Competition Between Japanese and Chinese Infrastructure Projects in Mongolia

Abstract

Mongolia is a landlocked country in East Asia, which has a number of advantages related to its geographical location, abundance of natural resources, openness to foreign capital, and dynamic development due to the market reforms carried out in the 1990s. This determines the interest in the country from China and Japan and the inclusion of Mongolia among the platforms of global competition between these largest Asian economies.

Development of Japan-Mongolia and China-Mongolia political and economic relations in the second half of the 20th century and Mongolia’s economic progress in recent decades have coincided with increasing competition between Japan and China in the world stage. At present, both countries are important trading partners for Mongolia and sources of capital needed to build its infrastructure and integrate it into global supply and production chains. The study of Sino-Japanese interaction in Mongolia may help us understand how Japan and China compete with each other in the world stage and to specify their areas of specialization and rivalry.

The objective of this research is to show, taking infrastructure projects as an example, how the global competition between Japan and China unfolds in Mongolia. In order to evaluate the current state of economic relations between Mongolia and each of the countries, in the first part, the author traces the history of Japan-Mongolia and China-Mongolia relations from the establishment of diplomatic relations to the present time, focusing on infrastructure projects.

The second part analyzes the interaction between Japan and China in Mongolia in the context of their growing economic competition. The study sheds light on particular areas of rivalry, while demonstrating that Japanese and Chinese projects not only compete but also complement each other.