China’s B&R initiative opportunity for bilateral rail cooperation with Mongolia

By Hu Weijia Source:Global Times Published: 2017/4/10 0:03:39

As Beijing expands the transcontinental rail network carrying cargo between North China and Europe, China should maximize the benefits the railways can bring to transit countries, like Mongolia, to ensure the sustainable development of the project.

The number of China-Europe freight trains travelling through Mongolia is expected to rise from 167 in 2016 to 400 in 2017, B Tsogtgerel, deputy minister of the Mongolian Road and Transport Development Ministry, was quoted by the Xinhua News Agency as saying recently.

Mongolia has become a major transit country along the transcontinental railway, but the lagging development of Mongolia's own rail network may create a drag on the rapid expansion of the route.

Mongolia is sandwiched between China and Russia, but a lack of investment in key infrastructure prevents the landlocked country from cultivating its own regional advantages to become a transportation hub.

With a ballooning budget deficit, Mongolia has cut spending and was supposedly unable to pay the salaries of its national athletes. As such, it will not be possible for the nation to spend a large amount of money in expanding and upgrading its rail network.

Mongolia's government may want to attract foreign investment in the rail sector and China could provide direct support for upgrading the country's railways. China's One Belt, One Road initiative could be a real opportunity for enhancing bilateral cooperation in the sector. According to media reports, last year Mongolia's government was planning to pitch railway projects to the China-led Asian Infrastructure Investment Bank.

China is fairly experienced in financing and developing railway technology, which can perhaps be used to help Mongolia. However, in a time of economic stagnation, Mongolia may be less satisfied with merely serving as a transit country for Chinese-made products exports to Europe. Instead the country may hope the China-Europe freight trains can bring more opportunities to the local economy.

China has accumulated valuable experience in railway operations as the country has set up a number of economic belts and industrial parks along some routes to boost local economies, and Mongolia should copy that experience.

China could promote industrial capacity cooperation with the mineral-rich neighbor in an effort to help integrate local industries into the global industrial chain.

Mongolia may need to make an effort to improve its investment climate through more favorable policies. Industrial capacity cooperation is likely to bring new momentum to the local economy, raising Mongolia's enthusiasm for reforms to offer faster customs clearance services.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn

Posted in: EYE ON THE ECONOMY

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