Mongolia: China's Canada?

Posted in China , Asia | 11-Jul-04 | Author: James Brooke| Source: The New York Times

Chinese restaurants and markets are cropping up in Mongolia as ties between the countries grow.
Beijing is reaching out to a former satellite of the Soviets

ULAN BATOR, Mongolia Two weeks ago, China's largest copper company signed a letter of intent to study investing in Mongolia's largest mining project. This week, Mongolia's president, on a state visit to Beijing, invited China to drill for oil. Next month, zinc production is to start at a new $50 million Chinese mine in eastern Mongolia.

To link it all together, Chinese aid is paying for Chinese crews this summer to pave major roads across Mongolia's steppes. More assistance may come from a $300 million loan offered by China's president when he stopped here last year.

Only 15 years ago, Mongolia, then a Soviet satellite, kept its land borders with China largely closed. Today, in a turnaround that reflects the rapid reorientation of the 13 other countries that have land borders with China, Mongolia values China as its largest foreign investor and largest trading partner.

"We are opening permanent border posts here, here and here," Wong Fu Kang, chargé d'affaires at the Chinese Embassy here, said Tuesday, tapping his forefinger on crossing points along his country's long border with Mongolia. At Mongolia's western end, he traced the path of a proposed road to connect western China with the Russian city of Novosibirsk. In central Mongolia, there is a railroad project that will link copper and coal mines. In eastern Mongolia, China has proposed building a bridge.

To J.Peter Morrow, chief executive of the private Agricultural Bank of Mongolia and Mongolia's most prominent American businessman, the Chinese "are pushing on all fronts - a road here, a bridge here, a coal mine here."

Many Mongolians share that uneasiness about the potential threat from a neighbor with a population more than 520 times that of the 2.5 million in Mongolia. Last month, in a poll of 2,170 adults, the Sant Maral polling group asked people to choose two countries that could be considered the best partners for Mongolia. Russia came in first, receiving twice as many votes as the United States, which came in second. China came in fourth, after Japan.

To improve its image, China sent $7 million for a new lighting system for this capital's showcase Sukhbaatar Square, named after a nationalist who, in 1921, declared Mongolia's independence, ending more than two centuries of Chinese colonial rule. In April, the Chinese government sponsored Chinese Cultural Days, a celebration of Chinese music, art and circus talent that was suspended in the early 1960s because of Russian-Chinese tensions.

Many Mongolians credit China's economic locomotive as the reason Mongolia's economy is expanding at an expected rate of 5.5 percent.

"We are very grateful that the Chinese economy is so active," Mongolia's prime minister, Nambaryn Enkhbayar, said. Noting that China is running short of coal, he said that a Chinese company planned to start mining coal in eastern Mongolia this year.

Dozens of cranes puncture the summer sky here as Chinese construction crews build new apartment and office buildings, softening the old Soviet image of the city. Shedding 75 years of Russian economic domination in a decade, Mongolia is rapidly becoming China's Canada, a northern resource.

"This is my vision of this country, Mongolia as a Canada," Sedbazar Otgonbat, vice chairman of Mongolia's foreign investment and foreign trade agency, said in an interview. "China and Mongolia must work hand in hand, as Canada and the U.S.A."

Historically marginalized by its landlocked location, Mongolia now finds that the rise of China is giving it a front-row seat for the biggest economic story in the world.

"Some people say Mongolia's landlocked economy is a disadvantage; I say that, with China, it is an advantage," said D.Jargalsaikhan, chairman of the Mineral Resources Authority of Mongolia, a state agency. "What makes Mongolia unique is that it has China as a neighbor. The Chinese market is just like a black hole where everything disappears - copper, iron, zinc."

With China as the new point of reference, more than 30 Chinese-language schools have opened here in recent years.

"China is the big brother, you cannot avoid China," said L.Sumati, director of the Sant Maral polling group. Trained in Moscow, Sumati now has his two children, both in their 20s, studying in Beijing.

Last March, 400 Mongolian students competed for 10 scholarships offered by Beijing to study in China.

"A decade ago, if you wanted to study Chinese, you would have had to go Moscow," Wong, the Chinese diplomat, said. "More and more Mongolians are studying Chinese. Before, Russian was the dominant foreign language here."

With Russian visa rules strict, many Mongolians and foreigners based here say they have stopped traveling north.

"This bureaucracy, this old-time thinking, is strangling our economic relations with Russia," said Ganbold, a local journalist.

As China pours money into developing its own western regions, Mongolia suddenly finds that modern cities and highways are taking shape only a few hundred miles away.

"The Chinese government is adopting big plans to develop the west," Wong said. "This will be beneficial to Mongolia."

With most Mongolians allowed to visit China without visas, a snowbird phenomenon has evolved, with about 400,000 Mongolians visiting China last year, compared with 182,000 Chinese who visited here.

But many of the Chinese who came were investors. According to the Chinese Embassy, there are 1,100 Chinese companies in Mongolia.

"We probably have 100 Chinese restaurants now," said Stephen Vance, executive director of Mongolians for Open Society, a group that received donations from the Soros Foundation. "The textile industry is pretty much 50 percent Chinese. The leather industry is dominated by Chinese."

To some the Chinese economic draw can be destructive.

"Mongolia used to have four million deer; there are almost none now," said Otgonbat. "Why? The Chinese buy deer antlers. By shooting them one by one, the whole population has been killed."

In the Gobi desert recently, Buyantogtokh Delgerjav, a local governor, said that economic diversification was the best policy to follow. "In Mongolia, we say we are a little piece of kidney squeezed between two pieces of fat," he said. "We can't afford to have bad relations with China or Russia."