The 6.6 magnitude quake struck in Lushan county, near the city of Ya’an in the southwestern province of Sichuan, close to where a devastating 7.9 temblor hit in May 2008 killing some 70,000.

Most of the deaths were concentrated in Lushan, a short drive up the valley from Ya’an, but rescuers’ progress was hampered by the narrowness of the road and landslides, as well as government controls restricting access to avoid traffic jams.

“The Lushan county centre is getting back to normal, but the need is still considerable in terms of shelter and materials,” said Kevin Xia of the International Federation of Red Cross and Red Crescent Societies.

“Supplies have had difficulty getting into the region because of the traffic jams. Most of our supplies are still on the way,” Xia said.

In Ya’an, relief workers from across China expressed frustration with gaining access to Lushan.

“We’re in a hurry. There are people that need help and we have supplies in the back (of the car),” said one man from the Shandong Province Earthquake Emergency Response Team, who declined to give his name.

In Lushan, doctors and nurses tended to people in the open or under tents in the grounds of the main hospital, surrounded by shattered glass, plaster and concrete that fell during the quake. Water and electricity in the area were cut off by the quake.

“I was scared. I’ve never seen an earthquake this big before,” said farmer Chen Tianxiong, 37, lying on a stretcher between tents, his family looking on.

Nearby, an elderly woman sat dazed mumbling to her son, while nurses wiped blood from another woman’s foot as her husband cradled her head.

In another tent, Zhou Lin sat tending to his wife and three-day-old son who were evacuated from a Lushan hospital soon after the quake struck on Saturday.

“I was worried the child or his mother would be hurt. The buildings were all shaking. I was extremely scared. But now I don’t feel afraid any more,” said Zhou, looking at his child as he slept soundly wrapped in a blanket on a makeshift bed.

Premier Li Keqiang flew into the disaster zone by helicopter to comfort the injured and displaced, chatting to rescuers and clambering over rubble.

“Don’t be sad, we will rebuild after this disaster and your new homes will be even better than before,” state media quoted him as telling residents.

Xinhua news agency put the number of dead and missing at 203, with almost 11,500 injured, 960 of them seriously.

Chen Yong, the vice director of the Ya’an city government earthquake response office, told reporters that the death toll was unlikely to rise dramatically.

“We understand the situation in most areas. Most of the casualties have been reported. In some remote mountain areas, it is possible that we don’t fully understand the situation,” he said.

SCHOOLS WITHSTAND QUAKE

But no schools had collapsed, unlike in 2008 when many schools crumpled causing huge public anger, prompting a nationwide campaign of re-building.

“Our schools are the safest and sturdiest buildings,” Chen said. “The Chinese government has put a lot of money into building schools and hospitals. I can guarantee that no schools collapsed.”

Xinhua said 6,000 troops were in the area to help with rescue efforts.

Rescuers in Lushan had pulled 91 survivors out of rubble, Xinhua said. In villages closest to the epicenter, almost all low-rise buildings had collapsed, footage on state television showed.

The China Meteorological Association warned of the possibility of landslides in Lushan county, with more than 1,000 aftershocks registered.

Ya’an is a city of 1.5 million people and is considered one of the birthplaces of Chinese tea culture. It is also the home to one of China’s main centers for protecting the giant panda.

Sichuan is one of the four major natural gas-producing provinces in China, and its output accounts for about 14 percent of the nation’s total.

Sinopec Group, Asia’s largest oil refiner, said its huge Puguang gas field was unaffected.

The U.S. Geological Survey initially put the magnitude at 7, but later revised it down.

In 2010, a 7.1 magnitude earthquake killed 2,700 people in Yushu, a largely Tibetan region in northwest China.

(Writing by Ben Blanchard; Editing by Sanjeev Miglani)

North Korea has ramped up its threats after being hit by new
U.N. sanctions since carrying out a third nuclear test in
February, prompting the United States to fly stealth jets over
the peninsula and to prepare anti-missile systems for Guam and
Alaska.

U.S. and South Korean officials say they have detected no
signs of a military build-up in North Korea, whose vast armed
forces are in any case believed largely to be poorly equipped
and poorly trained, though a formidable array of missiles and
artillery is aimed at South Korea.

A Reuters reporter in the Chinese city of Dandong, which
borders the reclusive state, said he could see North Korean
paratroopers dropping from a Soviet-era helicopter during a
drill above Sinuiju, which lies opposite Dandong.

Five people jumped from the helicopter into the hazy skies
and pulled their parachutes before the aircraft flew low and
disappeared behind the tree line across the Yalu River that
divides the two countries.

There was no sign of other military activity.

