian volumes that meet standard consumption needs, while also pursuing imports from South Korea and China. Mongolia has already imported 2,000 tonnes of diesel from South Korea, he said, and finalized a deal to bring in 18,000 tonnes of petroleum products from China this month, including 8,000 tonnes of Euro-5 grade AI-92 petrol currently being shipped.

Imports averaged 38.3 tank cars a day in August after Mongolia pushed for higher volumes following supply disruptions, but the average fell to 33 tank cars in September, leaving the country only just able to meet consumption needs. The incoming 18,000 tonnes from Russia and 8,000 tonnes from China should prevent further disruptions for the rest of the period. There are no queues for Euro-5 or AI-95 grade fuel in Ulaanbaatar, but queues have formed for the cheaper standard AI-92 Euro-2 grade, and the government would increase procurement of Euro-2 fuel for the remainder of the period, according to B.Dashpurev.