Mongolia in the making: Chinese investment there
Updated: 2013-08-16 10:41
You don't have to travel far in Mongolia to see Chinese investment. The new sports stadium by the airport? It's here, thanks to China. The Mongolian Chamber of Commerce building? A gift. And downtown's Central Place tower -- with its luxury shops below and upscale offices above -- built using Chinese construction. That's not all.
"The Chinese have invested heavily in infrastructure, especially the energy sector. For example, hydropower and thermal-power projects." Bolormma Luntan, Editor of Mongolian Mining Journal said.
Roughly half of all foreign direct investment in Mongolia now comes from China. As its large, consuming neighbour, China now accounts for three quarters of all of Mongolia's economic activity. 90 percent of all out-bound Mongolian goods go directly to China. It wasn't always like that. Historically, Russia was Mongolia's main backer.
"If you look closely at tracks here, you might notice that the gauges - the space between the rails - are quite wide, like in all of Mongolia, and like in most former Soviet satellite states. They're built to Russian-standards. Chinese gauges are more narrow, in line with international standards. That means that trains travelling the Mongolia-China route have to make a long stop at the border and have their wheels adjusted. That's both logistically difficult, and expensive."
And thus a hot debate here. Land-locked Mongolia wants sea-access for its resource extracts but how should it build new rails? Economist Mogi Badral believes all new China-bound tracks should match China's rail to boost rail export.
"If you force mining companies to use wider-gauges to export to China, it'll be more expensive than building, of course, a narrow gauge." Munkhdul "Mogi" Badral, Economist said.
He says, that's not sustainable in the long-run. And warns, as Chinese invest more here, a better cheaper solution to getting its return out will have to be found. Roee Ruttenberg, CCTV, in Mongolia.