Without deepening ties with Russia and the West, Mongolia risks becoming just another of China’s raw-materials extraction zones.

The visit of China’s foreign minister, Wang Yi, to Mongolia in June 2026 was, on the surface, a routine visit by the country’s paramount diplomat to a neighbor. The length of Wang Yi’s visit, the breadth of topics discussed, and the timing, following Putin’s visit to China, put it in a new context. During Russian President Vladimir Putin’s visit to Beijing, Mongolia was indirectly discussed in talks concerning the Power of Siberia II pipeline. This pipeline connects gas-rich regions of Siberia with the gargantuan Chinese market by traversing Mongolia.

For Russia and China alike, Mongolia is a revealing vector for both cooperation and competition in which the United States has an interest in preserving a balance of influence. This jockeying for position within Mongolia should remind us that, despite a “no limits partnership” espoused by both Moscow and Beijing, there is no uncritical embrace between the two. Their relationship is more nuanced.

Since 2022, Russia has been trying to accelerate Chinese energy purchases. While Russian gas exports to China have increased, Beijing has been deliberately glacial in its purchases, preserving its leverage over Moscow. The greatest beneficiary of cheaper Russian hydrocarbons on the market was not China, but India. The West’s erstwhile democratic bulwark against China in Asia gorged itself on cheap Russian energy.

Chinese restraint was borne out of a strategic calculus that an isolated Russia would increasingly mortgage itself to the only remaining large-scale purchaser and creditor, China. If, in the last few years, China had actually desired to support Russian endeavors wholeheartedly, it could have done so with high impact at relatively low cost. 

In fact, China could have increased domestic aggregate demand amid an economic slump in part by simply greenlighting already planned energy infrastructure projects, rapidly purchasing far more Russian energy, and pursuing greater economic integration with Russia. It did not, even when such actions could have solved immediate economic problems. Only now, with Russia standing to gain far less, is China allowing the Power of Siberia II to proceed.

China has been expanding its influence at Russia’s expense, providing an economic lifeline that keeps Russia afloat but not thriving. China has significant leverage inside Russia’s banking system, and many Russian businesses now operate in Renminbi. Industries once defined by the imposing stature of Russian entities, such as civilian nuclear enrichment and aeronautic equipment, are increasingly showing China replacing Russia as the primary competitor to the West. In Mongolia, this has taken the form of Russian soft power retreating in the face of China.

Amid this competition between Russia and China, even while considering cooperation elsewhere, it is in the United States’ interests not only to preserve a relative balance between the two but also to recognize when the thoughtless application of pressure may inadvertently spark deeper cooperation. This balance should not be pursued at all costs, but it must be considered. There is no place where this balance must be considered more carefully than in Mongolia.

Mongolia is an unwilling microcosm of Sino-Russian relations, as it borders only those two countries. Amid this clash between giants, Mongolia is not without agency. Mongolia has embraced a “third neighbor” policy, seeking to attract investment from non-neighboring countries, especially the United States, to create more actors with a vested interest in Mongolian sovereignty. 

This strategy resembles that of other Eurasian states, especially Kazakhstan’s multi-vector foreign policy, but ultimately, geography generates a crucial distinction. Unlike Kazakhstan or other states, which have access to the West via other neighboring countries or the Caspian Sea, Mongolia has no such strategic lifeline.

Despite this, Mongolia has been a darling of the American foreign policy establishment for decades. Its mineral wealth has turned it into an investment destination for Western mining companies, while its democratic credentials endear it to the West. The distant notion that Mongolia’s democratic norms and institutions may kindle liberal-democratic aspirations amongst co-ethnics across borders in Russia and China remains a distant hope in American policy.

The American establishment’s normative favor for  Mongolia needs to be replaced by concrete investment. Andres Loretdemola, an American scholar on Mongolia and a member of the Business Council of Mongolia, argues that Washington must identify specific critical minerals, such as copper, and prioritize investment through vehicles like the Development Finance Corporation, partnering with private Mongolian firms rather than troubled joint ventures involving the Mongolian state, such as Oyu Tolgoi.