Six equally ancient bombers could be seen sitting quietly
beside the runway of Sinuiju’s airfield.

Further down, where the border crosses the land, unarmed
North Korean soldiers manned a barbed-wire border fence,
chatting, laughing and sitting on their haunches while farmers
ploughed the bare fields behind them.

Dandong, a bustling little city with a clutch of new
high-rise apartment blocks lining the river, remained quiet.

In narrow, dusty streets surrounding Dandong’s main customs
office, traders loaded trucks with boxes of fruit and daily
necessities ordered ahead of a national holiday celebrating the
birthday of North Korean state founder Kim Il-sung.

“Is any country really scared of them?” said Chinese retiree
Zheng Jia, 73, walking along the riverbank which faces North
Korea. “China may back them, there’s no way China will support
them starting a fight.”

China’s Defence Ministry on Friday denied foreign reports
that the People’s Liberation Army was building up on the
country’s border with North Korea.

Still, state media said that another Chinese border city,
Hunchun, had carried out an unusual air raid drill on Thursday,
though images carried on Hong Kong’s Phoenix Television
suggested it was small scale, with old ladies shown shuffling
into shelters clutching handkerchiefs over their mouths.

Rather than unsettling anyone, the reports caused some mirth
on Sina Weibo, China’s Twitter-like microblogging site.

“You’re kidding,” wrote one user. “I live in Hunchun and I
heard nothing about this.”

Authorities in the northeastern city of Dandong have told tour agencies to halt overland tourism into North Korea, local travel agents said on Wednesday.

“There were tourists that were planning to go there today, but then we received the notification, so they’ve all gone back home,” said an employee of Dandong China International Travel Service, who asked not to be named.

Five other travel agencies confirmed they had stopped tours that use the land border crossing into North Korea at Dandong. One cited a notice from the government tourism bureau in Dandong.

“All (tourist) travel to North Korea has been stopped from today, and I’ve no idea when it will restart,” another travel agent in Dandong told Reuters by telephone.

“I think it is because of the situation in North Korea,” she said, declining to give her name.

Central government officials said tour companies had stopped travel of their own volition.

“Recently some Chinese travel agents and tourists, on seeing the tense situation on the Korean peninsula, canceled or postponed their travel plans for North Korea,” said Hong Lei, a spokesman for China’s Ministry of Foreign Affairs. “At present, the China-North Korea border is as normal.”

State-controlled CCTV News said the Chinese government had not issued orders to shut down tourism to North Korea.

The border remains open to commercial traffic, the travel agencies said.

In the morning, cars and trucks could be seen crossing the border to North Korea as normal, and residents said they were not overly concerned by the rise in tensions and threats of war.

“Their opponents will not let them off lightly, and no one in the world will support them. I think this is just a threat… I’m not worried,” said Liu Jinzi, 66.

A North Korean trade official surnamed Ko said there had been no order from Pyongyang to halt tourism. The official, who works in Dandong, also said trade was unaffected.

He did not want to be further identified.

The Pyongyang Project, a Vancouver-based travel and educational exchange group, said via Twitter that a North Korean tourism official in Yanji, another Chinese border city, told them tourism to the North Korean cities of Rason and Chongjin would be unaffected.

Hannah Barraclough, a tour guide with Beijing-based Koryo Tours that organizes visits to North Korea by air, said the company had not received any notice to halt tours.

“It’s business as usual for us,” she said.

Chinese authorities have temporarily halted travel to North Korea in the past in times of volatility on the Korean peninsula.

North Korean anger over the imposition of U.N. sanctions after its last nuclear arms test in February has created one of the worst periods of tension on the divided peninsula since the end of the Korean War in 1953.

The north ratcheted up threats to attack South Korea and the United States on Tuesday, and warned foreigners in South Korea to evacuate to avoid a “thermonuclear war.”

Foreign travel to North Korea is highly restricted, and independent travel without tour agencies is almost impossible.

China, the North’s only major diplomatic ally, has repeatedly called for calm and restraint.

(Writing by Megha Rajagopalan; Additional reporting by Sally Huang, Ben Blanchard, and Hui Li in Beijing; Editing by Raju Gopalakrishnan)

The author, a portly 57-year-old whose adopted pen name Mo Yan means “don’t speak”, said he had read some of Liu’s literary criticisms in the 1980s, but that he had no understanding of Liu’s work once it had turned towards politics.

“I hope he can achieve his freedom as soon as possible,” Mo told reporters on Friday in his hometown of Gaomi in the northern province of Shandong, in bold remarks likely to embarrass Beijing which has lauded his victory and denigrated Liu’s prize.

