Over caramel sweets and salty black tea, Baljinnyam is describing how well democracy fits in with his nomadic way of life. “I have experienced both communism and democracy,” he says. “There’s more freedom now. I can pursue my own interests. Under communism there were many restrictions.”

Baljinnyam – who goes by just one name, like many Mongolians – is talking to us inside his ger, the traditional tent that herders have used on the steppe and in the desert for centuries. On the walls are his medals from breeding racehorses. His set-up is rustic and remote; there isn’t another dwelling in sight. But here in a valley at the edge of Bogd Khan National Park there is plenty of land for his 200 goats, sheep, cattle and horses to graze.

The place feels cut off but Baljinnyam – softly spoken, hollow-cheeked and barely big enough to fill his traditional crimson del coat – is not: a blue transistor radio hangs on the wall not far from his flatscreen Samsung television, which gets reception from a satellite dish and power from a solar panel. “I have voted in every election since the early 1990s,” he says. “I follow what’s going on and I think our leaders have done their best to improve our livelihoods.”

The question of who will lead next will be settled in June when this country of three million people holds its presidential election. Political experts say Enkhbold Miyegombiin, the parliamentary speaker and a former prime minister, is the favourite. It will be only the seventh time that Mongolians have chosen a president since they opted to dump communism in favour of democracy in 1990. For a country that spent seven decades getting handouts from the Soviet Union, this is no mean feat. Surveys show that more than 90 per cent of Mongolians have no desire to turn back the clock.

Mongolia’s transition is all the more remarkable when you consider its location: democracy is not exactly a hallmark of the region. To the north lies Russia, to the south China. Further west are five other former Soviet central Asian countries – Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan – that are ruled by repressive regimes.

With no sea port of its own, Mongolia has tied its fate to its giant neighbours for now. About 60 per cent of its trade is with China, while Russia supplies the bulk of the fuel for transport and construction, and Russian power plants keep the winter lights burning in the capital, Ulaanbaatar.

When we meet Mongolia’s foreign minister Munkh-Orgil Tsend, in his small wood-panelled office inside the ministry, he is putting the finishing touches on a letter he will soon send to Moscow and Beijing. “I’m saying that it’s time for us to set up a think-tank that will prioritise our trilateral railway, infrastructure and power-station projects,” he says. “Mongolia’s policy priority is developing relations with Russia and China, first and foremost. Numero uno.” Other allies – Japan, South Korea, the US and the EU – will play a lesser role as so-called Third Neighbours.

This can be an unsettling thing to hear in distant capitals. “I think we’d all like to see Mongolia retain its independence: political independence, first and foremost, but also a degree of commercial independence,” says a western diplomat in Ulaanbaatar. “The reality though is that Mongolia has a choice: it can be poor or it can be economically dependent on its southern neighbour, China. Where else can it turn?”

There’s Japan, for one, with its dollops of aid and a free-trade pact thrown in. To see how that might work we head to the Khushigt Valley, an hour’s drive south of the capital. Over the past four years a Japanese joint venture has been building a new €546m international airport (with the same name as the current one) that is being financed with soft loans from Japan, Mongolia’s biggest donor. The runway is ready and the three-storey terminal completed but plastic still covers the lounge chairs, shops stand empty and the administration building and car park are empty plots of land. When the airport opens next year it will handle up to 270 flights a day, five times more than Chinggis Khaan International Airport.

“The new airport will be crucial and not only from the point of view of tourism,” says Purevsuren Lundeg, the president’s top adviser on foreign-policy matters, at his office in Government House. “We have also had lots of interest from big European airlines that want to set up a regional hub for their cargo businesses in Asia. Mongolia could act as a bridge between east Asia and central Asia, or as a connection from south Asia to north America.”

One reason for interest in Mongolia is the country’s huge deposits of coal, copper, gold and rare-earth metals. Mining has attracted foreign investors and fuelled an on-off boom in Ulaanbaatar for more than a decade. A Louis Vuitton shop and Shangri-La hotel have opened in the city centre. On the dusty streets, secondhand Toyotas sit in traffic alongside Porsches and Land Rovers. At the moment the mood is cautious: the recent slump in commodities prices has dealt the economy a setback, leaving cranes hovering over half-built towers and public coffers in a shambles. In February, Mongolia was forced to seek a €5bn bailout from the imf to pay its bills for the second time in less than a decade.

The breakneck speed of development hasn’t been without other costs. The gap between haves and have-nots is widening. More than a fifth of Mongolians now live below the poverty line, according to the Asian Development Bank. In Ulaanbaatar these poor residents are most vulnerable during the coldest months. “The temperature falls to minus 40c,” says Badruun Gardi, the 30-year-old founder and CEO of social-enterprise ngo GerHub.

It is a frigid, overcast morning and Badruun has climbed a hill to get a view of the shacks and tents that dot the city’s northern fringe. This is the ger district, a sprawling clutter that is home to 60 per cent of the city’s nearly 1.4 million residents. A young boy walks past pushing a handcart filled with plastic jugs. “No one has running water. No one has plumbing. No one has central heating,” says Badruun. “In winter the homes’ stoves are burning coal day and night. That creates air pollution in the city.”

The city’s approach is incremental but problems keep piling up as tens of thousands of new migrants arrive every year. All are looking for jobs and a better life. “Some are herders, some are moving here from small cities or towns,” says Badruun, a graduate of Stanford University. He has been flying to the US and UK to meet academics, architects and designers who can help find solutions. “For one couple’s tent we are already building an attachment with a shower, stove and heated floor,” he says.

Poverty and pollution aren’t the only threats to Mongolia’s future. Corruption and a shortage of independent news outlets are hampering progress too. More than two thirds of the country’s newspapers, TV and radio stations and news websites are owned by politicians; lax journalistic practices are widespread. So who can hold corrupt public officials accountable? Many Mongolians will tell you to switch on Mongol TV. At 20.00 the station’s female news anchor Chimgee starts the programme with a statement: “We don’t broadcast news that can be bought.”

Nomin Chinbat, 33, Mongol TV’s owner and CEO, came up with the idea shortly after she took over the broadcasting unit of her family’s mining and farming empire six years ago. “Back then it was hard to know what news was factually correct and what was propaganda,” she says in her office on the 14th floor at the station’s headquarters. Her newsroom of nine reporters is now regarded as the country’s best; it was the only one in Mongolia to work with the International Consortium of Investigative Journalists on the release of the Panama Papers. “We want to spearhead change in the media industry,” she adds.

More than half of the population here is under 30 and business opportunities abound. For 28-year-old Orchlon Enkhtsetseg that means a €120m wind-farm project in the Gobi Desert. As CEO of Clean Energy Asia, part of Mongolia’s largest telecom, he has tirelessly negotiated with herders and international donors and, while he can’t shake one pesky official asking for bribes, he loves the challenge.

Once the turbines are connected to the central grid they will generate enough power for 100,000 homes. But why bother with renewables when the country is sitting on one of the world’s largest coal reserves? Because the coal will one day run out; the vision, says Orchlon, is that Mongolia could eventually be a clean-energy exporter. “If we rely on our neighbours to keep the lights on there’s no independence. Without independence you can’t talk about self-sustainable development.”

Listening to these Mongolians who switch effortlessly between Russian and English and have no memories of communism, it’s hard not to feel optimistic. They revere their nomadic roots, recognise their country’s flaws and are determined to push things in a democratic, less inward-looking direction even if politicians aren’t yet on board. Government officials say their focus is on the economy and Mongolia’s neighbours; they make no claims of aspiring to a bigger global role. But they might be surprised to find that a new generation of Mongolians has more ambitious plans for their country.