China’s zero-Covid policy continues to result in prolonged closures of the Mongolia-China border, causing supply chain disruptions, higher inflation and goods shortages.

New coronavirus cases continue to arise in China’s Inner-Mongolia province and there is understandable nervousness over the advent of the new Omicron variant of the virus. In keeping with the government’s zero-tolerance Covid policy, strict lockdown measures thus remain in place. Consequently, prospects for a re-opening of the border with Mongolia have not improved lately.

Mongolia is dependent on China for 33% of its imports, 89.1% of its exports and more than 60% of its overall economy. Border closures have dramatically reduced income in the export sector, while the inability to import products and materials from China have caused disruptions throughout society.

Mongolian coal exports are down to about one-third of what was seen last year. The reduced coal exports have contributed to shortages of both coal and energy in China, while causing economic hardship in Mongolia. Border closures have left 3,500 Mongolian coal truck drivers at Chinese dry ports, stuck in long queues.

Rising transportation costs and continued congestion in the logistics network have contributed to Mongolia’s inflation rate hitting 9.6 percent, with food, meat, solid fuels, and gasoline experiencing the largest price increases. By September, meat prices in Ulaanbaatar had risen 16 percent and fuel prices 38.8 percent. Other factors driving inflation include increased costs of transport, logistics congestion and supply-side factors.