Liu should be able to research his “politics and social system”, Mo said without elaborating

A number of dissidents and other writers have said Mo was unworthy of winning as he had shied away from commenting on Liu’s plight. They have also denounced him for commemorating a speech by former paramount leader Mao Zedong.

But Mo, whose real name is Guan Moye, shot back at those criticisms.

“I believe that the people who have criticized me have not read my books,” he said. “If they had read my books they would understand that my writings at that time took on a great deal of risk and were under pressure.

“Many of the people who have criticized me online are Communist Party members themselves. They also work within the system. And some have benefited tremendously within the system,” he added.

“I am working in China,” he said. “I am writing in a China under Communist Party leaders. But my works cannot be restricted by political parties.”

Mo, who was once so destitute he ate tree bark and weeds to survive, is the first Chinese national to win the $1.2 million literature prize, awarded by the Swedish Academy.

He is best known in the West for “Red Sorghum”, which portrays the hardships endured by farmers in the early years of communist rule and was made in a film directed by Zhang Yimou. His books also include “Big Breasts and Wide Hips” and “The Republic of Wine”.

Prominent dissident Hu Jia, a close friend of Liu’s, praised Mo’s apparent sudden change of heart.

“What has happened in the last 24 hours has changed him. A Nobel prize, whether for peace or for literature, bestows on one a sense of wrong and right,” Hu told Reuters.

China, long used to wringing its hands at perceived snubs or insults by the Nobel organizers, has worked its propaganda machine into overtime to hail Mo’s win as a breakthrough for the entire nation, and recognition of its place as a great country.

Senior Communist Party official and China’s propaganda chief Li Changchun congratulated Mo, state media reported, saying he hoped “Chinese writers will focus on the country’s people in their writing and create more excellent works that will stand the test of history”.

But the mention of Liu by Mo, a vice-chairman of the government-backed Chinese Writers’ Association, could make things awkward for the Chinese authorities, who jailed Liu for 11 years in 2009 for inciting subversion of state power.

Chinese Foreign Ministry spokesman Hong Lei repeated government criticism of Liu’s award, saying it amounted to “grave meddling in China’s internal affairs and judicial sovereignty”.

COUNTRY BOY

Mo’s interest in literature dates back to his childhood in Gaomi. When he was six, he was an avid reader of Chinese classics, said Mo’s elder brother Guan Moxin, 62. The youngest of four children, Mo loved telling stories.

But Mo’s farmer father and brother, who are still living in the dusty, hardscrabble village in Gaomi where Mo grew up, had no idea they had a Nobel Literature Prize winner in their midst.

“What are the chances that a country boy without anything to his name could become a great author?” Guan Moxin told Reuters.

“He is just a man from this remote land, and this poor family; he is not from some big city.”

Mo, already hugely popular in China, has become something of a celebrity in Gaomi. Thrilled residents set off fireworks the night Mo’s award was announced. Reporters started streaming into the nondescript town. A hotel put up a digital banner congratulating Mo.

“I couldn’t quite believe it. It took me awhile before I could believe it. It seemed so impossible. We were all (the village) celebrating, lighting firecrackers,” Guan Moxin said.

Mo’s books reflect the tumult of modern China. He has credited his early suffering for inspiring his works, which tackle corruption, decadence in Chinese society and rural life.

“When he was little at school he was very naughty,” Mo’s 90-year-old father, Guan Yifan, told Reuters. “But afterwards he had to stop and do farm work. At the time we had to eat wild vegetables, and he had to go and dig wild vegetables.”

(Additional reporting by Sui-Lee Wee, Terril Yue Jones and Ben Blanchard in BEIJING; Editing by Nick Macfie)

Paramilitary police with shields and batons barricaded the
embassy, holding back slogan-chanting, flag-waving protesters
who at times appeared to be trying to storm the building.

“Return our islands! Japanese devils get out!” some of the
protesters shouted. One of them held up a sign reading: “For the
respect of the motherland, we must go to war with Japan.”

Protester Liu Gang, a migrant worker from the southern
region of Guangxi, said: “We hate Japan. We’ve always hated
Japan. Japan invaded China and killed a lot of Chinese. We will
never forget.”

As tensions escalated, and reports emerged of other protests
around China, Japan said its foreign minister had cut short a
visit to Australia, arriving back in Tokyo on Saturday morning
to deal with the situation.

The long-standing territorial dispute escalated dramatically
on Friday when China sent six surveillance ships to a group of
uninhabited islets in the East China Sea, raising tensions
between the two countries to their highest level since 2010.

