China and Japan’s Investment Competition in Mongolia

Media Coverage | August 01, 2018


China and Japan are two of the most financially influential countries in Mongolia’s proximity. Both have a long history of trade and investment in the latter. Mongolia calls Japan its “Third Neighbor,” which is a term first used in 1990 by then-U.S. Secretary of State James A. Baker who referred to the United States as Mongolia’s “Third Neighbor.” Mongolia then adopted the “Third Neighbor” policy aim at broadening its foreign relations outside of China and Russia to other countries like Japan, the United States and European countries. Japan has traded with Mongolia since the 13th century through the Steppe Road and is currently Mongolia’s third largest source of imports. Since Mongolia became a democratic country in 1990, Japan has consistently provided aid and assistance for its transition to a market economy.

China is one of Mongolia’s closest partners and has traditionally been its biggest trader and investor. By July 2017, China directly invested $4.1 billion in the country which accounted for 30 percent of Mongolia’s foreign investment. However, as China asserts more economic influence in Mongolia via the Belt and Road Initiative, the Tokyo-Beijing relationship has become increasingly complicated. With China’s rise, Japan has felt the urgency to balance and compete with China in the region. Is the development competition between China and Japan beneficial or detrimental to Mongolia? And how can Mongolia maintain and expand its interests within this complicated relationship?

Read the full article here on The Diplomat

Image: "China and Japan 1939" (CC BY-NC-ND 2.0) by Erik Daugaard Photography - Copenhagen