Shen Yue

Study on Economic and Trade Cooperation between Jilin Province and Mongolia

Ⅰ. The current economic and trade cooperation condition between Jilin Province and Mongolia

Mongolia is our neighbor on the north, country with the longest boundary line and the widest bordering area to China. Since the reform and opening up, there have been increased growth of trade volume and frequent bilateral economic and trade exchanges. Since 1998, China has become the largest investor in Mongolia. In 1999, China has become Mongolia's largest trading partner and has maintained this status since then. Since 2008, due to the international financial crisis, the Sino-Mongolian trade volume has also been subjected to certain constraints. Overall, however, the Sino-Mongolian trade still runs high and showed a significant growth. Sino-Mongolian trade value reached 2.062 billion U.S. dollars in 2007, exceeding 2 billion U.S. dollars for the first time, which accounted for 51.5 percent of Mongolia's total trade for the same period. In 2008 and 2009 Sino-Mongolian trade amount raised to $ 2.5 billion, reached to $ 3.984 billion in 2010, an increase of 64%. The total increase hit an all-time high. In recent years, with the exploration of a series of world-class mineral in Mongolia, the position occupied in China's energy and ore imports continued to rise.

At present, the Sino-Mongolian relations are its best in history with the bilateral economic and trade cooperation currently more active than ever bringing a board future to the Sino-Mongolian economic and trade cooperation.

As one of the provinces located nearest to Mongolia in China, Jilin’s economic and trade cooperation to Mongolia has developed very rapidly. The annual Northeast Asia Expo held by Jilin Province has become an important economic and trade activity in Northeast Asia. Mongolia attaches great importance to it and sent dignitaries to participate each year.

The bilateral economic and trade exchanges are frequent, including imports and exports, project contract, labor cooperation, investment, scientific and technological cooperation, infrastructure construction and so on. From the structure of import and export commodity, the export commodities of Jilin Province are mainly motor vehicles and chassis, diesel trucks, ferroalloy, vegetables, textiles and medicine, etc. while the imported commodities from Mongolia are mainly fresh or dried nuts In 2006, the total import and export of Jilin Province to Mongolia is $ 11.25 million which is higher than ever. The contracted project of Jilin Province to Mongolia is mainly building the highway from Edengsangte to Avi Hill which completed in 2004. The contract amount is $ 13 million. By the end of 2004, Jilin Province had dispatched 524 labors to Mongolia. At present, there have been six enterprises in Jilin Province to invest and build plants in Mongolia, mainly in the field of mineral exploration, road construction, iron and steel smelting. The amount of investment is more than $12 million. Labor export to Mongolia is also rising. In September 2008, China’s Ministry of Commerce, Jilin Provincial Department of Commerce and Science and Technology Department of Jilin Province jointly sponsored the Fourth China Jilin • Northeast Asia Investment and Trade Expo Mongolia Business Day ". Both sides agreed to cooperate in many areas, including jointly-establishing scientific and technological exchange platform for industrial cooperation, conducting information exchange, technical cooperation, product development and business incubators, this is to form long-term stable scientific and technological exchanges and cooperative relations to co-benefit. To develop scientific and technical cooperation in economic and trade field, exchange scientific and technical information and data, product and material samples, and compensated transfer of technology and license as well. In December 2011, Huafeng Energy Development Co., Ltd. of Jilin Province formally signed cooperative framework agreement with Yiriltu Mining Co., Ltd. of Mongolia. Two sides decided to cooperatively mine coal in Sukhbaatar Province which made history with transnational cooperation for coal enterprises in Jilin Province, to introduce Mongolia’s coal resources to Jilin Province taking Huafeng Energy as the platform and the company will achieve sales of 3 billion Yuan. A 185 km-long road will be built along Sino-Mongolia border.

To compare with the current condition that China is the largest investor and trading partner on Mongolia, the economic and trade cooperation of Jilin Province on Mongolia is lagging behind, However, it shows that there is great development potential and space on their trade and economic cooperation. As long as both sides cooperate sincerely and broaden cooperation areas actively under the principle of mutual benefit, we will certainly take the bilateral economic and trade cooperation to a new level.

Ⅱ.Favorable factors of Sino-Mongolian economic and trade cooperation

As one of Chinese northern provinces close to Mongolia, Jilin’s development has the following four favorable factors on economic and trade cooperation with Mongolia.

