Mongolia looks to Japan to get out of China’s economic shadow
ULAN BATOR--A businesswoman found herself rebuffed when she attempted to change her Chinese restaurant in the heart of Ulan Bator to attract the multitude of immigrants from China.
“I wanted to put up a sign in Chinese, but the Mongolian government ordered us not to do so,” said the woman, who is from Hebei province in central China.
Anti-China sentiment has grown in Mongolia, a resource-rich, sparsely populated country that is now trying to reduce its economic dependence on its huge neighbor to the south.
Against this backdrop, Prime Minister Shinzo Abe struck a package of financial and technological assistance deals with Mongolian leaders during his visit on March 30-31. It includes possible development of a coal mine and rare earth minerals.
Critics, however, say Japan has been late in making serious inroads in Mongolia. Abe, for example, is the first Japanese prime minister in six and a half years to visit the country.
In the meantime, China has been busy on the economic and diplomatic fronts to heighten its presence in Mongolia.
About 90 percent of Mongolia’s exports are coal, copper and other minerals--and almost all of them go to China, according to the Japan External Trade Organization.
An estimated 20,000 Chinese expatriates live in Mongolia, creating what some business executives say is an inexpensive, skilled--and essential--labor force.
“I know the jobless rate in Mongolia is high (9.9 percent), but Chinese workers are cheap and have technical skills,” said a 53-year-old Mongolian vice president of a leading construction company that hires about 100 Chinese immigrants each year. “We would not be able to operate without Chinese workers.”
However, the influx of Chinese workers has led to resentment among the Mongolian public. Attacks against Chinese immigrants have occurred since the mid-2000s.
“Mongolians feel that Chinese are taking away their natural resources and jobs,” said an investment consultant in Mongolia.
The Mongolian government has taken measures to reduce the clout of Chinese businesses.
As the woman from Hebei province knows, the signs of restaurants operated by Chinese in Ulan Bator invariably appear in either Mongolian, which uses Russian Cyrillic alphabet, or English--not Chinese.
Mongolia is also aiming to forge close links with Japan, Russia and South Korea to chip away at China’s economic dominance.
Since last May, Ulan Bator has been preparing legislation to limit the ratio of investment in core industries, such as mining, of foreign companies.
“We do not intend to regulate all foreign-affiliated companies, but state-run companies working very closely with their governments are posing problems,” said a senior official with the Mongolian government’s mining department, in a veiled reference to China.
In January, a Mongolian coal mining company announced its decision to terminate a contract with a Chinese state-run aluminum company, which had a large stake in the Mongolian company and was a big buyer of coal.
The Mongolian company complained that its Chinese partner had forced down the price for large volumes of coal.
Resource-poor Japan has looked increasingly to Mongolia after learning firsthand about the economic risks of relying on China, particularly for rare earths used to manufacture high-tech products.
China, which accounts for more than 90 percent of rare earth production in the world, banned exports to Japan after a diplomatic row erupted in 2010.
The same year, Japan and Mongolia conducted a joint search of rare earth minerals in the south and west of Mongolia. Ulan Bator is calling for a continued joint search to proceed with drilling and processing.
Japan is also the largest aid provider to the country, supplying 211.1 billion yen ($2.22 billion) in official development assistance by fiscal 2011.
But Japan’s longtime economic aid has not translated into frequent private-sector exchanges between the two nations.
In 2012, 17,000 Japanese visited Mongolia, one-20th the number of Chinese visitors. The same year, 8,200 Chinese students studied in Mongolia, compared with about 1,200 Japanese students.
“Japan is not benefiting from its official development assistance (to Mongolia),” a tour operator said.
Exchanges between Japanese and Mongolian top government leaders have also been infrequent.
In contrast, members of the China’s top leadership have visited Mongolia almost every year.
On March 27, three days before Abe arrived in Mongolia, a delegation of Mongolian dignitaries, including opposition party leaders, visited China.
Liu Yunshan, the fifth-ranked official of the Standing Committee of the Chinese Communist Party’s Politburo, China’s top governing body, met with the delegation and called for stronger bilateral ties.
