Anyway, the reason I would suggest buying off a foreigner is that typically they aren't in China very long, so sometimes you can get a bike in basically brand new condition. The ones at the used bike stores tend to be a little more beaten up (and sometimes stolen). I bought a Merida Duke off a coworker for 1000. It was 3600 new, and the bike was in mint condition.
It depends on how you define "mountain bike". A lot of people these days claim only the downhill bikes with high end suspension forks are the "real" mountain bikes, which is nonsense of course. I'll assume you just want a bike that can ride on trails.
It also depends on how you define "decent". I consider decent to be something with a cleanly welded frame, and a mid-level groupset such as Shimano Altus, Acera or Alivio. If you cheap out and get a bike with low end components (like Tourney or even lower), the springs and mechanisms will rust or wear out quickly, or require constant tuning. In my opinion, if you buy new you won't get anything decent for less than 1200RMB unless you are really lucky.
My personal recommendation is to buy second hand. Depreciation on bikes is astronomical. 700 will get you a well equipped second hand bike that cost 2000+ when new. Normally the best way you can get these is from other foreigners who are leaving China, but I've also seen some pretty good deals in bike shops. Don't worry about some minor scratches as long as everything works. Just spend 100-200 more to get new tires and brakepads, and you're good.
BTW is Merida German? I was pretty sure it was Taiwanese.
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