ⅰ. Sino-Mongolian relationship is in the best period in history

In June 2003, President Hu Jintao visited Mongolia and established a partnership of good-neighborliness and mutual trust which infused powerful force into economic and trade cooperation between the two countries and increasingly expanded the field and size of cooperation. In June 2010 Premier Wen Jiabao mentioned when he visited Mongolia that Sino-Mongolian neighboring countries, cultural similarities and economic complementarities are unique advantages and conditions for exchange and cooperation. China is willing to maintain high-level exchanges with Mongolia, continue to support firmly and mutually on major issues concerning each other's core interests, and enhance mutual political trust. China is willing to strengthen cooperation with Mongolia in energy, environmental protection and transportation, support Mongolia to develop processing industry, continue to provide assistance within our capacity for Mongolia’s economic and social development.

Mongolian government attaches great importance to Mongolian-Sino relation, purses a foreign policy of giving priority to develop relations with the two giant neighbors China and Russia and has established a long-term stable good-neighborly partnership with mutual trust. Meanwhile, Mongolian Government also actively improves the investment environment and has created favorable conditions and more opportunities for trade and economic cooperation between China and Mongolia. Both Mongolia and China are WTO members. In the framework of the WTO, the market in China and Mongolia will be more open, mutual tariff will be substantially lower, non-tariff import restrictions will reduce, very favorable to the development of bilateral economic and trade relations.

Like what Vice Chairman Xi Jinping said in the Boao Forum for Asia in 2009 when met with Mongolia's leaders, “expanding bilateral relations is the vibrant source for bilateral relations and improving mutually beneficial cooperation is the lasting impetus to the development of bilateral relations.”

On March 24, 2011, Wang Xiaolong, China's newly appointed Ambassador Extraordinary and Plenipotentiary in Mongolia, expressed at a press conference held at the Embassy that the exchange and cooperation of both sides continue to develop on politics, economy, culture education, military and humanities in recent years, bilateral relations are in the best period in history, the future development of bilateral relations is facing many favorable conditions of favorable timing, geographical and human conditions. There is a rare opportunity for further deepening and expansion, great potentials and broad prospects. People in the two countries are looking forward to strengthening bilateral cooperation and benefiting from it.

ⅱ. Jilin Province has the geographic advantage for bilateral economic and trade cooperation

Mongolia boarders on the three provinces of northeast China. About one-third of the total length of Mongolia's boarder shares with northeast China which laid a good foundation for carrying out cross-border trade. Especially Jilin Province is located in the middle of northeast China, in the geometric center of the Northeast Asian region consisting of northeast China, the Bohai Rim, North Korea, South Korea, Japan, the Far East of Russia and Mongolia, which has an advantage in geographical location. The distance from Baicheng City to Sino-Mongolian border is less than 300 kilometers, while the distance from Changchun, the provincial city of Jilin, to Erlianhaote, the largest trade port on Sino-Mongolian border, is less than 1236 km. Therefore, the development of Jilin has a convenient geographical condition and convenient transportation advantage for Mongolia’s economy and trade. In addition, the climate of Jilin is similar to Mongolia.  There is also a Mongol Autonomous County in Jilin Province with 17 million population, among which there are a number of outstanding Mongol entrepreneurs. It provides a favorable cultural foundation for the development of economic and trade cooperation with Mongolia.

ⅲ.The economy of Jilin Province and Mongolia are highly complementary.

The similarity and difference of economic development level is a necessary condition for bilateral economic and trade cooperation. The similarity is the basis of cooperation, while the difference is a prerequisite for cooperation. Only with different characteristics can we play our respective advantages and achieve mutual supplement. The reality shows the primary industry and the second industry take high proportion both in Jilin and Mongolia, while the tertiary industry does not develop enough. The overall economic development level is similar and the regional gradient is small, however, there are large differences in natural resources, industrial structure, technological level, and demand for commodities.