Officials in the finance industry who conduct business with China and Mongolia said Chinese leaders are sturdy diplomats.
By KOICHIRO ISHIDA/ Correspondent
“I wanted to put up a sign in Chinese, but the Mongolian government ordered us not to do so,” said the woman, who is from Hebei province in central China.
Anti-China sentiment has grown in Mongolia, a resource-rich, sparsely populated country that is now trying to reduce its economic dependence on its huge neighbor to the south.
Against this backdrop, Prime Minister Shinzo Abe struck a package of financial and technological assistance deals with Mongolian leaders during his visit on March 30-31. It includes possible development of a coal mine and rare earth minerals.
Critics, however, say Japan has been late in making serious inroads in Mongolia. Abe, for example, is the first Japanese prime minister in six and a half years to visit the country.
In the meantime, China has been busy on the economic and diplomatic fronts to heighten its presence in Mongolia.
About 90 percent of Mongolia’s exports are coal, copper and other minerals--and almost all of them go to China, according to the Japan External Trade Organization.
An estimated 20,000 Chinese expatriates live in Mongolia, creating what some business executives say is an inexpensive, skilled--and essential--labor force.
“I know the jobless rate in Mongolia is high (9.9 percent), but Chinese workers are cheap and have technical skills,” said a 53-year-old Mongolian vice president of a leading construction company that hires about 100 Chinese immigrants each year. “We would not be able to operate without Chinese workers.”
However, the influx of Chinese workers has led to resentment among the Mongolian public. Attacks against Chinese immigrants have occurred since the mid-2000s.
“Mongolians feel that Chinese are taking away their natural resources and jobs,” said an investment consultant in Mongolia.
The Mongolian government has taken measures to reduce the clout of Chinese businesses.
As the woman from Hebei province knows, the signs of restaurants operated by Chinese in Ulan Bator invariably appear in either Mongolian, which uses Russian Cyrillic alphabet, or English--not Chinese.
Mongolia is also aiming to forge close links with Japan, Russia and South Korea to chip away at China’s economic dominance.
Since last May, Ulan Bator has been preparing legislation to limit the ratio of investment in core industries, such as mining, of foreign companies.
“We do not intend to regulate all foreign-affiliated companies, but state-run companies working very closely with their governments are posing problems,” said a senior official with the Mongolian government’s mining department, in a veiled reference to China.
In January, a Mongolian coal mining company announced its decision to terminate a contract with a Chinese state-run aluminum company, which had a large stake in the Mongolian company and was a big buyer of coal.
The Mongolian company complained that its Chinese partner had forced down the price for large volumes of coal.
Resource-poor Japan has looked increasingly to Mongolia after learning firsthand about the economic risks of relying on China, particularly for rare earths used to manufacture high-tech products.
China, which accounts for more than 90 percent of rare earth production in the world, banned exports to Japan after a diplomatic row erupted in 2010.
The same year, Japan and Mongolia conducted a joint search of rare earth minerals in the south and west of Mongolia. Ulan Bator is calling for a continued joint search to proceed with drilling and processing.
Japan is also the largest aid provider to the country, supplying 211.1 billion yen ($2.22 billion) in official development assistance by fiscal 2011.
But Japan’s longtime economic aid has not translated into frequent private-sector exchanges between the two nations.
In 2012, 17,000 Japanese visited Mongolia, one-20th the number of Chinese visitors. The same year, 8,200 Chinese students studied in Mongolia, compared with about 1,200 Japanese students.
“Japan is not benefiting from its official development assistance (to Mongolia),” a tour operator said.
Exchanges between Japanese and Mongolian top government leaders have also been infrequent.
In contrast, members of the China’s top leadership have visited Mongolia almost every year.
On March 27, three days before Abe arrived in Mongolia, a delegation of Mongolian dignitaries, including opposition party leaders, visited China.
Liu Yunshan, the fifth-ranked official of the Standing Committee of the Chinese Communist Party’s Politburo, China’s top governing body, met with the delegation and called for stronger bilateral ties.
Officials in the finance industry who conduct business with China and Mongolia said Chinese leaders are sturdy diplomats.
By KOICHIRO ISHIDA/ Correspondent
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