China had sent the ships in response to the Japanese
government’s decision on Tuesday to buy the islands, which Tokyo
calls the Senkaku and Beijing calls the Diaoyu, from a private
Japanese owner despite Chinese warnings against doing so.

In Shanghai, streets around the Japanese consulate, in the
western part of town, were cordoned off on Saturday. Hundreds of
police let small groups of people in at a time to protest.

Japanese media said big anti-Japan protests were also being
held in the Chinese cities of Xian, Suzhou, Changsha and
Nanjing.

Pictures on China’s popular Twitter-like site, Sina Weibo,
showed hundreds of protesters marching down a street in the
southwestern city of Kunming with banners and Chinese flags.

There have been sporadic protests around China throughout
the week, although those in Beijing had been small and largely
p e aceful.

“CHINA WILL NOT SHY AWAY”

The dispute flared up last month after Japan detained a
group of Chinese activists who had landed on the islands.

Diplomats say Tokyo and Beijing want to keep the row from
spiralling out of control, but managing the situation can be
difficult given that China is undergoing a leadership change, an
election is looming in Japan and mutual mistrust runs deep.

The ruling Communist Party, which likes to project an image
of stability, rarely permits protests to take place. While
Beijing is under strong popular pressure to take a tough line
with Japan, it will also be cautious not to let the protests
spin out of control.

“I think the government is encouraging this,” said one
protester, who gave his name as Uda Hen.

“They could have stopped all of us approaching when we were
at the subway station. The government has taught us to be
anti-Japanese at school, so if they want us to stop it would be
like slapping their own mouths,” he added.

The influential Chinese tabloid the Global Times, published
by Communist Party mouthpiece the People’s Daily, said in an
editorial on Saturday backing off was not an option for China.

“China should be confident about strategically overwhelming
Japan,” it wrote, saying the Chinese military should “increase
their preparation and intensify their deterrence” against Japan.

“China will not shy away if Japan chooses to resort to its
military,” the widely-read paper added.

However, China has yet to send military forces into the seas
around the islands.

Relations between Beijing and Tokyo chilled in 2010, after
Japan arrested a Chinese trawler captain whose boat collided
with Japanese Coast Guard vessels near the islands.

Sino-Japanese ties have long been plagued by China’s bitter
memories of Japan’s military aggression in the 1930s and 1940s
and present rivalry over resources and regional clout.

(Additional reporting by David Gray in BEIJING and John Ruwitch
in SHANGHAI; Writing by Ben Blanchard; Editing by Paul Tait)

Back in the training centre, set in verdant hills 1,400 meters above sea level, he wiggles his hefty frame to thumping house music, as he slams younger athletes into the ground one-by-one with a sly grin, occasionally giving them a playful headlock for good measure.

The media-friendly showman became a national hero when he earned the country’s first ever gold medal in the men’s -100 kg class at the Beijing Olympics, 44 years after Mongolia first competed in a Games.

A burly 28-year-old with a slight squint and cauliflower ears, Tuvshinbayar is now hoping to repeat that success in London, likely to be his last Games as a serious competitor.

“Of course, we athletes are competing for our country. And I’m competing to be an Olympic champion again, and have my country’s name heard across the world,” he told Reuters.

Tuvshinbayar only took up judo at the age of 18, after seeing the Asian Championships on television.

But like many of Mongolia’s nomadic herders raised on the vast steppe, he grew up wrestling, as a young child with his family’s livestock, and later in matches at traditional festivals.

He even refers to his chosen sport as ‘judo wrestling,’ which may account for a certain heavy-handedness in his style.

“In Mongolian families, there is nobody who is not interested in traditional wrestling. Since I was a young child, I wrestled, and that’s where the preparation for becoming a judo wrestler started,” he said.

“There are a lot of similarities. Wrestling is just wrestling,” he added with a lop-sided smile.

Almost 400 contenders from 134 countries, up from 96 in 2008, will battle it out in the seven weight categories for men and women during seven days of competition at London’s ExCel exhibition centre.

Khashbaatar Tsagaanbaatar has high hopes for the men’s -66 kg class, while Munkhbaatar Bundmaa is pitted for a medal in the women’s -52 kg class, having taken golds in both Paris and Moscow Grand Slams in 2011.

HUNTING SKILLS

Despite traditional heavyweights like Japan looming large, petite 26-year-old Bundmaa is unperturbed.

“I’m confident in myself. Going to the Olympics is not a small thing, and I will come back with a medal,” she said.

Mongolia is also throwing its weight behind freestyle wrestling, boxing and shooting, all of which involve the traditional combat and hunting skills that 800 years ago helped build an empire that stretched as far as Europe.

