China imposes fees and tariffs on commodity deliveries and slows border trade against Mongolia from December 1, 2016.
Context
On November 30, 2016 the Mongolian Mining Journal made public a notice (reported in Reuters) that China had imposed new fees and tariffs on cross-border trade that would take effect on December 1, 2016. Reporting from mid-December subsequently suggested that China had “closed” the Gants Mod crossing, leading to long queues of trucks unable to cross. China also cancelled bilateral diplomatic meetings and delayed talks on a proposed $4.2billion loan to bail out the Mongolian economy.
This incident was reported as being provoked by a four-day visit by the Dalai Lama to Mongolia (a majority Buddhist society), which took place from November 18-21, 2016. During the visit, the Dalia Lama is thought to have (secretly) performed a ritual to identify a new Buddhist leader in Mongolia who will play a key role in choosing the next Dalai Lama – a process that Beijing is seeking to influence. The Dalai Lama denied that his visit to Mongolia was politically motivated. Beijing was formally ambiguous as to whether this was the reason for its new measures.
Impact
From Dec 1, 2016, China imposed a fee of US$1.45 on each vehicle crossing the Mongolia-China border, and a tariff of 8 yuan (approx. $1.12 as of July 2024) per tonne of goods for delivery. Precious metal and copper concentrate exports from Mongolia to China were charged a tariff of 0.2% of the total value if these goods were valued at greater than 10,000 yuan (approx. $1400.76 as of July 2024) per tonne.
One analyst was cited by Reuters as claiming that, prior to these measures, the main Gashuun Sukhait crossing typically had 900 trucks passing through per day, and a monthly total of 133,000 tonnes of copper concentrate exported through the crossing.
Responses
(i) Mongolian Industry Responses
Mongolia’s copper-gold Oyu Tolgoi mine (51% owned by Rio Tinto) initially responded suspended exports to China. It told press that it was “following a new requirement at the Chinese-Mongolian border to utilise one joint coal and concentrate crossing route”, and that “The new requirement has led to safety and security concerns as well as unreasonably long waiting times to cross the border.” A Rio Tinto spokesperson also noted that “Oyu Tolgoi is in active discussion the with relevant authorities to resolve the issue and resume shipments as fast as possible.” By mid-December, the Oyu Tolgoi mine said that it had resumed exports to China, and made clear that production at the mine had not been affected.
(ii) Mongolian Government Responses
The Mongolian government changed its earlier position (that the invitation for the Dalai Lama’s visit was from a religious institution and beyond its control), expressing regret for the Dalai Lama’s visit and committing itself to refusing any later entry. On December 21, 2016, Foreign Minister Tsend Munkh-Orgil told local press that “The Dalai Lama’s visit by the invitation of Gandan Monastery negatively affected two countries (China and Mongolia) and these two countries have a misunderstanding,” adding that “[t]he government feels sorry for this” and stating that the Dalai Lama “probably won’t be visiting Mongolia again during this administration.” Foreign Minister Tsend later clarified this statement with a more unequivocal statement that “during the full term of this government, the Dalai Lama will not be allowed to visit Mongolia even for religious purposes”.
Following a January 2017 phone call between the two country’s foreign ministers, Chinese media reported an additional an additional statement of regret from Foreign Minister Tsend, including a statement acknowledging Tibet as Chinese territory. Meanwhile, Chinese foreign minister Wang Yi was quoted as saying that “The Dalai Lama’s furtive visit to Mongolia brought a negative impact to China-Mongolia relations” and that “[w]e hope that Mongolia has taken this lesson to heart”.
[iii] Chinese Government Responses
The Chinese government had never admitted the imposition of fees and tariffs on mining commodities. However, around December 2016, the Ministry of Foreign Affairs did make several direct remarks on the implications of the Dalai Lama’s visit to China-Mongolia relations.
(iii) Third Party Responses
The New York Times reported that Mongolia had “withered under pressure” from China.
Status
The Mongolian government quickly apologised for angering the Chinese government and changed its position in line with Beijing’s preferences. English language reporting is not clear on whether this led to the end of the tariffs and fees. However, in February 2017 Chinese state media reported that China had agreed to economic bailout of Mongolia, with Chinese foreign minister Wang Yi stating that the two states were “ready for another start”. The same report cited a Chinese expert as saying that “Mongolia has fixed the trouble brought by allowing the Dalai Lama’s entry”.
