Beijing opens its chequebook for rich and restive Xinjiang

Heavy government spending helped the Xinjiang economy grow 8per cent last year, offsetting the impact of the worst ethnic violence for 12 years but still the slowest expansion in a decade.

The regional government announced GDP of 427 billion yuan (HK$485.66 billion) for 2009. Exports of farm goods rose 46 per cent to US$939 million, while average farm income increased 14 per cent to 4,000 yuan.

That marks the lowest increase in GDP since 1999, when it rose by 7.6per cent. Since then, the annual rate averaged 10 per cent, peaking at 13 per cent in 2007, mainly because of the Go-West campaign launched by the government in 1999 which raised investment in central and western China. It compares with a national GDP growth in 2009 of 8.7 per cent.

Last July witnessed the worst inter-ethnic violence in Xinjiang since a confrontation in Yining in 1997. According to official figures, the Urumqi clashes left 197 people dead and 1,721 injured. A Uygur group put the figures significantly higher.

The violence devastated the region's tourist industry. It also influenced inward investment by foreign and domestic firms.

Beijing's response to the violence has been to accelerate its basic policies in the region - state spending and heavy security: the open chequebook and the iron fist.

Last year it increased spending to win the hearts and minds of the minorities who account for 59 per cent of Xinjiang's population of 21 million.

This included 145 billion yuan on laying 11 new railway lines, including the double-tracking of the trunk route to Lanzhou, capital of Gansu, the main route to the rest of China. It will cut the travelling time from Urumqi to Beijing from 42 to 11 hours. The lines will bring the cities of Yili, Aksu, Tacheng and Kelamayi into the rail network for the first time

In addition, the state is building five major highways, three new airports and a new terminal building at Urumqi airport. It spent 94.86 billion on social programmes, an increase of 30.4 per cent over 2008; the money went on education, health and social welfare. It spent 3.08 billion yuan on subsidised housing for low-income families.

'The July 5 incident caused enormous damage to every sector of Xinjiang industry,' regional chairman Nur Bekri said in January. 'But it could not change the overall unity and stability of Xinjiang nor the direction of reform and development.'

He said that domestic and foreign firms continued to invest in the region, with 28 of the world's top 500 companies and 77 of China's biggest 500 companies having projects there.

For critics of the government, the spending is a mistake. 'The minority problem in Xinjiang, as in Tibet, is not economic but political, religious and social,' said Wang Lixiong, an author who has written books on both regions. 'This heavy spending has been going on for several years but did not prevent last year's violence, nor that in Tibet in March 2008.

'These show that the government's minority policies have failed. The minorities need real autonomy, to protect their culture, traditions and religions. In reality, these 'autonomous regions' have less autonomy than normal provinces. Most of this investment goes to wending jituan (stability groups) - big state companies - and not to ordinary people.

'The violence should make those in power reflect on their mistakes and change. But this has not happened. No one admits a mistake or takes responsibility; they blame everything on 'external hostile forces'. If the violence happens again, it will be worse and more serious.'

Uygurs who want a separate state argue that the region's rich oil, gas and mineral reserves belong to Xinjiang and should not be transported free to China by large state companies. They argue that, if it were a separate entity, the region would be wealthy as an exporter of these commodities.

Xinjiang is a treasure trove of oil, gas and minerals. It has 138 kinds of minerals; in nine of them, it ranks top in China. It has oil reserves of 20.86 billion tonnes, 30 per cent of the national total, 10.3 trillion cubic metres of gas, 34 per cent of the national total, and 40 per cent of the country's estimated coal reserves. It accounts for one sixth of China's territory.

The region is also a national leader in wind power.

The city of Dacheng, 40 kilometres from Urumqi, has installed capacity to produce 10 million kilowatts of power from wind.

Beijing is preparing a 'Central Xinjiang Work Meeting' later this year. At a preparatory meeting for this event on January 26, Zhou Yongkang, the member of the Politburo's standing committee responsible for domestic security, said that, since October, more than 500 officials from 64 departments and institutions had been to Xinjiang to study and investigate.

'We will set in place major tasks for supporting accelerated development in Xinjiang and promoting lasting order and stability there,' Zhou said. 'Central enterprises must increase investment in Xinjiang. We must promote local economic and social development.'

Senior managers from large energy firms attended the January 26 meeting, including China National Petroleum Corp, Sinopec, the State Grid Corp of China and the Shenhua Group.

One proposal for this meeting is a new 'oil city' in a north-west suburb of Urumqi, where supplies of oil and gas from the five Central Asian countries would be stored and then shipped by pipeline and railway to cities in the east. There are also plans for trade and economic co-operation zones with the five countries and proposals to increase trade and energy co-operation with Iran, Afghanistan and Pakistan.

The other result of last year's ethnic violence has been increased spending on security. In January, the regional legislature proposed a near doubling of the budget for public security this year over the 2009 level, to 2.89 billion yuan, from 1.54 billion.