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Making Sense of the New Xinjiang Development Plan

May 24 | 10 Comments

“[Residents have] hailed the strategic plans that help bring prosperity to their hometown.” Xinhua

“Xinjiang should fulfill the goal of building a moderately prosperous society in all aspects by 2020…” China Daily

“The government is trying hard to reduce regional income disparities…” Shanghai economist in Business Week.

A large pile of renminbi, Chinese currencyNews about Xinjiang’s new development plan dominated the China news cycle last Friday, covering the front pages of many major China newspapers.  The package was unveiled after a three-day conference in Beijing attended by President Hu Jintao and the new Xinjiang Party Secretary Zhang Chunxian.

The goal of this package? Raise Xinjiang’s GDP per capita, currently ranked 21st in the country, to the national average by 2015.

Xinjiang GDP per capita:      19,798 RMB
China Avg GDP per capita:  25,125 RMB

How are they going to do this? Apparently they’re going to utilize massive investment coupled with new tax policies.

Investment in Xinjiang 2009:    214 billion RMB
Projected Investment  ’11-’15:    2 trillion RMB

Where is all this money coming from? Some of it is being funneled from other provinces while my guess is that a good portion will come from a new 5% resource tax on oil and gas in the Xinjiang.

How will this affect the average Xinjiang citizen? This, I believe, is the crucial question.  I received an email from a reader named Bruce last week who admonished me for using “macro” thinking to describe a problem that takes place on a micro level.

Posing questions in macro terms, e.g., “How did this affect Xinjiang economically?” is something the Chinese media likes to do because it puts the focus on something abstract — the Xinjiang economy — and takes our eyes off the people behind the statistics.  I would argue that the Han (who are concentrated in Urumqi) definitely suffered economically, but many non-Han throughout Xinjiang who were already at or below the poverty line suffered far worse.

From what I can gather, most of the investment will be passed along to local governments, transportation initiatives,  and regional businesses, primarily those involved in mineral and oil extraction.

Now I want to begin my criticism by saying that I’m glad the government is focused on Xinjiang right now and I admit that it would be virtually impossible for any governing body to come up with a perfect plan.  That said, I think they’re approaching the problem like some men approach a bad marriage: throw enough jewelry/money at her and hope that the problem will just magically go away.

A lot of this investment may never reach the poorer Han, and definitely not the non-Han because employment for them in Xinjiang is an uphill battle.  I focused on this difficulty in my review of the book Under the Heel of the Dragon, where Kaltman shows that the employment disparity has a lot to do with language barriers and language barriers are a result of the education system.

Why not take even a portion of this investment and direct it toward schools that from my experience need an upgrade.  Why not invest in a program that offers incentives to grab more bi-lingual minority teachers?  I believe it would benefit a lot of Xinjiang people if they invested in centers that offer free Mandarin courses for non-native speakers.

The government has addressed some of these issues before, but I believe that if they’re really hoping to ease ethnic tension the investment focus should be toward the next generation.

Will this investment scheme work? When it comes to the Chinese government, I’ve learned not to underestimate their resolve.  I have no doubt Xinjiang’s GDP will reach the projected goal by 2015, but I don’t think this will properly reflect what is happening on an individual level.

So 10 years from now, will we look back on this investment package as a turning point for Xinjiang?

About Josh Summers

Josh is the author of Xinjiang | A Traveler's Guide to Far West China, the most highly-reviewed and comprehensive travel guide on China's western region of Xinjiang. He lived, studied and run a business in Xinjiang, China for more than 10 years, earning recognition for his work from CCTV, BBC, Lonely Planet and many others.

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  1. It’s hard to fault the government for giving the region so much of a economic boost. Regardless of one’s stance on the situation of the Uyghurs and other minorities, some of this money sloshing around is bound to do a bit of good for everyone, even if the benefits may be distributed unequally. But in the end it still seems like an opportunity was lost.

    Certain thigs are unequivocally good:

    Basing natural resource taxes on prices instead of production should increase the revenue of the regional government by up to 25% (so I saw quoted). Theoretically, this is money that will remain in Xinjiang. (before it was an implicit subsidy to inland gas consumers)

    Exempting businesses in poor areas from income taxes for 2 years (and reducing it 50% for the ensuing three) will hopefully greatly benefit southern Xinjiang (and other minority areas), where poverty is most concentrated.

    Other aspects of the plan I find more dubious:

    The Bingtuan and the XJ regional government will continue to receive generous transfers from the central government. This suggests the odd status of the Bingtuan remains unchanged and that government will continue to play the major role in the Xinjiang economy. (The state sector already plays a disproportionate role in the economy of Xinjiang compared with other regions.)

    More land will be approved for development. Xinjiang is plenty spacious, but I thought there was already a real estate bubble in China. And something tells me this development will be occuring in majority ethnic areas. (more land seizures maybe? a huge source of disaffection in all of China, who knows)

    the plan to pair up different areas of China with cities in Xinjiang also seems dubious. I don’t know how the central government will force these places to give up 0.3-0.6% of their local revenue to oases in Xinjiang. This one seems ripe for fudging of the numbers. Individual provinces have no incentive for helping out Xinjiang directly, as there’s nothing in it for them. Emotional appeals to duty and the motherland will only go so far when billions of rmb are involved. This also makes me think there may be more work transfer programs to neidi like Shaoguan (although I need to verify this).

