Mongolian Prime Minister Oyun-Erdene Luvsannamsrai was in China last week for a working visit centered around attending the 7th China International Import Expo. It was his third visit to China as prime minister, following trips in February 2022 and June 2023, but his first visit to Shanghai.

Oyun-Erdene’s latest visit to China aimed to promote his government’s digital transformation plan, covering areas such as 5G, intelligent transportation, and green energy; cultivating professional talent, and promoting technological innovation and economic modernization. The hope is that cooperation with China will promote the transformation of Mongolia’s high-tech industry.

However, China-Mongolia relations are not all smooth sailing at the moment. Although Oyun-Erdene is trying his best to improve relations between Mongolia and China, he will face many political challenges in the near future.

Before analyzing Oyun-Erdene’s visit to China, we should first review the trip to Ulaanbaatar made by China’s Vice President Han Zheng in September. After attending the 9th Eastern Economic Forum in Vladivostok, Russia, Han visited Mongolia for three days. Just days prior, Russia’s President Vladimir Putin had also visited Mongolia. When Han met with Mongolian politicians, he put forward five suggestions for the development of China-Mongolia relations in the next stage, including deepening cooperation among China, Mongolia, and Russia.

Since then, the two countries have had frequent exchanges, including a prime minister-level China-Mongolia-Russia trilateral meeting on the sidelines of the Shanghai Cooperation Organization (SCO) Council of Heads of Government meeting in Islamabad, Pakistan. Two days after that, Liu Jianchao, the head of the Chinese Communist Party’s International Department who is sometimes called “China’s shadow foreign minister,” met with Oyun-Erdene, who was passing through Beijing on his way back from the SCO meeting in Pakistan.

On the occasion of celebrating the 75th anniversary of the establishment of diplomatic relations between Mongolia and China this year, Oyun-Erdene made his trip to Shanghai less than three weeks later. His latest visit seeks to strengthen the strong bilateral relationship between the two countries, especially on the economic front.

For 25 consecutive years, China has been Mongolia’s largest trading partner globally. In 2023, total trade with China was valued at $16.59 billion, contributing around 70 percent of Mongolia’s global trade. As of September 2024, the recorded total trade was $13.83 billion, according to statistics from China – on par to surpass last year’s total.

Oyun-Erdene’s latest trip to China had a decided focus on trade. The Mongolian prime minister took part in the opening ceremony of the China International Import Expo in Shanghai. The annual multi-sectoral event offers opportunities for expanding trade and economic relations with foreign partners and introducing national products to international markets. The opening ceremony of the international exhibition was also attended by China’s Premier Li Qiang, as well as the prime ministers of Kazakhstan, Malaysia, Serbia, Slovakia, and Uzbekistan.

In his speech at the CIIE opening on November 6, Oyun-Erdene said that Mongolia “actively participates in this expo as a platform to enhance economic ties with not only neighboring China but also with other countries.” He noted Mongolia’s economy was undergoing “three key transitions”: integrating AI, digital, and smart technologies; transitioning to “green development;” and a human resources transition “to plan for Mongolia’s future growth.” He emphasized the importance of strengthening cooperation between states in achieving these goals through the development of barrier-free trade, e-commerce, transport and logistics, as well as the introduction of advanced AI technologies.

On November 5, the day before the CIIE opening, Oyun-Erdene met with Chinese Premier Li Qiang. In their meeting, the Mongolian delegation conveyed President Khurelsukh Ukhnaa’s greetings to Chinese President Xi Jinping, and Xi reciprocated with warm wishes for Khurelsukh. Both sides acknowledged the strong strategic partnership between their nations, built upon the reliable and friendly relations between the two presidents. Notably, however, Xi has not visited Mongolia since 2014, despite hopes he would make a trip this year to celebrate the 75th anniversary of diplomatic relations.

Trade and economic cooperation featured prominently in the discussions between Oyun-Erdene and Li. With trade between Mongolia and China totaling about $17 billion in 2023, both leaders expressed confidence in achieving their goal of raising this figure to $20 billion.

While Oyun-Erdene was in China, the two sides signed eight cooperation documents, including a loan agreement for the Erdeneburen hydropower plant in Mongolia’s western region and an agreement on joint construction of the Gashuunsukhait-Gantsmod cross-border railway. Both are high priority projects for Mongolia that have been stalled for years. Additionally, Oyun-Erdene and Li explored cooperation in other sectors, including green energy, telecommunications, mining, agriculture, IT, education, tourism, and cultural exchanges. Oyun-Erdene noted that cooperation between Mongolia and China should be expanded as a model to other countries.

While in Shanghai and Zhejiang, the Mongolia delegation met with Shanghai Mayor Gong Zheng and Wang Hao, deputy secretary of the CCP’s Zhejiang Provincial Committee and governor of Zhejiang province. Mongolia’s delegations also met with executives from prominent Chinese companies like China Energy Group, Alibaba Group, and Huawei, one of the leading companies in technology research and development.

In particular the Mongolian government has agreed to cooperate with Huawei in making its digital transition, including learning new technology practices, building smart cities, and training young professionals in the digital energy and other technology sectors. The two parties established a joint working group – to headed by the minister of Digital development, innovation, and communications – to cooperate in the areas of 5G systems, smart transport, smart traffic, and green energy.

Curiously, Oyun-Erdene brought along nine government ministers (including three deputy prime ministers) and over 10 members of the State Great Khural, Mongolia’s parliament, during his visit to China. It seems that Oyun-Erdene went to Shanghai with half of the Mongolian government personnel, a rare scene.

The Chinese cities of Shanghai and Hangzhou certainly are attractive destinations for Mongolian businesses engaged in international trade, but that itself doesn’t explain why Oyun-Erdene brought along so many domestic politicians – including the leaders of every political party represented in the State Great Khural. There were other reasons behind the large delegation.

First, this indicates Mongolia’s political sincerity. After the parliamentary election in late June of this year, the ruling Mongolian People’s Party (MPP) saw the size of its majority shrink. In acknowledgement of the change, Oyun-Erdene, who is chairman of the MPP, issued an invitation to the other political parties holding seats, hoping to form a coalition government. On July 8, the MPP and the two largest opposition parties, the Democratic Party and the Hun Party, jointly signed a memorandum of understanding, agreeing to form a coalition government.

After forming a new national unity government, then, Oyun-Erdene is taking care to involve all the various political parties in relations with China. He must be conscious that the longevity of the newly formed coalition government depends on Mongolia’s economic health – and that, in turn, largely hinges on how Mongolia and China engage in economic and trade cooperation. In the recent past, Mongolia has been somewhat frustrated by border closures impacting China-Mongolia trade and a lack of progress on big-ticket cooperation projects. Overcoming these issues is a priority for the Mongolian government given the outsized importance of China in Mongolia’s trade.

In addition, Oyun-Erdene is carefully managing relationships with other parties in a bid to avoid domestic political struggles over the 2025 national government budget. Mongolia’s government budget plan for next year, including controversial topics like export revenue, public investment, and domestic social stability, has the potential to trigger a political crisis.

The domestic politics of Mongolia and the relationship between Mongolia and China will both continue to warrant close observation moving forward.

BY Sumiya Chuluunbaatar

Sumiya Chuluunbaatar is an economist and expert on international issues. Sumiya is currently working as a non-resident fellow at the Institute of International Studies, Mongolian Academy of Sciences.