The episode says clearly that the Ligonians bear a "unique similarity" to medieval Chinese culture
To engage in my favorite hobby of machine-gunning my own legs, this is not "clearly" established. Picard says the Ligonians remind him of an Earth culture, and then proceeds to present them with a gift relating to the Song dynasty. Perhaps he wants to show how the Song had to capitulate to the superior Mongols and give them gifts like this one?
Ligonians as Mongols might make more sense in light of what we see in the episode...