As one of the old industrial bases in China, Jilin’s economy has three outstanding advantages. Firstly, the manufacturing has prominent advantages, such as FAW Group, the "cradle" of Chinese automobile industry with an annual capacity of one million automobiles, Changchun Car Company, the largest production base of rail vehicles in Asia, other industries such as chemical and pharmaceutical industry are also in leading position at home. Secondly, the agriculture has prominent advantages. Jilin Province is an important commodity grain base and an emerging animal husbandry base in China. All the per capita share of grain, grain rate, grain quantities brought out and the corn exports rank first in the country. Thirdly, the strength of science technology and education is tremendous. The number of scientists, engineers and college students for every 10,000 people in Jilin Province ranks the sixth in China.

Mongolia is rich in natural resources. There are more than 80 kinds of mineral with rich reserves which have been found or proven, such as petroleum, coal, copper, tungsten, gold, silver, molybdenum, aluminum, iron and etc. However, the market is relatively small and there is lack of capital and technology. A lot of foreign investments are required in the future. Energy resource development strategy has been taken as the most important national strategy in the medium and long-term development planning formulated by Mongolia recently. Step 1: start economic and resources development through the introduction of foreign investments development. Step 2: develop domestic non-resource industry with the profits through export of energy resources. Currently, Jilin Province is one of the nearest areas away from Mongolia, where the market capacity and the consumption of energy resources are huge, in the mean time the capital and science and technology are strong. Therefore, to develop Mongolia's mineral resources by using Jilin’s fund and technique is highly complementary which will injects inexhaustible power for the sustained growth of bilateral economy. Meanwhile, Mongolia is lack of food, building materials and daily necessities, while in Jilin Province there are plentiful supplies, what can supply Mongolian market in a steady stream.

ⅳ. Both sides have strong wills to further optimize and develop economic and trade cooperative relations

All the leaders and scholars from Mongolian Academy of Sciences and scholars from Jilin Province participated the Second Northeast Asian Think Tank Forum held in Changchun In September 2011, expressed their strong desire to further develop economic and trade cooperation of both sides and reached consensus on the fields and modes of cooperation.

In August the same year, invited by Mongolian Agricultural Association, the five-member delegation, including Vice President and Secretary General of Mongol culture and Economic Association of Jilin Province Mr. Han Xu, Director of Qianguo Irrigation District of Jilin Province Mr. Tumen, former General Manager of Qianguo Bio-feed Co. Ltd,. of Jilin Province Mr. Tong Tegexi, visited Mongolia to investigate agriculture. The two sides reached four cooperative intentions through negotiations and on-the-scene investigation. Firstly, build organic fertilizer plant in Mongolia; secondly, develop rice experimental plots in Selenga River; thirdly, plant wheat in the planning area; fourthly, exchange pure green organic wheat of Mongolia by the rice of Songyuan City.

Ⅲ. Suggestions on promoting the optimization development of bilateral economic and trade cooperation in Jilin Province and Mongolia.

ⅰ.Both sides are required to firmly establish mutually beneficial and win-win cooperation concept.

At present, Sino-Mongolian economic and trade cooperation has made significant progress, and we both have good intentions of further strengthening cooperation, but there still exist some understandings and ideas to be solved urgently.

From Mongolian side, some of the political factions and social groups mistakenly believe that the intention of Chinese energy development in Mongolia is to plunder their valuable resources and attempt to control Mongolia’s energy resources market. In the meantime, they feel concerned about the environmental damage brought by energy development, hence, they always set up barriers in China's mining in Mongolia.

From Chinese side, the enterprises are required to change two misconceptions. Firstly, they think that Mongolia is located between China and Russia, its access to the sea can only depend on China. Russia is a large energy exports country, hence, Mongolia’s energy and mineral resources can only be sold to China. In fact, in the cooperative area of Mongolian minerals, the United States, Canada, Australia and other countries have been going ahead. Secondly, abandon the idea of absolute control. From the perspective of pursuit of economic profit and business, absolute control can be understood, however, there are historical and realistic issues outside economy between China and Mongolia. It is not feasible for China to control the other’s vital resources in mega-projects. Therefore, China should avoid the idea of quick success and give full consideration to the concerns of Mongolia to plan and develop some long-duration and large-scale cooperative projects with mutual benefits and greater impact on the Mongolian economy while rationally exploiting and making use of Mongolia’s energy and minerals, making them the theme of the long-term effective bilateral economic and trade cooperation. Combining with this, investment projects (including Chinese aid projects) should attach great importance to the social benefits of Mongolia while reflecting the economic benefits, in order that Mongolian citizens can appreciate by the greatest degree the sincerity of China to strengthen Sino-Mongolian cooperation, which can provide a solid basis of public opinion for bilateral exchanges.

