Tensions in the relationship between China and Mongolia have been brought into stark relief by President Xi Jinping’s August trip to Ulan Bator. Relations between the two countries are better now than for many years and massive trade flows where vast armies once converged. However, historical, cultural, and geopolitical problems linger. Beijing’s interests in the north are challenged by increasing anti-Chinese sentiment within Mongolia, by Mongolia links to the United States, and by ethnic tensions within the six million-strong ethnic Mongol community that lives within China’s borders.

While visiting Mongolia, Xi Jinping publicly accompanied Mongolian prime minister Altanhuyag Norov in bowing to a statue of Genghis Khan – a show of respect that was broadcast on Chinese state TV. Such public reverence for a man famed as a conqueror of China only makes sense in the context of Chinese theory on ethnic minorities.

Indeed, all of Mongolia was incorporated into the Chinese empire under the Qing Dynasty (itself ruled by ethnic-minority Manchus). The modern nation-state of Mongolia only won its independence from the yolk of Chinese rule with the collapse of the Qing Dynasty in 1911. Mongolian independence was secured with assistance from Russia, and internationally recognized in 1945. Interestingly, the Republic of China government in Taiwan has never fully recognized Mongolian independence. Throughout most of the twentieth century Mongolia served as a buffer state for the Soviet Union.

China has been making economic inroads into the former Soviet satellite state in the wake of the Soviet Union’s collapse. Bilateral trade has sky-rocketed from a mere $324m in 2002 to $6bn in 2013. Mongolia’s vast reserves of gold, coal, and other minerals, along with its sparse population of 2.8m in a territory of 1.5m sq kms (and therefore limited local demand for raw materials) make it an ideal trading partner for China. More than half of Mongolia’s foreign trade is with the Chinese.

The economic aspects of Sino-Mongolian relations dominated the meeting between Xi Jinping and Mongolian prime minister Altanhuyag Norov. For example, the Chinese government has agreed to allow landlocked Mongolia access to eight Chinese ports. Furthermore, the two sides made agreements for increased transportation links, and declared a goal of boosting bilateral trade to $10bn annually by 2020.

However, a lingering distrust of Chinese motives within Mongolia accompanies the deepening ties between the two countries. At the extreme end a member of the tiny Mongolian ultra-nationalist group Tsagaan Khass – literally "White Swastika" – has warned "We have to make sure that as a nation our blood is pure. That’s about our independence…. If we start mixing with Chinese, they will slowly swallow us up. Mongolian society is not very rich. Foreigners come with a lot of money and might start taking our women."

The US state department has issued a notice for Americans travelling to Mongolia: "….nationalist groups frequently mistake Asian-Americans for ethnic Chinese or Koreans and may attack without warning or provocation. Asian-Americans should exercise caution walking the streets of Ulaanbaatar at all times."

Mongolian fears of the Chinese have both historical and contemporary roots. Most Mongolians follow a form of Tibetan Buddhism that reveres the Dalai Lama. In 2011 Chinese foreign ministry spokesperson Hong Lei condemned Mongolia for hosting the exiled Tibetan leader: "We have always opposed any country providing a platform for the Dalai Lama to engage in activities to split China in any form." In 2002, the Chinese government shut a rail link with Mongolia for two days after the Dalai Lama visited Ulan Bator. Ironically, it was the Chinese who encouraged Mongolian Buddhism in the eighteenth century, believing it to be a ‘quietist’ religion that would make Mongols more amenable to Chinese domination.

Besides historic rivalry and cultural ties to Tibetan Buddhism, Mongolian apprehensions of China also stem from geographic realities. Mongolia is sandwiched between two massive and powerful neighbours who have historically dominated their country. Since the fall of the USSR and political reforms within Mongolia, the Mongolian government has adopted a "Third Neighbour" policy of reaching out to outside powers to provide a degree of geopolitical manoeuvrability. As part of this effort, Mongolia has sent troops to aid US missions in Iraq and Afghanistan. Speaking in Ulan Bator in April, US secretary of defense Chuck Hagel said, "A strong US-Mongolia defence relationship is important as part of the American rebalance to the Asia-Pacific region".

Baasanjav Ganbold, Mongolian ambassador to the Republic of Korea, explained the Third Neighbour policy thus: "Our two neighbours support [this policy] because the very foundation of it is balancing each of our partner countries’ interests…. We proudly call India our third neighbour. Turkey and South Korea also fall into this category."

President Xi Jinping alluded to historical and contemporary concerns when addressing the State Great Khural (Mongolia’s parliament): "Although friendship and cooperation have been the mainstream in the history of relations among Asian countries, there are still numerous issues left over from history yet to be resolved. Differences and frictions are hardly avoidable among neighbouring countries. What is important is how to handle and manage them properly. The most effective way to ensure long-term peace and stability in the region is to build consensus and resolve differences through dialogue and cooperation."

In 2011 protests erupted throughout China’s Inner Mongolia Autonomous Region after a Han Chinese coal truck driver struck and killed an ethnic Mongolian, who had been blocking coal trucks from driving onto his pastures. The prominent protest chants were "Defend our grassland!"  and "Chuncheng Group, get out of Xilingol!" The protests eventually died down after the truck driver was arrested, and the government promised reforms to mining laws. Unlike many ethnic protests in Tibet and Xinjiang, there were no widespread calls for independence.

The demonstrations within Inner Mongolia have been mirrored by similar protests across the border in independent Mongolia. Many traditional herders are worried about losing their traditional way of life in  the face of large-scale mining. There have even been a series of "eco-terror" attacks in Ulan Bator in response to government loosening of mining laws.

At the same time economic aspirations may help to explain the general lack of an organized independence movement within China’s Inner Mongolia. Dr Enze Han, from the School of Oriental and African Studies in London, writing in Asian Ethnicity, cited "the perception of better living conditions in Inner Mongolia" as a factor in its relative political stability.

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