The New Great Game: Potential Impact of Mongolia’s Mineral Development on China, Russia, Japan and Korea

18 September 2012
East-West Center
Dr. Alicia Campi

    Last week, noted Mongolist Dr. Alicia Campi gave a lecture on her research into Mongolia’s new mineral development and its effects on surrounding north Asian countries. For this post, I will focus only on her discussion of China:

    China’s neighbor to the north, Mongolia, is in the midst of a very exciting time: the country’s economy is growing by leaps and bounds, and most of this growth is directly attributable to Mongolia’s extensive mineral reserves. Mongolia is home to vast deposits of coal, gold, uranium, copper and rare earth minerals. In 2011 alone, coal mining increased 23%!

    What does this mean for China?
   
    China is currently Mongolia’s largest trading partner and foreign investor. As both a geographically enormous country and a coal-based economy, China has the onerous task of transporting coal all over the nation to fuel industry. This ties up the railways! So naturally, China is very interested in Mongolian copper and coal for its factories in the north, closer to the border.
   
    However, China could have other motives for buying Mongolian coal. According to a Peking University professor, China only invests in Mongolia for “political reasons.” He was referring to China’s national security goal of encouraging the Mongolian government not to support Inner Mongolian “terrorists.” Given that the Chinese government has forwarded huge sums of money to Mongolia in exchange for minerals it won't receive for years, this claim seems legitimate.

    As I was listening to Dr. Campi’s lecture, two things struck me as significant:
        1. Mongolia’s plan for the future is to diversify their foreign investors (meaning, not let China invest so much more than any other country)
        2. Russia is interested in monopolizing Mongolian coal in order to keep it out of China’s hands

        These two points indicate that it might be more difficult for China to obtain Mongolian coal in the near future. Could this cause China to make more of an effort to shift its economy towards a renewable energy base? Or will China just find other ways to keep fueling its growth using coal? Only time will tell!

-Hannah Chen