However, even the most optimistic projections and ambitions of American investment cannot escape the geoeconomic reality that Ulaanbaatar confronts daily: Only Russia can stymy Chinese influence, and vice versa. Owing to simple geographic realities, Russia is the only actor positioned to provide a meaningful counterweight to China in Mongolia. Erosion of Mongolian sovereignty is rightly seen as a threat in Moscow.

American investment should thus not be seen as a means of driving foreign policy, as it often is in many other states, or even as a proxy for competition. Rather, it is a means of consolidating Mongolia’s robust domestic democratic institutions. Mongolia has a forthcoming presidential election in 2027 that will test this robustness under increasing stress.

There can be little doubt that China has increasing leverage inside Mongolia. 91 percent of all Mongolian exports go to China. For comparison, exports to Russia and the United States account for 0.73 percent and 0.24 percent of total exports, respectively. Minimizing the scope to strategic sectors, such as minerals, changes little. Mongolian coal and mineral exports are increasingly flowing to the insatiable Chinese market while Western investment projects flounder. 

Even foreign-owned mines inside Mongolia will probably end up producing for the Chinese market. Even exports destined for locations beyond China still transit through it, meaning even the most wildly optimistic scenarios for Western success will only increase China’s leverage without Russia’s cooperation.

The newly operational Gashuunsukhait–Gantsmod cross-border railway has enabled Mongolia to overtake the far more populous Indonesia as China’s largest coal supplier, boosting exports by over 60 percent. On the surface, this looks like a win for Ulaanbaatar. In practice, it locks Mongolia into a permanent role as a raw-material supplier to a single buyer that can dictate the price. Mongolia physically cannot diversify without Chinese acquiescence: there is nowhere else to ship the ore. This is how China plays the long game: no shots fired, just infrastructure and discounts until a country loses its room to maneuver economically.

Exports are not the only quantifiable area where China retains an advantage. Imports, comparative levels of sovereign debt holdings, tourism, study-abroad exchanges, and more all indicate increasing Chinese leverage over Mongolia relative to Russia and distant third neighbors. If unaddressed, this could fester into a threat to Mongolian sovereignty and the international order.

A combination of aesthetics and history masks the extent of China’s influence relative to Russia’s in Mongolia among some policymakers. Mongolia’s history as an independent state, whose independence from China was enabled by Russian assistance in 1911, followed by its status as the second Communist State after the Soviet Union itself, is mixed with cultural holdovers such as the Cyrillic alphabet for the Mongolian language and Russian architecture, making it easy to overestimate Russian influence in Mongolia.

An overemphasis on political history and ephemeral politics is likely obscuring the extent to which China is gaining structural advantages at Russia’s expense, not just in Mongolia but worldwide. Sino-Russian competition is present in Mongolia, Central Asia, North Korea, India, and Africa to varying degrees. Unless it is carefully managed, Mongolia’s Third Neighbor policy will inadvertently benefit only China.

For the United States, the varying behavior, fluid relationship, and shifting relative power of its two primary adversaries will force Washington to make difficult decisions sooner rather than later. Nobody should be surprised when Mongolia, or any other state, looks beyond the beltway for assurances against China.

About the Author: Wesley Hill

Wesley Alexander Hill is the associate director of the Energy, Growth, and Security Program at the International Tax and Investment Center. Wesley is an expert on grand strategy, geoeconomics, and international relations with a regional specialization in China, Eurasia, and Sub-Saharan Africa and a broad focus on Chinese influence worldwide. Prior to his current position, Wesley was a professor at Tulane University and a CLFP fellow at the National Bureau of Asian Research. He began his career as a congressional foreign policy analyst. Wesley has been featured in Al Jazeera, BBC, The Hill, Newsweek, Voice of America, and many other outlets. Wesley is also a contributor to Forbes.

The post Mongolia’s Search for a ‘Third Neighbor’ appeared first on The National Interest.