References & Further Information
Adiya, A. 2023. “China’s Grip on Mongolia’s Quest for Spiritual Leadership.” The Diplomat. March 23. Available at:https://thediplomat.com/2023/03/chinas-grip-on-mongolias-quest-for-spiritual-leadership/
Campbell, C. 2021. “‘We Face Very Tough Challenges.’ How Mongolia Typifies the Problems Posed to Small Countries by China’s Rise.” Time Out. April 13. Available at:
Campbell, C. 2021. ‘We Face Very Tough Challenges.’ How Mongolia Typifies the Problems Posed to Small Countries by China’s Rise. Time. April 13. Available at: https://time.com/5953518/mongolia-china-russia-problems/
Edwards, T., Stanway, D., and Blanchard, B. 2016. “China slaps new fees on Mongolian exporters amid Dalai Lama row.” Reuters. December 1. Available at: https://www.reuters.com/article/markets/china-slaps-new-fees-on-mongolian-exporters-amid-dalai-lama-row-idUSL4N1DW1Z2/
Erdenebileg, Z. 2017. “China-Mongolia Relations: Challenges and Opportunities.” China Briefing. January 6. Available at: https://www.china-briefing.com/news/china-mongolia-relations/
Jamasmie, C. 2016. “Oyu Tolgoi resumes copper shipments to China.” Mining.com. December 14. Available at: https://www.mining.com/oyu-tolgoi-resumes-copper-shipments-to-china/
Kohn, M. 2016. “Mongolia Vows No More Dalai Lama Visits After China Turns Screws.” Bloomberg. December 22. Available at: https://www.bloomberg.com/politics/ articles/2016-12-21/mongolia-vows-no-more-dalai-lama-visits-after-china-turns-screws?embedded-checkout=true
Ministry of Foreign Affairs of the People’s Republic of China. 2016. ‘Foreign Ministry Spokesperson Geng Shuang’s Remarks on 14th Dalai Lama’s Visit to Mongolia’ [外交部发言人耿爽就十四世达赖窜访蒙古答记者问] November 20. Available at: https://www.mfa.gov.cn/web/fyrbt_673021/dhdw_673027/201611/t20161120_5434420.shtml; see English version at: http://perth.china-consulate.gov.cn/eng//fyrth/201611/t20161121_176891.htm.
Ministry of Foreign Affairs of the People’s Republic of China. 2016. ‘Hope Mongolia learn from the lesson’ [希望蒙古国从达赖窜访事件中汲取教训] December 21. Available at: https://www.gov.cn/xinwen/2016-12/21/content_5151180.htm.
Namjilsangarav, G. 2016. “Mongolia says Dalai Lama will not be allowed future visits.” AP News. December 21. Available at: https://apnews.com/general-news-8c026337a97640309f4bdb530bf6cd07
Shanghai Observer. 2016. ‘Mongolia pledged not to invite Dalai Lama to visit in the future and felt regretful about the damage of Mongolia-China relations’ [蒙古保证不再邀请达赖窜访 对中蒙关系受创表遗憾]. December 21. Available at: https://web.shobserver.com/staticsg/res/html/web/newsDetail.html?id=39899.
Thomson, J. 2016. “Rio Tinto suspends shipments to China from Oyu Tolgoi mine.” AFR. December 4. Available at: https://www.afr.com/companies/mining/rio-tinto-suspends-shipments-to-china-from-oyu-tolgoi-mine-20161204-gt3mfw
Wong, E. 2016. “Mongolia, With Deep Ties to Dalai Lama, Turns From Him Toward China.” New York Times. December 30. Available at: https://www.nytimes.com/2016/ 12/30/world/asia/china-mongolia-dalai-lama.html
Yunbi, Z. 2017. “Mongolia to get help from China.” China Daily. February 21. Available at: https://www.chinadaily.com.cn/world/2017-02/21/content_28276535.htm
Xinhua. 2016. ‘The Minister of Foreign Affairs of Mongolia undertook that Dalai Lama would be no longer allowed to visit Mongolia’ [蒙外长称将不再允许达赖窜访]. December 20. Available at: http://www.xinhuanet.com/world/2016-12/20/c_1120155514.htm.