Mongolia-China Relations

Mongolia is one of the first group of countries that recognized the People's Republic of China. The two countries established diplomatic relations on Oct. 16, 1949. In 1962, both sides signed Sino-Mongolian Treaty on Friendship and Mutual Assistance and also Boundary Treaty. And in mid and late 1960s, their relations suffered ups and downs.

In 1970s, the two countries restored to exchange of ambassadors. In 1980s, their relations saw gradual improvement. In 1989, their state and ruling party (Chinese communist Party and Mongolian People's Revolutionary Party) normalized relations. Since then, their friendly relations and cooperation have consolidated and developed in such areas as the political, economic, cultural, educational and military.

Despite the twists and turns in their relations over the past 50 years since the establishment of their diplomatic relations, neighborliness and friendship have always remained the mainstream of Sino-Mongolian relations. Over the last 10 years in particular, their relations have developed rapidly and made remarkable achievements.

In 1994, both sides signed again Treaty on Friendship and Cooperation between China and Mongolia, laying the political and legal foundation for the healthy and steady development of their relations. In December 1998, at the invitation of President Jiang Zemin, President of Mongolia N. Bagabandi paid a state visit to China. Both sides issued Sino-Mongolian joint statement, deciding to establish neighborly, friendly relations and cooperation into the 21st century based on long-term stability, sound trust so as to point out the course for the development of the bilateral relations in the future. In June 2003, President Hu Jintao paid a state visit to Mongolia. Both sides declared to establish neighborly and mutual-trusting partnership between China and Mongolia, and issued a joint statement.

Over the recent years, mutually beneficial cooperation has been developing between the two countries, and China is now Mongolia's largest trading partner and investor. Both sides share identical or similar views on many issues in international affairs, support each other and enjoy fruitful cooperation.

Trade

During past few years, trade between Mongolia and China has substantially increased.
In 2005, the trade with China accounted for 37.5 % of the total trade turnover of Mongolia. Mongolian export to China equalled 48.12% of the overall exports of Mongolia, while the import stood at 27.67% of the total imports of Mongolia.

Top export items are copper and molybdenium concentrates, animal hide, skin,cashmere, wool and wood.
Garments, food, flour, rice, mashinery and equipment represent the bulk of the imports from China.

After becoming a member of the WTO, China has been implementing a step-by-step policy and coordination towards liberalizing imports. Raw materials imported into China are exempted from customs duty, and finished products are being taxed depending on the quality level of products.

Investment

China is one of the main investors in Mongolia both by the amount of investment and the number of companies, with investment mainly in textiles, garments, trade, services and mining. In 2003, Chinese FDI flows are growing in such sectors as geology-mining ($US 153.8 million); trade and catering services ($US 92.5million); engineering construction, construction materials ($US 30million); and light industry ($US 22.9million).

By the end of 2003, 1000 Chinese enterprises were registered and invested 332.8 million in Mongolia.

Major Bilateral Agreements

1. The Boundary Treaty between the People's Republic of China and People's Republic of Mongolia (signed on Dec. 26, 1962)
2. The Consular Treaty between the People's Republic of China and People's Republic of Mongolia (signed on Aug. 9, 1986)
3. The Treaty on Friendly Relations and Cooperation between the People's Republic of China and Mongolia (signed on April 29, 1994).