By the mid-nineteenth century, however, turmoil in China, caused by internal rebellion and by pressures from the West, resulted in a breakdown of the increasingly expensive administrative apparatus in Outer Mongolia. Mounting debts and higher taxes, which led to a growing impoverishment of Outer Mongolia, gradually rekindled traditional Mongol dissatisfaction with the Manchu overlord. Rioting, Mongol troop mutinies, and other anti-Chinese incidents occurred with increasing regularity in the late nineteenth and the early twentieth centuries. Outside help was sought from Russia in 1900, when a mission--which failed--was sent to St. Petersburg. Thereafter, reform-minded Chinese leaders abolished many old social and political proscriptions, and, despite Mongol resentment of the idea and of continued Chinese repression, preparations were being made for constitutional government when revolution broke out in China.
With the end of the Qing Dynasty and the establishment of the Republic of China in 1911, revolutionary ferment also emerged in Mongolia. As early as July 1911, participants in an anti-Chinese meeting in Yihe Huree (see Glossary) had petitioned the Russian government--which long had sought the independence of Outer Mongolia--for help against China. On December 1, 1911, Outer Mongolia in effect proclaimed its independence on the basis that its allegiance had been to the Manchus, not to China. On December 28, the eighth Jebtsundamba Khutuktu became Bogdo Khan (holy ruler) of an autonomous theocratic government; a 20,000-troop army was created; and Russian officers appeared in Yihe Huree (renamed Niyslel--capital--Huree, or Urga) to equip, to organize, and to train the army. The new Chinese government refused to recognize Mongolian independence, but it was too preoccupied with internal discord to enforce its sovereignty.
Starting from the end of the 19th century, when its rule weakened, the Ching ruler, in order to resist foreign incursions and evade internal crisis, in 1901 began to introduce some reforms in Mongolia as part of their overall New Administration policy. This policy led to the violation of many restrictions regarding which understandings had been reached with the Manchu state, including the provisions of the Law on Outlying region, which had been adopted in 1691 at the Dolonnor conference and had since been observed for 200 years until 1891. According to that law it was prohibited to allow immigrants to settle in Mongolia, to work at gold mines, to farm or utilize water resources. For example, the arrival of Chinese settlers led to land ploughing and farming, influencing the religion and customs which had evoked the resentment of the Mongolians and had naturally met with widespread protest. It is in these circumstances that in July 1911, the Khalkha princes. High functionaries and lamas met secretly and decided that the time had come for the Mongolians to protect their state, religion and territory, their freedom and revive their state independence. It is as a result of this active struggle in 1911 that the national revolution occurred, as a result of which Mongolia separated itself from the Manchu administration, once again declared its state independence and on 29 December Jebtzundamba Khutukhtu YIII was proclaimed Bogd Khan, head of the religion and the State. Thus Mongolia revived its state independence and a new era of state renaissance began in the 20th century.
The successes and achievements of the national revolution awakened the national consciousness and will of the Mongolian people. As a result new, progressive changes took place in the society. As to the State, a Parliament with advisory powers, composed of upper and lower houses, was established; the army was modernized. New customs, leasing and taxation regulations were introduced. Schools and cultural establishments were opened. The state began publishing books, sutras and newspapers. Commodity and money relations developed and small business increased.