At the beginning of the year, Mongolia decided to reduce its coal supply to China, exporting coal to Japan and South Korea instead. In January of this year, China's coal imports from Mongolia decreased by more than 20%.

At that time, whether it was Japan, South Korea, or the United States, which was not directly involved, everyone was very happy, especially the United States. As long as something was not good for China, the United States could rejoice.

However, Mongolia now regrets its decision, not only asking to resume coal exports to China but also applying to use its own currency instead of the US dollar in trade with China.

The United States, which had just been happy for a short while, suddenly found that there was another enemy in the de-dollarization movement.

01. Regret

In fact, for Mongolia, two recent discoveries have led to a complete reversal of the situation.

The first thing is that China has resumed importing coal from Australia, which may lead to the gradual exit of Mongolian coal from the Chinese market. Obviously, Mongolia cannot afford this loss.

The second thing is that Mongolia found it difficult to repay the loans owed to China on schedule and had to bow down to China to request an extension.

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Mongolia is a country that mainly relies on resource exports. In the past, it exported a large amount of coal to China and also obtained a large amount of foreign exchange income.

However, last year, Mongolia suddenly demanded a significant price increase. After not getting agreement, it simply stopped some contracts for supplying coal to China.Subsequently, Mongolia decided to export coal to Japan and South Korea to obtain higher prices.

In fact, for Mongolia, this is just a move in negotiations. After all, exporting coal to Japan and South Korea requires land transportation through China, and then shipping from Tianjin Port, which significantly increases the freight cost. In fact, most of the transportation costs are actually earned by China.

However, it was unexpected that Chinese enterprises were not threatened at all and immediately started importing coal from Australia. This could very likely lead to Mongolian coal losing the Chinese market, which also means that Mongolia will lose a lot of foreign exchange income.

So Mongolia is nervous.

Inner Mongolia decided to re-export coal to China, and the inevitable disappointment includes the United States, Japan, and South Korea.

02, De-dollarization

On the other hand, Mongolia is also facing debt problems.

Not long ago, the World Bank proposed a debt relief aid plan, calling for debt relief for some poor countries, and emphasized that China should also participate.

Currently, there are more than 70 low-income countries in the world with more than 300 billion in U.S. dollar debt, which is indeed not good for global economic development.

Although China is one of the main creditor countries, it is also a developing country and cannot completely waive the debt.China is a major country that is willing to provide substantial assistance to debtor nations. It continuously extends loans to these countries and invests heavily in infrastructure development, thereby creating employment opportunities and driving economic growth for these nations.

Clearly, this approach is more meaningful than simply giving money away.

Taking advantage of this opportunity, Mongolia has also requested an extension and hopes to use its own currency more frequently in trade with China.

In line with the aforementioned principles, China has adopted a corresponding approach to Mongolia's debt. Particularly, using more of the Chinese yuan and less of the US dollar in trade aligns more closely with China's intentions.

In fact, for Mongolia, it is not difficult to gradually repay its debt because it has a number of resources that can be exported to China. Through these exports, Mongolia can not only increase its GDP but also use the yuan it earns to repay its debts.

In the current context of the US dollar's continuous appreciation and interest rate hikes, if China agrees to let Mongolia repay its debts in yuan, it would already alleviate a significant amount of pressure on Mongolia.