MFA: CHINA AND U.S. BOTH "GOOD INFLUENCES" FOR

C O N F I D E N T I A L SECTION 01 OF 02 BEIJING 007005

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/07/2032
TAGS: PGOV PREL CH MG
SUBJECT: MFA: CHINA AND U.S. BOTH "GOOD INFLUENCES" FOR
MONGOLIA

Classified By: Political Section Regional Affairs Unit Chief Mark Teson
e for Reasons 1.4 (b/d).

Summary
--------------


1. (C) In the wake of Mongolian President Nambaryn
Enkhbayar's October visit to the United States and signing of
the USD 285 million Millennium Challenge Account aid package,
Chinese and Mongolian officials underscored the "special"
nature of Sino-Mongolian relations, but differed on China's
views of U.S. influence in Mongolia. China does not object
to U.S.-Mongolian ties if the United States helps develop
Mongolia because stability in its northern neighbor is an
advantage for China, our MFA contact said. Both China and
United States have an "opportunity to cooperate in Mongolia"
and we can be "good influences," he stated. However, our
Mongolian Embassy contact was dubious, stating China
"worries" about the United States and other countries
developing closer relations with Mongolia. Both
interlocutors underscored the closeness of the Sino-Mongolian
relationship, especially in the realms of economic ties and
person-to-person contacts. END SUMMARY.

Bilateral Issues and the Third Neighbor Policy
-------------- -


2. (C) Both Mongolian Embassy Minister Counselor Buyanbadrakh
and MFA Asian Affairs Department Third Secretary Zhang Yishi
acknowledged Mongolia's "strategic" importance. Yang
Jiechi's first trip abroad as Minister of Foreign Affairs was
to Mongolia, Zhang said on October 27, and that country was
"pleased with this attention." FM Yang's choice of Mongolia
as his first destination was not simply because it is "close
by," said Buyanbadrakh on October 31. Zhang stated that
Sino-Mongolian relations are the "best they have been in
history," and Buyanbadrakh concurred, telling Poloff
separately that there are "no obstacles in the relationship."
China does complain when the Dalai Lama visits Mongolia, but
he has visited often and it has not posed a major problem, he
said.


3. (C) Zhang said China respects Mongolia's "third neighbor"
policy, in which Mongolia looks to develop relations with the
United States, Japan and other Western countries. Mongolia
is a "democratic country" and its system transformed very
quickly, he observed. If the country to our north is
prosperous and stable, it is to China's advantage, said
Zhang. China does not object to U.S.-Mongolian ties if the
United States aids Mongolian development. There is an
"opportunity" for China and the United States to "cooperate"
there, he continued. "We both know" that China and the
United States hope to have good relations with Mongolia and
we will both be "good influences" if we develop these
relationships. China hopes the recent Millennium Challenge
grant can help Mongolia, Zhang said. He asked for more
details on what President Nambaryn Enkhbayar's "very large"
Mongolian delegation of over 100 members did while in the
United States. Drawing from Department press guidance,
Poloff provided him with some information on the agreements
inked.


4. (C) Mongolian Minister Counselor Buyanbadrakh was dubious,
stating China "worries" about the United States and other
countries developing closer relations with Mongolia. Japan's
aid to Mongolia actually exceeds China's, he said. These
other nations understand Mongolia's "geographic importance."
While Buyanbadrakh said the Chinese Government has not
officially expressed concern about Western influence in
Mongolia, he cited Chinese articles which did so.

Economic and Trade Ties, Person-to-Person Contacts
-------------- --------------


5. (C) MFA's Zhang was quick to highlight the close trade and
economic relationship in the "good neighborly" Sino-Mongolian
"partnership." China has been Mongolia's largest trading
partner for eight years and its biggest foreign investor for
nine years, he said. These economic ties are "natural," as
Mongolia is resource rich and China seeks to further its own
development. Furthermore, it is a good market for Chinese
products, stated Zhang. In 2006, trade was twice as large as
the previous year. Being landlocked, Mongolia does have
"unique geography," but the trade ties are not based on
transport alone, according to Zhang. Minister Counselor
Buyanbadrakh noted Chinese investment in Mongolia, but said
that many Chinese companies repairing homes and roads in
Mongolia use PRC laborers rather than locals. These policies
have been especially unpopular among Mongolia's youth.
Overall, Chinese policies are "correct," Buyanbadrakh said.


6. (C) Buyanbadrakh stated that the two countries do enjoy a

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"special relationship." Zhang cited the importance of
cultural and person-to-person exchanges, noting that one in
every four Mongolians has visited China. Buyanbadrakh
pointed out that China had "good feelings" toward Mongolia
even before the two countries normalized relations. The
cultural and folk "foundation" between Mongolians on either
side of the border is the same, he underscored, and there is
"mutual trust."

Randt