China eyes trade route deal with Mongolia

China expects to sign agreements to give landlocked and resource-rich Mongolia easier access to Chinese territory for its exports when President Xi Jinping visits the country this week, a senior diplomat said on Monday.
Mongolia, nervous about over-dependence on its enormous neighbour, had once favoured a more circuitous and expensive northerly rail route via Russia that would connect its mines to the Pacific coast, a plan the World Bank said was unrealistic.
But in an apparent recognition that China is still the best option for Mongolian exports, Mongolia is now talking with China about a route directly south.
Assistant Chinese Foreign Minister Liu Jianchao said that making the trans-shipment of goods from Mongolia would be one of the topics for discussion during Xi's two-day trip to Ulan Bator, which starts on Thursday.
"Everyone knows that Mongolia is a land-locked country with no sea ports, so the issue of trans-shipment, especially via China, is a very important need for Mongolia. China fully understands this and will do all it can to help Mongolia to smoothly and more easily carry out trans-shipments," Liu told reporters in Beijing.
"Both sides are currently having talks on this issue," he added, declining to provide details. "The direction of these talks is to make Mongolia's trans-shipments easier and smoother."
Soaring Chinese demand for commodities like coal has underwritten Mongolia's rapid growth, with more than 90 per cent of its exports sold to China.
Still, Beijing's growing economic hegemony has caused disquiet among Mongolian lawmakers, who hastily drafted a law in 2012 to limit foreign ownership in "strategic" sectors.
The law was designed to block efforts by China's state-owned Chalco Group (601600.SS) to acquire a majority stake in Mongolian-based coal miner South Gobi Resources (SGQ.TO).
Mongolia had ambitions to become China's top coal supplier, largely through the development of one of the world's biggest untapped mines at Tavan Tolgoi, near the Chinese border.
However, Mongolia has complained that it has not received fair value for the coal, arguing that the lack of alternative buyers allows Chinese firms to drive down prices. A dispute with Chalco, which signed a supply deal with Tavan Tolgoi in 2011, has contributed to a decline in coal shipments.
Liu said that while there were "different points of view" on certain issues, generally China felt that Mongolia welcomed Chinese business.
"From what we can see from our contacts with the Mongolian government, people and companies, the Mongolia side really welcomes China's investment," he said.
"Both sides have had very effective cooperation on the energy and mining side. Talks on relevant projects, including coal mines, railways and roads are ongoing. We hope that there can continue to be progress."
In October, Mongolia agreed to establish a working group with China to oversee the construction of new road, rail and pipeline infrastructure connecting the two countries with Russia.
Liu would only say that China was talking with both Mongolia and Russia about the oil pipeline.
Another report from Shanghai adds: China may use incentives to encourage domestic hospitals to use Chinese-made medical devices as it looks to stimulate the local market and reduce soaring healthcare costs, a potential threat to the global firms who currently dominate the sector.
China will speed up the development of its medical device industry and promote wider use of local products to "effectively control unreasonable increases in the cost of medical care and reduce the burden on patients," the country's health ministry said in a statement posted on its website on Monday.
The overt backing by Beijing for homegrown medical devices will raise protectionism concerns and is a headache for the global companies attracted to China by annual growth rates McKinsey & Co expect at around 20 per cent over the next few years.
Global medical device makers, especially from the United States, Europe and Japan, now dominate around three-quarters of China's medical device market, which was worth 212 billion yuan ($34.51 billion) last year, according to figures from the Hong Kong Trade and Development Council (HKTDC).
"We want to strongly advocate health ministry organisations to use domestically-made medical devices, especially pushing top level class III hospitals to use domestically-made products," the statement said, citing Li Bin, the head of China's National Health and Family Planning Commission.
Li was speaking at a medical device conference in Beijing to promote the domestic sector, the statement said.
A number of recent investigations by Chinese authorities into foreign firms like Microsoft Corp and car companies including Audi AG and Chrysler have sparked concerns that Beijing may be using legal muscle to support domestic firms at the expense of foreign companies.
China's foreign direct investment inflows in January-July fell for the first time in 17 months compared with the same period a year earlier, although Chinese officials stressed it was not linked to a spate of recent probes into foreign firms for alleged monopolistic behavior.
Miao Wei, the head of China's Ministry of Industry and Information Technology (MIIT), said in the same statement that China needed to raise the level and quality of its homegrown medical devices and create incentives for medical institutions to use locally-made products.
The fast growth of China's medical devices market has drawn in firms including Siemens AG, General Electric Co, Koninklijke Philips NV, Johnson & Johnson and Medtronic Inc. These compete with local companies such as Mindray Medical International Ltdand China Resources Wandong Medical Equipment Co Ltd.
Hospitals are the biggest distribution channel for medical devices, accounting for almost 80 per cent of the market, according to HKTDC figures. There were around 13,400 public hospitals in China last year, and a further 11,300 private hospitals, according to a June report from Deutsche Bank.