Dutch Disease in Mongolia?

How does a country like Mongolia convert its natural resource wealth into sustainable economic growth and prosperity?  In economics, Dutch Disease refers to the decline in manufacturing that tends to occur when natural resource extraction increases.  The increase in revenue from natural resources will make a nation's currency appreciate in value relative to foreign currencies, thus making it more expensive for other countries to buy the nation's exports.  This makes the manufacturing sector less competitive in the global market.  This phenomenon was first documented in the Netherlands after a large natural gas field was discovered there in 1959, thus the name Dutch Disease.

So how can Mongolia develop its manufacturing sector while its mining sector grows exponentially?  I don't think it should be difficult to manipulate the value of Mongolia's currency because Mongolia has only a few major export markets, namely China and Russia.  The Mongolian central bank could control the value of the Mongolian currency by deploying the same method that China uses to manipulate its own currency with its major trading partners.

Mongolian example:  China pays a Mongolian mining company 1m RMB (Chinese currency) for some amount of coal.  The mining company will go to the Bank of Mongolia and exchange the 1m RMB for however many Mongolian Tughriks.  The Bank of Mongolia could then use a healthy portion of that 1m RMB to purchase Chinese bonds, essentially injecting the RMB back into the Chinese economy.  This way the Bank of Mongolia will not accumulate an excess reserve of Chinese y, keeping the exchange rate between the Chinese and Mongolian currencies relatively stable.  This will keep Mongolian manufacturing competitive relative to Chinese competitors.  With Chinese consumption growing, Mongolian manufacturing should seek to export its finished goods to China.  This would allow Mongolia to develop a modern industrial economy as opposed to a undiversified extraction economy.

Mongolia's coal and copper resources are highly desired by Chinese companies.  This gives Mongolia a considerable amount of leverage when dealing with China.  For this reason, I think it is not unreasonable to think that this monetary policy would be tolerated by China.  Currently, Mongolian people are very weary of Chinese influence in their country.  In fact, in a poll asking who is the best partner for Mongolia, Mongolians put China last behind the United States, Russia, Japan and Korea.  But still, I think China remains the most promising partner for Mongolia, namely because of its proximity, its hunger for Mongolian exports and its increasing influence in World affairs.  What Mongolia needs is a trade agreement with China that acknowledges Mongolia's desire to develop its own domestic manufacturing, intended for sale in China.  Only then will both sides be equally served by the relationship and Mongolians can sleep soundly at night knowing that the big brother of Asia is not taking advantage of them.