Mongolia's China Embrace: Liquidity Lifeline or Leverage Trap?

Mongolia deepens economic ties with China via a new deal on coal trade, rail logistics, and FX liquidity.

Mongolia's recent parliamentary ratification of a comprehensive agreement with China, encompassing the Gashuunsukhait-Gantsmod (GSK-GMD) railway, coal trade, and Tavan Tolgoi coal mine expansion, marks a significant deepening of economic ties.

While offering the promise of short-term gains through enhanced trade, the agreement also raises concerns about long-term strategic autonomy and potential vulnerability to Chinese leverage.

The agreement, signed in Harbin on February 14, 2025, and ratified by the parliament of Mongolia on March 27, 2025, follows years of negotiations and represents a key achievement for Prime Minister Oyun-Erdene’s government.