“In our country, four kinds of sports have developed well: judo, boxing, shooting and wrestling,” said Demchigjav Zagdsuren, President of the National Olympic Committee.

“At the last Olympics and in previous games, it was in these sports that we won medals. Our goal for London is to get at least four medals in these.”

Once-impoverished Mongolia saw its economy grow by over 17 percent in 2011, thanks mainly to foreign investment in the huge mineral resources lying beneath its grasslands and deserts.

Rio Tinto, which runs the country’s massive Oyu Tolgoi copper and gold project, sponsors the Mongolian Olympic team, and is providing Mongolian gold for the medals at London.

The country’s growth has meant dramatic increases in sports funding, filling a vacuum left by near economic collapse following its split from the Soviet Union in 1990.

“Mongolia is now growing faster and sports are developing in step with the country,” said Zagdsuren.

With considerable national pride resting on his broad shoulders, and a generation of younger athletes stepping up to fill his shoes, Tuvshinbayar is philosophical.

“If you think of it as pressure, it’s pressure. If you don’t, then it’s not. Athletes should free themselves from that kind of thinking and try to find the joy in what they do,” he said.

“If I had any doubts, I wouldn’t be able to succeed.”

(Editing by Ian Ransom)

Back in the training centre, set in verdant hills 1,400
metres above sea level, he wiggles his hefty frame to thumping
house music, as he slams younger athletes into the ground
one-by-one with a sly grin, occasionally giving them a playful
headlock for good measure.

The media-friendly showman became a national hero when he
earned the country’s first ever gold medal in the men’s -100 kg
class at the Beijing Olympics, 44 years after Mongolia first
competed in a Games.

A burly 28-year-old with a slight squint and cauliflower
ears, Tuvshinbayar is now hoping to repeat that success in
London, likely to be his last Games as a serious competitor.

“Of course, we athletes are competing for our country. And
I’m competing to be an Olympic champion again, and have my
country’s name heard across the world,” he told Reuters.

Tuvshinbayar only took up judo at the age of 18, after
seeing the Asian Championships on television.

But like many of Mongolia’s nomadic herders raised on the
vast steppe, he grew up wrestling, as a young child with his
family’s livestock, and later in matches at traditional
festivals.

He even refers to his chosen sport as ‘judo wrestling,’
which may account for a certain heavy-handedness in his style.

“In Mongolian families, there is nobody who is not
interested in traditional wrestling. Since I was a young child,
I wrestled, and that’s where the preparation for becoming a judo
wrestler started,” he said.

“There are a lot of similarities. Wrestling is just
wrestling,” he added with a lop-sided smile.

Almost 400 contenders from 134 countries, up from 96 in
2008, will battle it out in the seven weight categories for men
and women during seven days of competition at London’s ExCel
exhibition centre.

Khashbaatar Tsagaanbaatar has high hopes for the men’s -66
kg class, while Munkhbaatar Bundmaa is pitted for a medal in the
women’s -52 kg class, having taken golds in both Paris and
Moscow Grand Slams in 2011.

HUNTING SKILLS

Despite traditional heavyweights like Japan looming large,
petite 26-year-old Bundmaa is unperturbed.

“I’m confident in myself. Going to the Olympics is not a
small thing, and I will come back with a medal,” she said.

Mongolia is also throwing its weight behind freestyle
wrestling, boxing and shooting, all of which involve the
traditional combat and hunting skills that 800 years ago helped
build an empire that stretched as far as Europe.

“In our country, four kinds of sports have developed well:
judo, boxing, shooting and wrestling,” said Demchigjav
Zagdsuren, President of the National Olympic Committee.

“At the last Olympics and in previous games, it was in these
sports that we won medals. Our goal for London is to get at
least four medals in these.”

Once-impoverished Mongolia saw its economy grow by over 17
percent in 2011, thanks mainly to foreign investment in the huge
mineral resources lying beneath its grasslands and deserts.

Rio Tinto, which runs the country’s massive Oyu
Tolgoi copper and gold project, sponsors the Mongolian Olympic
team, and is providing Mongolian gold for the medals at London.

The country’s growth has meant dramatic increases in sports
funding, filling a vacuum left by near economic collapse
following its split from the Soviet Union in 1990.

“Mongolia is now growing faster and sports are developing in
step with the country,” said Zagdsuren.

With considerable national pride resting on his broad
shoulders, and a generation of younger athletes stepping up to
fill his shoes, Tuvshinbayar is philosophical.

“If you think of it as pressure, it’s pressure. If you
don’t, then it’s not. Athletes should free themselves from that
kind of thinking and try to find the joy in what they do,” he
said.

