| ULAN BATOR/BEIJING
ULAN BATOR/BEIJING Aug 21 Chinese President Xi
Jinping arrived in Mongolia on Thursday for a two-day visit
designed to deepen economic ties between the neighbours, with
Mongolia desperate to kickstart its struggling economy with
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 trading partner.
In an article written by Xi for publication in Mongolian
newspapers, the Chinese president said the country 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 ... 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 Thursday.
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 polling organisation.
Mongolia aims to use its mineral wealth to modernise 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 development plans.
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 southern border.
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 Russia.
(Additional reporting by Ben Blanchard in BEIJING; Editing by