At the same time, I would like to sincerely suggest that Mongolia should make in-depth investigation and research on the experience of energy exports countries such as Kuwait, Saudi Arabia, Iran, which can help eliminate unnecessary and excessive worries of its energy and mineral resources exports.

ⅱ. Organize mutual investigation

The two sides are suggested to organize economic and trade cooperation delegation consisted of government officials, experts and scholars and entrepreneurs to investigate the other side. While enhancing mutual understanding and mutual trust, conduct in-depth investigation and discussion on bilateral economic and trade cooperation areas, cooperative projects and cooperative methods to increase the understanding of necessity, urgency, feasibility and profitability for cooperation, then make decisions and carry out cooperation.
ⅲ. Jointly organize regular academic seminars

The two sides are suggested to jointly organize academic seminar taking optimizing bilateral economic and trade cooperation as the theme topic each year. Provide scientific and practical reference for the decision-making of the government as well as the basis decision for the investment, trade and technical cooperation of enterprises. This project can be lead by Jilin Academy of Social Sciences. We hope to get positive response from Mongolia.

ⅳ. Launch a number of cooperative projects preferentially put in practice recently

A. To expand the imports of animal husbandry products from Mongolia and set up light industry enterprises in Mongolia. Most of Mongolia’s daily life products depend on imports, so the price is higher in the local areas. There are larger profit margins. While exporting daily commodities to Mongolia, Jilin Province can start some small manufacturing plants in Mongolia such as small printing factories, small drugs processing plants, small dairy processing plants and other small processing plants of farm, livestock, poultry products.

B. To expand infrastructure cooperation with Mongolia, encourage investment in building industry and building materials industry. In Mongolia, 80 percent of the populations live in cities, but the urban infrastructure is lagging behind. There is a greater demand for construction and building materials. The demand for insulation materials, solar energy products and technologies are also great due to its cold climate and short long sunshine hours. Jilin Province should encourage more powerful enterprises to undertake infrastructure projects in Mongolia, set up plants to produce building materials in Mongolia and export related technologies.

C. Actively participate in Mongolia’s construction of “Millennium railway”. It is reported that Mongolia has ever planned to construct a Millennium Railway traversing its whole territory. If the project can be achieved, it will be the shortest Eurasia Bridge connected from Japan Sea directly to Europe. In China about 1000 km of this railway is in Jilin Province except less than 300 kilometers through Xinganmeng of Inner Mongolia. Therefore, it is bound to bring immeasurable benefits to the economic and social development for Mongolia and Jilin. Jilin Province should attach sufficient importance and actively involved in it.

D. To make efforts to promote tourism projects cooperation with Mongolia. There are abundant tourist resources in Jilin Province and Mongolia. Jilin Provincial Government attaches great importance to the development of tourism. The tourism industry is emerging. Mongolia's ecological environment and natural landscape are protected well, which have the advantage to develop tourism. Mongolian Government put forward the plan of giving priority to tourism industry. If Jilin Province cooperates with Mongolia, to develop cross-border tourism should be a project of low cost, risk-free, fast returns and high benefits. The tourism sectors of both sides are recommended to contact with each other as soon as possible in order to open up Mongolian grassland tours, Changbai Mountain tour, cross-border travel of China, Mongolia, DPRK and Russia.

E. Appropriately transfer technologies and labors to Mongolia. Jilin Province should exert its scientific and technological advantages and transfer some much-needed technologies to Mongolia. For example, introduce plastic mulching techniques and vegetable greenhouse techniques in accordance with its short frost-free period; introduce virus-free potato high-yield techniques, corn high yield techniques, wheat seeds optimization techniques and other crop seeds optimization techniques in accordance with its degradation of crop seeds; introduce  integrated management techniques in captivity, livestock improvement techniques, forage storage techniques, processing feed techniques of pasture, crop stalks in accordance with short herbivorous period, backward management and livestock degradation. It is believed that these technologies exports can bring considerable economic benefits for both sides.

Authors: Professor Ma Ke, president of Jilin Academy of Social Sciences
Associate professor Shen Yue, Secretary-General, Research Center for Northeast Asia, Jilin Academy of Social Sciences

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