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TheStreet Open House

For Mongolia, China's Too Close For Comfort

Mongolia's one other neighbor, Russia, remains important, supplying fuel and owning half a mammoth copper mine and half the national railway system, legacies of the 70 years Mongolia spent as a Soviet client state. But China, with its huge population and voracious demand, looms larger than resource-rich, thinly populated Russia.

Mongolia has sought to minimize both Moscow's and Beijing's influence by forging links with other world powers. The fledgling democratic government has contributed troops to U.N. peacekeeping missions in Sierra Leone and other countries, and to the American war in Iraq. U.S. Secretary of State Hillary Clinton, on a visit in July, praised Mongolia as "an inspiration and a model."

In measures that politicians here say are aimed at China without naming it, Mongolia also caps immigrants from any one country to a third of one percent of the population, or less than 10,000 people, and restricts the numbers of foreign workers and types of investment.

"We will not be another Africa," said Ganhuyag Ch. Hutagt, a banker and former vice finance minister who wants to turn Mongolia into an international center of finance. "We cannot afford to have one particular nation control our businesses."

From the steppe to the streets of the capital Ulan Bator, Mongolians evince a distrust of Chinese. The sentiment goes beyond a neo-Nazi fringe that shaves the head of Mongolian women who sleep with Chinese. Almost everyone says China is stealing Mongolia's coal.

When NBA star Dwight Howard appeared at an outdoor promotion for leading mobile phone operator Mobicom Corp. in Ulan Bator last November, the popular Mongolian rapper Gee warmed up the crowd with his hit "Hujaa" â¿¿ a pejorative term for Chinese.

Unlike neighboring countries from Japan to India, Mongolia has no Chinatowns. The tens of thousands of Chinese workers drawn to Mongolia's mineral boom are rarely seen, living in fenced-off mining camps hidden in the vastness of the Gobi or behind high construction walls at building sites in the capital Ulan Bator. They are told to stay off the streets to avoid being beaten up by youth gangs. The few Chinese restaurants advertise "Asian" food, not Chinese.

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