Big Changes In The Gobi: China And Mongolia’s Cross-Border Economic Zone Gets Underway
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As China and Kazakhstan invest heavily in developing their joint free trade zone at Horgos, another cross-border economic zone is getting underway 2,500 kilometers to the east.
Construction broke ground on the $135 million China-Mongolia Cross-border Economic Cooperation Zone on September 19th. This is to be an 18 square kilometer expanse that stretches from Erenhot (Erlian) in China’s Inner Mongolia across the frontier to Zamyn-Uud in Mongolia. This economic zone is the result of a deal that China and Mongolia signed in 2015, which evenly delineated nine square kilometers on each side of the border for the endeavor.
The purpose of this zone is to further integrate and bolster economic activities between China and Mongolia, with a focus on import/export processing, logistics, warehousing, and e-commerce. Like most free trade zones, its hallmark is its lack of tariffs for exported products that are produced within it, which will be dropped from 6.5% to zero.
While construction on the zone isn’t expected to be completed until 2018, 50 companies are expected to be operating there by the end of the year.
China-Mongolia-Russia Economic Corridor
This free trade zone is a key part of a much larger initiative to establish a China-Mongolia-Russia economic corridor to further integrate the three countries infrastructurally, economically, and, to a certain extent, politically. Deriving from a memorandum of understanding that was laid out in July 2015 and signed into existence this June, the economic corridor is becoming one of the primary thoroughfares of the Belt and Road — a web of enhanced trade routes extending from China to Europe. It will facilitate the creation of improved transportation — integrating Mongolia’s Prairie Road program, Russia’s transcontinental rail and road systems, and China’s overland transportation network — provide more efficient border crossings and customs procedures, create preferential trade policies, and increase opportunities for international business within its realm.
Wade Shepard
