Beijing daily gives U.S. lawyer’s views on Chinese investment in Mongolia

The Global Times, a daily Chinese newspaper focusing on international issues and produced by the official Chinese Communist Party newspaper, the People"s Daily, has published in some detail the views of Michael Aldrich, an American lawyer who divides his time between Beijing and Ulaanbaatar, on the development of Mongolia"s mining-dependent economy. The lawyer feels that the Mongolian Government has realized that the country cannot properly develop without the flow of considerable capital northwards from China. It also wants to diversify the sources of foreign capital so no one country becomes the "key" investor.

He thinks “a considerable amount” of the present Chinese investment comes from privately-owned companies that side-step Chinese overseas investment regulations through nominee shareholder arrangements. These companies “often step on the toes of Mongolian sensitivities by seeking to circumvent local laws and customs”. Chinese state-owned firms are more slow-paced since they cannot avoid the red tape.

Asked how legal work in Ulaanbaatar compares to that in Beijing, Aldrich said there are some similarities. The legal systems of all former-socialist states tend to have much in common, but Mongolia has a greater respect for the freedom of individuals who enter into contracts without obtaining governmental agency approval, or those who don"t necessary comply with regulatory restrictions that may or may not be enforced. Establishing a wholly owned subsidiary with foreign investment in Mongolia can be completed in several days, as opposed to the weeks of processing required in China.