“If I had any doubts, I wouldn’t be able to succeed.”

Seconds later, dozens of small children on horseback, many of them under ten years old and most without helmets, thunder past the crowd, now whooping wildly.

It’s almost a millennium since the descendents of Ghenghis Khan ruled an empire stretching as far as Europe, but Mongolians are still fiercely proud of their ancient nomadic culture, and the annual Naadam festival is where they show it most – and pass it on to the next generation.

As the winning jockeys dismount, members of the audience jostle to scoop handfuls of sweat from the stocky Mongolian horses, wiping it on their own foreheads for good luck.

“Naadam is a tradition passed down from our ancestors to our parents,” said Battulga Tsogbayar, a tiny 14-year-old boy who won Tuesday’s horse race near the town of Zuunmod, Tuv province.

“Coming first in a horse race at Naadam makes my family happy, and for me that’s the most important thing about the festival.”

Naadam centers around the three “men’s sports” of horse racing, wrestling and archery, which have been practiced for centuries as intrinsic parts of nomadic life.

Nearby, wrestlers in cloth underpants and jackets covering their arms and shoulders lumber into a small stadium, where, arms outstretched, they perform a slow, almost balletic dance to display their physical prowess.

The winner of each tussle collects a handful of boortsog, a type of fried wheat, some of which he throws to the sky as an offering to nature before sharing the rest with his friends.

Instead of gold, silver or bronze, the winner earns the rank of lion, while runners-up become elephants or hawks.

“I’m Mongolian, so of course I started wrestling from childhood,” said Battungalag Chultempuntsag, an imposing figure with broad, slanting features and flattened ears who ranked as provincial elephant last year – the second-highest position.

“We Mongolians all grow up wrestling. It’s an important tradition, and I’m pleased to carry it on.”

NAADAM FAITH

The national festival on Wednesday in Ulan Bator, the country’s heaving capital of over one million, hinted at the country’s future as well as its past.

In a televised opening ceremony lead by the president, mass dances evoking shamanic ritual were followed by pop songs from the winners of the Mongolian equivalent of “American Idol” and a turn by the country’s Olympic athletes, as banners advertising Pepsi and electronics brands fluttered overhead.

The wrestling and horse racing that followed have become big business, as the country’s fast-developing mining industry brings in huge amounts of money, and victorious horses can fetch hundreds of thousands of U.S. dollars.

Mongolia’s economy grew at 16.7 percent year-on-year in the first quarter of 2012, according to the World Bank, mostly due to foreign investment in the vast mineral resources lying beneath the steppe.

New opportunities are now tempting many of the country’s three million people towards Ulan Bator’s sprawling suburbs, far from the grasslands that fostered the sports of Naadam.

“Young people are moving to the city and using traditional ways of life less and less, and this certainly has an effect on our national culture,” said S. Dulam, a professor of culture at the National University of Mongolia.

As a result, festivals like Naadam have taken on a greater significance, he said.

“There are two events through which we can pass on and preserve our traditional and national culture: Naadam, which is happening now, and traditional Mongolian lunar New Year.”

For Enkhbayar, a local artist watching the “Shagai” – a popular sport in which competitors flick part of a sheep’s ankle bone at a target also made of bone – the endurance of Naadam was a great comfort.

“Naadam is in Mongolian people’s blood,” he said. “It will continue forever. As long as you have Mongolians, no matter where they are, Naadam will still exist.”

(Editing by Elaine Lies)

The right-leaning party said it had won at least 36 of 76
seats in the legislature, the Great Khural, though the election
commission has yet to confirm the result of Thursday’s poll.

It will need 39 seats to form the next government and is
front-runner to form a coalition if it doesn’t hit that number.

Politicians are under pressure to try to redistribute the
proceeds from Mongolia’s vast mineral wealth, and analysts had
been anticipating a swing to the left following this week’s
vote.

After the last election in 2008, the MDP formed a “grand
coalition” government with its main rival, the centre-left
Mongolian People’s Party (MPP), but it withdrew from the
alliance in January in order to concentrate on campaigning.

The MPP, Mongolia’s ruling party during the Communist era,
said it was expecting to win 25-26 seats. Its vote is thought to
have been split by the breakaway Mongolian People’s
Revolutionary Party (MPRP), led by former president Nambar
Enkhbayar.

The MDP said Enkhbayar’s “justice coalition” won three of
the 48 constituencies contested. Under the new system, 48
constituency elections are fought on a “first past the post”
basis while the remaining 28 seats are allocated to each major
party proportionately, depending on their overall share of the
vote.

