top of page
  • Writer's pictureEwen Levick

How can Mongolia leverage the Australia-China trade spat to its advantage?

China’s relations with Australia aren’t getting better any time soon. The list of grievances from both sides is extensive, and there's been Twitter clashes and commodity import bans on Australian products. Fortunately, iron ore and LNG remain untouched.

China is Australia's biggest trading partner. Australian businesses in mining, petroleum, agriculture, education and tourism have gained a lot from this trade over the past two decades, with exports to China reaching US$117 billion in 2019. And now many of these items are under threat.

As seen on the Sydney Morning Herald:
As seen on the Sydney Morning Herald:

The disruption of Australian coal shipments to China caught the attention of many. Mongolia is trying to ramp up its exports to fill the coal supply gaps created by Australia (see the chart above) competing with Russians and Indonesians.

Yet, there may be additional ways that Mongolia can take advantage of the trade spat.

Here, I’d like to focus on beef, tourism, and wheat - all big-ticket items on Australia's export list to China.

Last December, China banned beef imports from another Australian supplier, the sixth so far. Lamb exporters were also unable to get into the Chinese market due to Covid-19.

Chinese beef consumption has been steadily growing, particularly in the country’s northwest (close to Mongolia). Per person, beef and veal consumption in China jumped from 3.3 kg in 2011 to almost 5 kg last year.

Mongolia has been pushing for a greater share of meat exports to China for many years. Capitalizing on the above opportunity would require Mongolian beef suppliers to meet Chinese inspection and quarantine standards, which is difficult for an industry made up of mostly small or medium-sized enterprises.

Compared to the multi-billion-dollar coal export sector, meat exports to China are tiny - only $57m in 2019.

A German report found that Mongolia’s beef suppliers’ share of the Chinese market is ‘very low’. According to the report, the government needs to improve cross-border infrastructure for refrigerated goods like beef, which can often rot during transport to China. It also recommends better enforcement of domestic livestock hygiene standards and cross-border cooperation on food safety enforcement.

If these logistics and hygiene challenges are resolved, Mongolian beef exporters will then have to compete with their international peers and offer better terms to Chinese buyers. The Argentinians, Russians, and Brazilians have all been doing their best to meet beef demand in China.

Relations between Australia and China aren't great at the moment. (Credit:
Relations between Australia and China aren't great at the moment. (Credit:

Another opportunity arising from the China-Australia trade spat is tourism for Mongolia once the Covid-19 pandemic is over.

Last June, China warned its citizens not to travel to Australia due to a ‘spike in racism’ during the pandemic (which the Australian government disputes). Even though Chinese tourists can’t currently come to Australia anyway due to border closures, this warning could remain once borders re-open.

It could even escalate to an all-out ban on package tours, which has previously happened to both South Korea and Canada. Around 60 percent of Chinese tourists use package tours to travel.

Mongolia has similarities with Australia that could appeal to this market, including an extremely low population density and wide-open spaces. Although there are also big differences (especially the weather), even securing a small slice of this market could prove lucrative.

If China does move to ban package tours to Australia, the Mongolian government could capitalize on the opportunity through a tourism branding exercise in China. A good model could be New Zealand’s ‘100% Pure’ campaign, which showcases the country’s natural beauty and is renowned as one of the world’s most successful tourism campaigns.

A third opportunity is more remote but is still worth keeping an eye on – wheat.

There’s now talk that Australian wheat could be next up on China’s hit list. China has already increased inspections of Australian wheat, and the Australian Bureau of Agricultural and Resource Economics, which is a federal government agency, warned that China could soon ban Australian imports.

Yet China’s demand for foreign wheat is now the strongest it’s been in 25 years thanks to high domestic prices.

Whilst this could come mostly from the US and elsewhere, it could represent a business opportunity for Mongolian wheat farmers. It is true the harvest was not that great last year at 408,900 tonnes. Mongolia barely meets its domestic demand and iwas negotiating to procure additional wheat from Russia. However, once Covid is over, Mongolia may be well placed to produce more wheat and export it to China with improved harvesting.

Of course, none of this is guaranteed – circumstances could change quickly as the China-Australia relationship evolves. Nonetheless, there could be new opportunities emerging at a time when the Mongolian government is looking to diversify the economy. It would do well to investigate further.

Ewen Levick is the editor of Mongolia Weekly. He is also a co-founder of Taiga Travel Mongolia LLC, an experienced tourism operator based in Ulaanbaatar.


We're working hard to bring you the best English-language news and analysis on Mongolia. But we're just getting started, and we need your support.

For as little as $10 a month, you can help us grow and tell Mongolia's stories to the world through our weekly newsletter, which is packed full of exclusive information you won't find anywhere else. Why not try it for free today?


bottom of page