China extended its support to Mongolia on Jan 20 for overcoming economic difficulties, as Foreign Minister Wang Yi announced a number of measures to help the debt-ridden neighbor.
Observers said that since the bilateral ties are emerging from a time of political frustration, Beijing’s latest help is a sincere move to assist the landlocked neighbor to diversify its economy.
The measures include providing assistance and favorable loan terms to Mongolia and extending a bilateral currency swap deal that is vital to Mongolia’s foreign trade and currency stability, according to a joint news conference after Wang’s talks with his visiting Mongolian counterpart Tsend Munkh-Orgil on Feb 20.
The International Monetary Fund said on Feb 19 that the country has agreed to implement an economic rescue package proposed by the IMF and refinance bond loans, easing concerns that Mongolia might default on a loan in March.
China supports the aid by international financial institutions to Mongolia, and it will also consider Mongolia’s hope to expand exports of mineral, agriculture and husbandry products to China, Wang said.
Since Mongolia is trying to avoid missing a $580 million sovereign-guaranteed debt repayment due in March, the IMF said in its statement on Feb 19 that the Asian Development Bank, World Bank and bilateral partners, including Japan and South Korea, will provide up to $3 billion in aid.
People’s Bank of China, the central Bank of China, will extend a currency swap line to Mongolia worth 15 billion yuan ($2.18 billion), while the IMF said it will offer three-year loans worth about $440 million, Agence France-Presse reported.
Mongolia angered China in November by allowing a visit by the 14th Dalai Lama, who has pushed for separating Tibet from China.
In January, during a phone call between Wang and his Mongolian counterpart, Mongolia said it had reflected deeply on the visit and promised to not allow the Dalai Lama to visit again.
On Feb 20, Wang said the bilateral relationship “is ready for another start”.
Munkh-Orgil, the Mongolian foreign minister, said his country remains true to the one-China policy and Tibet is part of China. Additionally, Mongolia appreciates China’s help in addressing economic problems, he said.
He added that Mongolia’s prime minister expects to visit China in May to attend the Belt and Road Forum for International Cooperation.
Xing Guangcheng, a senior researcher on Russian and Central Asian studies at the Chinese Academy of Social Sciences, said the helping hand was offered at a time when Mongolia has fixed the trouble brought by allowing the Dalai Lama’s entry, which “pushed on China’s bottom line”.
Zhang Jingquan, a professor on Northeast Asian studies at Jilin University in Changchun, said the measures announced by Wang on Feb 20 “are meeting the desperate need” of Mongolia.
The country could take the improvement in bilateral ties as an opportunity to diversify its economy and change its inefficient development pattern, Zhang noted.