Wednesday, August 20, 2014

China to sign various deals with Mongolia during offical visit


China will sign a series of energy and infrastructure deals with Mongolia as part of President Xi Jinping's two-day state visit to the neighbouring country this week, according to the Foreign Ministry.

Assistant Minister of Foreign Affairs Liu Jianchao said yesterday that the trip would also yield support for Mongolia's plans to boost cross-border transport through China. The trip, scheduled for Thursday and Friday, comes as China tries to expand its influence in Central Asia by promoting its idea of a Silk Road Economic Belt, an initiative designed to expand economic cooperation in the region.

It also comes as China continues to look beyond its borders to meet its growing economy's increasing demand for energy and resources.

I for one have been eagerly anticipating this visit. The Mongolian economy has recently slowed to around 5% mostly due to a big slow down in foreigner direct investment coupled with lower commodity prices. The dispute over the the second phase of the Oyu Tolgoi copper mine has not helped investor perceptions. What I find ironic is that Mongolia is turning to China for investment and economic cooperation. This whole economic slowdown and loss of investor confidence was a direct result of the Mongolian governments knee jerk reaction to the attempted takeover of SouthGobi Energy by China Aluminum a couple of years ago. After the economy suffered and every foreign investor pretty much left the country, along with their capital, the Mongolians are now welcoming the Chinese and hoping for investment. Governments who can explain them? Anyway this should lead to a change in view towards Mongolia and hopefully capital will begin returning. After this visit Putin will visit Mongolia in a couple of weeks. With the current issues Russia is having in the west it has begun shifting, over the last few years, towards Asia. Because Mongolia sits between China and Russia it can play the part of facilitator and toll road operator for trade between China and Russia as the relationship between these tow grows.

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