Xi Jinping makes first official visit to Mongolia

Xi Jinping, right, greets President Tsakhiagiin Elbegdorj of Mongolia at the 2014 Shanghai Cooperation Organization summit on May 19, 2014. (Photo/Xinhua)

President Xi Jinping of China is set to make a highly anticipated two-day visit to Mongolia starting Thursday, with hopes of signing new cooperation deals on coal, mining and railroads, reports Duowei News, an outlet run by overseas Chinese.

China has many reasons to seek closer ties with its northern neighbour, Duowei said, which has enjoyed rapid economic development and GDP growth of 18%-20% in recent years due to its rich resources, including coal, copper, iron, phosphorus, gold and oil. Mongolia is a key trade partner from which China acquires coal, of which Mongolia has more than 175 billion tonnes in proven reserves, according to official figures.

The visit is the first to the country by Xi since taking office last March. During the trip he will meet with his Mongolian counterpart Tsakhiagiin Elbegdorj, who extended an invite to Xi back in May, as well as Zandaakhuugiin Enkhbold, chairman of Mongolia's State Great Khural, and prime pinister Norovyn Altankhuyag. The last Chinese leader to visit Mongolia was the former premier Wen Jiabo back in June 2010, with the last visit from a Chinese president dating back even further to 2003, when Hu Jintao made the trip as part of his first series of official visits on becoming president.

The leaders of the two countries have met several times since Xi became president but always at major regional forums and conferences such as the Shanghai Cooperation Organization summit or the Conference on Interaction and Confidence Building Measures in Asia summit. Chinese foreign minister Wang Yi visited Mongolia in June and since then the two countries are believed to have come to terms on a basic bilaterial framework for the three key areas of mineral resources development, infrastructure construction and financial cooperation.

This year China will import around 300 million tonnes of coal, with about a tenth, or 30 million tonnes, coming from Mongolia. The Trade and Development Bank of Mongolia predicts that Mongolia's annual exports of coal to China will rise to 50 million tonnes by 2016, and that a total of 1 billion tonnes of goal will be exported to China over the next 20 years.

Also reportedly included in the framework is the construction of two coal gas plants, of which 95% of the output will be shipped to China through pipelines. Analysts say that to take advantage of Mongolia's natural resources, developing railways and gas pipelines will form an important part of China's future development strategy.

On the financial cooperation front, one of the main goals is to promote the internationalization of the renminbi. China has been Mongolia's largest trade partner and investor for more than a decade, with bilteral trade expanding 50-fold from US$120 million to US$6 billion over the last 20 years. As at the end of October 2013, there were also 5,951 Chinese companies registered in Mongolia, accounting for almost half of total foreign enterprises in the country.