The MPRP was campaigning on a strong “resource nationalism”
platform and its inclusion in any new government could have an
impact on plans for the mining sector, including the
much-coveted Tavan Tolgoi coal project, which the party hopes to
keep in Mongolian hands.

Four years ago, election campaigning was angry and
ill-disciplined, with major parties ratcheting up their promises
to ever more unsustainable levels. Rumours swirled around Ulan
Bator about vote rigging, and post-election riots left five
people dead.

This year, tough new election laws created a more subdued
campaign, which was also reflected in the turnout. Just 65
percent of the 1.833-million electorate cast their vote on
Thursday, down from 74 percent in 2008 and 82 percent in 2004.

Foreign investment in Mongolia’s mines helped expand the
economy at the fastest pace in all of Asia last year. But many
of the three million citizens say the bulk of the nation’s new
wealth still lies in the hands of the political elite.

The end of Communism in 1990 left the economy devastated as
old Soviet supply lines broke down. Since then, Ulan Bator’s
resource policies have been notoriously laissez-faire as it
sought to attract foreign investment on whatever terms possible.

Expectations are rising that policies could swing too far in
the opposite direction, imposing more controls to redistribute
mining wealth in a way that pleases voters.

(Writing by David Stanway; Editing by Nick Macfie)

Foreign investment in Mongolia’s much coveted mines like the
$7 billion Oyu Tolgoi copper project helped expand the economy
at the fastest pace in all of Asia last year. But many of the
country’s 3 million voters say the bulk of the nation’s nouveau
wealth still lies in the hands of the political elite.

Thursday’s parliamentary election will see politicians from
two major parties – the Mongolian Democratic Party (MDP) and the
Mongolian People’s Party (MPP) – fight to appease the masses.
Foreign firms such as Rio Tinto can expect a
more turbulent ride in the years to come.

“We believe that (resource nationalism) is broadly
bi-partisan and is to increase whichever party wins,” said the
Ulan Bator-based Frontier Securities in a note to clients.

A shift to the left could end up saddling investors with
higher tax bills and make it harder to win approval for new
projects. But the main players in the election remain broadly
supportive of foreign capital, which has turned the dusty former
Soviet outpost of Ulan Bator into a bustling boomtown.

“Even with popular voter support for resource nationalism,
authorities are still realistic and will not push it too far,
because obviously they need high economic growth,” said Dale
Choi, an Ulan Bator-based analyst with Frontier.

Mongolia’s economy grew 17.3 percent in 2011, outpacing all
in Asia and trailing only Qatar and Ghana globally.

REDRESSING IMBALANCES

For many voters, the seventh parliamentary election is
another chance to try to redress an imbalance.

The end of Communism in 1990 left the economy devastated as
old Soviet supply lines broke down. Since then, Ulan Bator’s
resource policies have been notoriously laissez-faire as it
sought to attract foreign investment on whatever terms possible.

Expectations are rising that policies could swing too far in
the opposite direction, imposing more controls to redistribute
mining wealth in a way that pleases voters.

Mongolia has already imposed restrictions on mining in
forest or river areas, a moratorium on new licenses and a new
law designed to limit foreign ownership of “strategic” sectors.

President Tsakhia Elbegdorj, a former journalist and veteran
campaigner from 1989, insisted Mongolia remains committed to the
free-market approach to development.

“Open countries succeed in exploring for and using their
mineral wealth, but closed societies fail,” Elbegdorj, who holds
a master’s degree in public administration from Harvard, said in
an interview last week.

But he conceded that the public were dissatisfied with the
way the country’s new wealth has been spread, and the emphasis
of Mongolia’s politics needed to change.

The government has sought to redistribute wealth by creating
social funds using mining profits much like the way Norway has
done with the money it generated from oil. But that has resulted
in cash handouts that have made very little difference to
underlying poverty.

SHIFT IN RHETORIC

While Mongolia’s course of economic development has been
set, there has been a shift in rhetoric, said Sumati
Luvsandendev, a pollster with the Sant Maral Foundation.

“The social justice issue is now at the top of the agenda,”
he said. “The attitude of Mongolians towards mining is based on
an expectation that it will solve many of Mongolia’s problems,
but there is a problem of confidence about decision makers.”

The mining boom has not improved conditions in large parts
of the countryside or in Ulan Bator’s crowded migrant districts.

“I don’t see any benefits (from mining),” said Altantsetseg
Laagansuren, a 29-year old mother of three living in a crowded
ger (tent) in one of the capital’s sprawling makeshift suburbs.
“I don’t see anything changing. I think the people at the top
are sharing and eating up the wealth,” she said.