    Setting a goal of raising Xinjiang’s per capita GDP to the national average is all well and good but they could do that by simply handing out money on street corners. What is more important is that the underlying basis for continued prosperity is laid. while I don’t doubt that China can build the necessary infrastructure (trains, highways, pipeliines), I am more doubtful about their plans for improving the human capital of Xinjiang (things like education, training, ensuring sound institutions). This is absolutely necessary if Xinjiang is to be more than a rentier economy (dependant on oil and gas) in the future. Xinjiang cannot perpetually depend on handouts from the government like it has for much of the past 300 years.

    Its very difficult to say how this will all work out. The government’s plans still seem rather vague and I’m still wondering if all these new funds mentioned include things that have already seen increased spending (like security and bilingual kindergarten). (figures for the national stimulus and ‘opening the west’ campaign included all sorts of previously planned outlays).

    Having read much about all this including Hu Jintao’s final speech, like Josh, I am struck by how the government and party place such an exclusive emphasis on economic growth (specifically investment) to solve all problems. As this is pretty much the current govt. strategy anyway, I have the distinct feeling they are simply “doubling down”. In reading about this meeting I couldn’t help but think that China’s top leadership is uniquely unimaginative and poorly understands xinjiang. Much better than party bigwigs spouting grandiose communist psycho babble from Beijing, they might actually try making a serious effort to understand the place on its own terms and seriously acknowledge the deeper social problems evident to everyone who’s ever been to Xinjiang.


    Josh on May 25th, 2010 at 6:09 am

    Hey Karhaman,

    I never read anything about the Bingtuan receiving major benefits from this investment program. It doesn’t surprise me, but I’m curious where you found that.

    I would also like to add that I find it interesting that the government doesn’t just want to put an exclusive emphasis on economic growth, they want a “speedy” economic growth. If it can’t be packaged in a nice “5-year” plan, then it’s not worth trying apparently.


    kahraman on May 25th, 2010 at 8:18 am

    good point. Xinjiang is not Guangdong or Shanghai… they are starting from a lower base and it takes time for construction and various policies to have a notable effect.

    Maybe calling it a five year plan lends it a communist sounding grandiosity and communicates the centrality of government planning in the process.

    Actually I saw the blurb about the Bingtuan here:

    It is a bit vague but suggests a they are an integral part of the investment plan.

  2. kahraman.

    This is a great analysis thanks for its all sided approach. Your last paragraph I think is very important considering the failure of past policies (also under the mantra of economic development and aid and increasing prosperity) to stem social unrest and Uyghur dissatisfaction in the Autonomous Region Time will tell no doubt. It is good to see that some of this economic stimulus may actually reach the agriculturalists of the poorer regions. Tax breaks look beneficial as well. Over taxation has been a gripe of farmers for a long time, as have compulsory contracts to state buyers to provide mono-crops such as cotton especially. Again, lets see how all this manifests where the rubber meets the road.


    “This also makes me think there may be more work transfer programs to neidi like Shaoguan (although I need to verify this).”

    I suppose another unstated aspect here of this relationship could be population transfer from these eastern ‘sister’ cities to the sister oases as well.


  3. “Individual provinces have no incentive for helping out Xinjiang directly”

    However, they have been helping the Tibet, Sichuang, and many others. You under estimated the power of unity in China.

    I like Josh’s idea of investing in schools. Uyghurs need to learn Chinese as fast as they can.

    However, they should be grateful that they can live in China in peace without speaking a word of Chinese.

    A muslim who cannot speak English in USA faces far more problems than a Uyghur who cannot speak Chinese living in China.

    Or try to be a mexican in Arizona today, their previous homeland.


    tez on May 25th, 2010 at 2:43 pm

    ad nauseum!


  4. Of course money has been donated to Tibet, Sichuan and Qinghai for the earthquakes but those are humanitarian crises. If this type of aid has been long standing, why is it precisely those places that are still the least developed in all China. Obviously it hasn’t worked, despite emotional appeals to national unity. Do you really think the central government can make provinces and localities make donations to Xinjiang for any significant length of time? I imagine these places would fight tooth and nail to retain their local tax revenues. Economic performance is largely how local leaders are evaluated anyway. This sounds more like a nice rhetorical device, just like those international summits where rich nations pledge to commit 0.2% of gdp to foreign aid. As nice as these sort of things sound, they never work and are voluntary anyway.


    Josh on May 25th, 2010 at 6:16 am

    During my research for this article I found out that Xinjiang, in terms of numbers, really isn’t that poor. Many, many other provinces including Tibet, Gansu, Qinghai, Ningxia, and others are much poorer.

    Now I don’t believe those numbers accurately reflect the economic disparity that is impossible to miss in Xinjiang. It just shows that there are plenty of rich people here to balance out all the very poor ones.


    kahraman on May 25th, 2010 at 8:06 am

    You’re absolutely right. It seems northern Xinjiang is relatively wealthy. Karamay is the oil base, Shihezi is a base for refining and the bingtuan and Urumqi is the political and economic center of Xinjiang. Those areas can also benefit more directly from access to the rest of China and trade with a growing Kazakhstan. It is south of the Tian Shan that skews the figures, especially the southern part of the Tarim Basin. Its so isolated that its tough to generate sustained growth down there. Beyond that, the nearby countries are all very poor and/or destabilized. that eliminates the possibility of a thriving trade.

  5. Money is good; poverty isn’t a big problem as the coast villages weren’t much better off 30 years ago. Market is THE problem that XJ is land-locked and faces NO wealthy export destinations.

    The money will make the area bouy or a while; it is hard to believe a sustained development will follow, though. Maybe can try turn XJ into a bigger (agriculture/power) production base?