Research On Chinese Foreign Direct Investment In Mongolian Mining Sector

Foreign Direct Investment(FDI)is seen as the fundamental part for an open and successful international Economic system and a major mechanism for development.That is a reason why even the biggest global economy competes to attract FDI through its legal environment,policies and regulations.Last few years,Mongolia attracted other countries by rich natural resources foreign investors.Mining is the key factor of Mongolian future development process and more than 90 percent of total exports are accounted for its mining sector.Mongolia is a major producer of several minerals including coal,copper,gold,zinc,and fluorspar.With extensive reserves,it has the potential to increase production considerably.Mongolia is sitting next to two of the largest economies in the world,Russia and China.This geographical situation influences to the economy,such as exports.Most of the Mongolian Mining exports goes to China approximately 90%.Targeted investment aimed at expanding Mongolia's nascent mineral resources sector propelled the economy forward,made it one of the fastest growing in the world between 2009 and 2012.But starting from 2013,Mongolian economic growth which is directly dependent on its mining sector began to slow down because of Chinese and global economic changes and/or price decreases in mineral resources.Also,domestic economic policies designed to protect Mongolia's sovereign interests and to respond to the expectations of the Mongolian public have discouraged FDI may affect the volume of foreign investment.Due to above reasons,FDI has steadily declined,constraining development of the mining and infrastructure sectors.However,Mongolia has made several amendments in its law and undertaken certain measures to encourage foreign investment and create more favorable business and legal environment for investors.This paper seeks to diagnose the current situation of Mongolian mining sector,influences of the environments such as politic,legal etc.,changes in mineral resource demand of China,emerging challenges and mutual beneficial solutions for both Chinese and Mongolian sides.