Amitan Ulam-Undrakh, a camel herder and former township
governor in South Gobi province, is a direct beneficiary of the
Oyu Tolgoi project. He has watched closely as Rio Tinto and
Ivanhoe’s billion-dollar investment transforms the region’s once
moribund subsistence economy. But even he has reservations.

“Livestock and traditional sectors used to be the biggest
part of the economy, and we should choose a leader who can allow
mining and the traditional ways of life to coexist,” he said.

President Elbegdorj, from the nominally free-market MDP, is
promising an end to mining overdependence. He has imposed a
moratorium on new licenses and is preparing to approve a new
mining law ahead of his own re-election campaign next year. He
also hopes to raise taxes on miners to as much as 40 percent.

“We all agree (mining is an important part of the economy)
but profits from mining should be invested in other sectors -
infrastructure, human development and in the diversification of
our economy,” he said.

While the 76-member legislature (the Grand Khural) is
sovereign with ultimate powers over laws, the 1992 constitution
also gives equal executive powers to the president, which can
lead to deadlock.

REBEL FORCE

The latest polls suggest the MDP has now sneaked ahead of
the centre-left Mongolian People’s Party (MPP). Both parties
formed a grand coalition after the 2008 election and ushered
through the Oyu Tolgoi deal in 2009. The alliance ended in
January.

But by hogging the middle ground, the big parties have left
themselves vulnerable to a populist candidate prepared to
exploit popular unease about income disparities. The biggest
beneficiary has been Nambar Enkhbayar.

After his defeat in presidential elections in 2009,
Enkhbayar fell out with the MPP and formed his own party using
the MPP’s old name, the Mongolian People’s Revolutionary Party
(MPRP). Many in the MPP’s left wing jumped ship with him.

He expected to contest a seat in the parliamentary election
and fight for the presidency in 2013, but he was arrested in
April on corruption charges that he insists were fabricated.

Unbowed by his subsequent exclusion from the vote, the
former president continues to campaign on a largely left-wing
resource nationalist ticket, and his “justice coalition” could
conceivably hold the balance of power in the new parliament.

After addressing a small but appreciative crowd near Ulan
Bator’s Russian-era State Department Store, Enkhbayar told
Reuters that he was not opposed to foreign capital in industries
like manufacturing, but resources required a different approach.

Foreign firms should be rewarded for their exploration and
development efforts but given a strict timetable to hand mining
properties back to the people, he said.

“With the foreign investment law coming in and other laws
being threatened, we can’t expect an easy ride anymore,” said an
executive with a foreign mining firm. “I worry a bit about
Enkhbayar because despite the corruption scandal, he seems to be
stronger than ever.”

Pollster Sumati said Enkhbayar has become the
“none-of-the-above” candidate for frustrated voters.

“He has become a protest leader, and he is representing the
rebels in both major parties,” he said.

DEBATE

Last year, a group of backbench MPs urged the government to
renegotiate the landmark 2009 Oyu Tolgoi agreement that granted
a 66 percent stake in the project to Canada’s Ivanhoe Mines
, now controlled by Rio Tinto. Many of the lawmakers
were also behind a 2007 law to submit miners to a windfall tax.

Foreign investors were relieved when the bid to revise the
Oyu Tolgoi deal failed, but there were more worries to come.

The same backbenchers responded furiously to an attempt by
Ivanhoe to sell its majority stake in the coal miner SouthGobi
Resources, and pushed through a foreign investment law
designed to restrict overseas ownership in “strategic” sectors.
The law was diluted and finally passed in May, but it still
contains worrying ambiguities.

Cameron McRae, country manager for Rio Tinto and chief
executive of Oyu Tolgoi, said that while there were still a
number of “traditional politicians” campaigning against foreign
investment, many more were stressing support.

The Oyu Tolgoi mine is scheduled to start delivering ore to
market by the end of August and will go into full operation next
year. On top of the $7 billion already invested, analysts
estimate there is at least another $6 billion to come.

Sumati said most Mongolians were worried not about foreign
ownership, but by the prospect of being left behind.

Rio Tinto is trying to repel the argument through a process
of “community engagement.” In the small town of Khanbogd, it is
constructing gleaming new schools, roads and government
buildings.

Eyes are also on the massive Tavan Tolgoi coal mine in the
South Gobi region.

Decisions about the mine’s development have been repeatedly
delayed, with Mongolia unable to win the consent of all the
parties involved – including Russia, China, Japan, South Korea
and the United States. An investment accord was supposed to have
materialised last year.

The election could have an impact if it increases the
representation of resource nationalists like Enkhbayar who want
to keep it in Mongolian hands and could make the fate of the
project a condition of his party’s participation in a coalition.