His one-day stopover on the sidelines of the APEC summit was the first such trip by an American president.

Greeted by horseback warriors, flower waving children, and cups of fermented mare's milk, Bush told Mongolian leaders his country was interested in becoming a "third neighbour" to a country landlocked between Russia and China.

The offer has been well-received by Mongolian policy-makers.

Yondon Otgonbayar, Secretary of the Mongolian People's Revolutionary Party, the largest party in the coalition government, told Aljazeera.net his country's central objective is to strengthen ties with the US.

"Since we have chosen our road to democracy, the notion of a third neighbour (the United States) has appeared in our global political lexicon."
 
Seeking to forge strategic partnerships with the US, the Mongolian government has deployed troops in Iraq and become an ally in the US-led 'war on terror'.

Tense China relations

But centuries-old relations with China may be difficult to shed.

China was overrun by Mongolian leader Kublai Khan in the 13th Century. The first foreigner to ever rule China, Khan founded the Yuan dynasty which held rein over China till 1368.

President Bush sought to
strengthen ties with Mongolia

The tide was reversed, however, when Chinese Imperial forces invaded and ruled Mongolia during the Qing Dynasty (1644-1911).

When the Chinese dynastic order collapsed, the Mongols were shortly afterwards furled into the Soviet umbrella.

"There is historical resentment that Mongolia was part of China for 400 years," said Tjalling Halbertsma, a United Nations advisor to Mongolian President Nambar Enkhbayar.

"But the current government's point of view is a more realistic approach that China is a neighbour and will always be one."

Growing 10% last year, the Mongolian economy has been boosted by China's runaway economic growth. Reliant upon the Chinese seaport of Tianjin for exports, and rich in natural resources such as copper, zinc and iron, Mongolia has Chinese consumers to thank for driving up world metal prices and boosting state coffers.

And as a counterweight to Bush's fleeting stopover, Enkhbayar will fly to Beijing this weekend for a six-day state visit.

But according to one Western diplomat, Mongolia is trying to stave off further Chinese encroachment of the economy by refusing investment opportunities and turning down preferential loans.

"The thing Mongolians totally fear is that their nation will be overwhelmed by Chinese immigrants in the form of labour battalions and such, the way Xinjiang and Tibet are inundated with Chinese," John J Tkacik, who is also an analyst at the conservative Heritage Foundation in Washington, told Aljazeera.net.

Already, cheaper Chinese workers are being bussed in to man construction sites, building resentment amongst locals and threatening an upsurge in Mongolian nationalism.

The result is a nuanced government approach - welcoming some Chinese investment, up to a point, while actively searching for friends and investment from the West.

It is a strategy that has yielded mixed results.

US support

Writing in the June issue of the Far Eastern Economic Review, Tkacik describes how efforts by America to include Mongolia into APEC, the Six Party Talks, and Nato's "Partnership for Peace" security forum have all floundered due to Chinese opposition, suggesting Beijing sees Mongolia as too pro-American.

"Since we have chosen our road to democracy, the notion of a third neighbour (the United States) has appeared in our global political lexicon"

Yondon Otgonbayar,
Secretary of the Mongolian People's Revolutionary Party

When the US tried to squeeze Mongolia's membership to Nato, French officials vetoed the application, saying they did not want to frustrate their Chinese friends.

But Chinese officials play down talk of friction between the two countries.

"The mainstream attitude in Mongolia towards the Chinese people is that they see growth and opportunities for economic cooperation," Shen Shishun, a Sino-American relations expert at the China Institute for International Studies, told Aljazeera.net.

"We welcome American aid to Mongolia as it will help create a golden neighbourhood of prosperous countries around China," he said.

And American aid is forthcoming.

Mongolia is to receive $200m in aid as part of the Millennium Challenge Account, a US fund set up to aid emerging democracies.

On a visit in October, Secretary of Defence Donald Rumsfeld also committed an additional $11m to upgrade the armed forces.