Xi's arrival marks the first Chinese presidential visit to Mongolia
in 11 years, and Mongolia, hit by plunging commodity prices and a
rapid decline in foreign investment, is keen to agree to new deals
on transportation, energy and mining investment with its dominant
In an article written by Xi for publication in Mongolian newspapers,
the Chinese president said the country would do all it could to help
"China hopes that both countries can push cooperation on building
inter-connecting railways and roads, the development of mines and
processing ... so that people in both countries can receive even
more benefits," Xi wrote.
China already buys more than 90 percent of Mongolia's exports,
mainly of coal and copper, and 49 percent of foreign enterprises
registered in Mongolia are Chinese, Xinhua news agency reported on
But while the focus is likely to be on economic cooperation,
persistent Mongolian worries about Chinese political hegemony in the
region make a bigger breakthrough unlikely, analysts said.
"I don't think right now is the time to talk about breakthroughs in
relations - the Mongolian economy is in a difficult situation but it
isn't difficult enough to have any immediate impact (on relations),"
said Sumati Luvsandendev, head of the Sant Maral Foundation, a local
Mongolia aims to use its mineral wealth to modernize its isolated
pastoral economy, but it has struggled to fund its plans.
Legislation aimed at restricting foreign ownership in "strategic"
sectors has also deterred foreign investment, which fell 70 percent
in the first half of 2014.
But despite political opposition, the government appears to be
warming to the prospect of further Chinese involvement in its mining
and infrastructure sectors, the two pillars of its long-term
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Mongolia is also keen to use the Chinese rail network to deliver
coal and other minerals to other markets, and a transshipment deal
is expected to be signed during Xi's visit.
"I think the most important deal we can get out of this visit is a
rail transit agreement," said Bontoi Munkhdul, chief executive of
the Ulan Bator-based Cover Mongolia consultancy. "Allowing rail
access to seaports in China would allow us to export our commodities
to other sea-borne Asian nations such as Japan or South Korea."
The government in Ulan Bator has already agreed to form a joint
venture with state-owned Chinese coal giant Shenhua Group to build a
13-km rail link that will help deliver Mongolian coal across its
During a Mongolian government delegation visit to China last year,
officials told Reuters that a working group had been set up to build
roads, railways and pipelines connecting the two countries to
(Additional reporting by Ben Blanchard in BEIJING; Editing by Nick
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