In late October, Mongolian Prime Minister Norovyn Altankhuyag completed a four-day state visit to China, less than a month after Mongolia's parliament voted to scrap a foreign investment law designed to prevent Chinese state-owned enterprises from gaining footholds in strategic sectors such as coal mining. Throughout his visit, Altankhuyag reassured Chinese investors and political leaders that Mongolia, a darling-turned-pariah for investors in emerging markets, welcomed the friendship and business of its southern neighbor.
Altankhuyag's visit — which included stops at the West China International Fair, a major investment forum held annually in Sichuan province, and meetings with Chinese President Xi Jinping and Premier Li Keqiang — comes at a critical moment for Mongolia. In just over one year, Mongolia has seen its investment reputation and economic fortunes spiral downward — a process that began with the government's move to block a $926 million bid in 2012 by state-owned Chinese aluminum enterprise Chalco to take over SouthGobi Resources, which operates the massive Ovoot Tolgoi coal project near the Mongolia-China border.
Nonetheless, as China's leaders are well aware, Mongolia can be a fickle business partner. With interests in Mongolian resources that are both strategic and economic, Beijing knows that no shift in the tone of Chinese-Mongolian relations is likely to be a permanent one. Still, the recent scrapping of the investment law and Altankhuyag's visit could signal a change in Mongolia's attitude toward investment from China.
