ULAN BATOR/BEIJING, Aug 21 (Reuters) – Chinese President Xi Jinping proposed on Thursday the expansion of bilateral trade with Mongolia to $10 billion a year by 2020 as he arrived for a two-day visit aimed at deepening economic ties between the neighbours.
Xi’s arrival marks the first Chinese presidential visit in 11 years to Mongolia which has been hit by plunging commodity prices and a rapid decline in foreign investment. It is keen to agree to new deals on transport, energy and mining investment with its dominant trading partner.
The two countries signed a joint declaration upgrading their relationship to a “comprehensive strategic partnership”. They also signed agreements to cooperate further in areas such as economics, energy, mining and finance.
“Xi proposes to expand China-Mongolia trade to $10 billion by 2020,” China’s Xinhua state news agency said. Two-way trade was worth $324 million in 2002 but rose to $6 billion in 2013, accounting for more than half of Mongolia’s total foreign trade, Xinhua said.
In an article written by Xi for Mongolian newspapers, Xi said China would do all it could to help Mongolia develop. “China hopes that both countries can push cooperation on building inter-connecting railways and roads, the development of mines and processing,” 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 reported.
But while the focus remains 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 polling organisation.
Mongolia aims to use its mineral wealth to modernise its isolated pastoral economy, but it has struggled to fund its plans. A 2012 law aimed at restricting foreign ownership in “strategic” sectors, since reversed, has also slowed foreign investment, which fell 70 percent in the first half of 2014.
Mongolia’s economy grew just 5.3 percent in the first six months, slowing from 11.7 percent in 2013, official data showed.
Mongolia has previously sought to restrict Chinese firms from taking control of its assets, blocking a stake bid by state metals conglomerate Chinalco for the Mongolia-based miner SouthGobi Resources.
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