THE terrorist bomb which exploded in Beijing during the recent National People's Congress was the first ever in the capital and came a day after NPC Vice-Chairman Wang Hanbin announced anti-terrorism additions to the amended Criminal Law passed a week later. Apart from the bomb on a bus, the terrorists were also believed to have set off blasts outside two department stores and caused panic at a third by issuing a telephone warning. More than a dozen people were seriously injured in Beijing. More than 80 were killed or injured in Urumqi, the capital of Xinjiang region, where three bombs went off and a fourth failed to explode. A bomb attack was also reported in another Xinjiang town, Korla. Immediately after the Beijing blasts, there was widespread speculation they were the work of Muslim extremists fighting Chinese rule in Xinjiang. But the security forces admitted they had failed to uncover evidence to back up this theory. The bombings certainly followed violent protests in Xinjiang - the worst reported ethnic riots in China since martial law was declared in Lhasa in 1989. In Yining rioting by ethnic Uygurs reportedly led to the deaths of at least nine people and perhaps as many as 100. The reasons for the Uygur unrest are both economic and historical. While Uygur conflict with the Han Chinese is nothing new, one new flashpoint is undoubtedly Beijing's renewed efforts to exploit the region's oil and gas. In 1993, China found itself a net importer of oil for the first time in its history, and its dependency seems destined to increase rapidly. Experts forecast that by 2010 China will account for 7.4 per cent of global demand and that it will be heavily reliant on the Middle East. Ninety per cent of domestic oil comes from fields in Manchuria and Shandong. In the 1980s, when oil prices were high, oil exports from such areas helped to bankroll many key investments. But now the fields are drying up, damaging self-sufficiency and hurting central Government revenues. China had pinned its hopes on the development of potential offshore oil fields but these turned out to be a bitter disappointment. Now the mainland is hoping to develop the vast reserves believed to lie under the desert sands of the Tarim basin in the heart of Xinjiang. Chinese call this the 'Saudi Arabia of Asia' because it is the second largest sedimentary basin in the world. But the natural conditions are also among the most challenging in the world so, in 1993, Beijing suddenly declared this vast area open to exploration by foreign companies. To make this possible, the authorities sent 30,000 workers to build roads and other infrastructure. Massive development programmes are being discussed, sparking Uygur fears of an additional huge transfer of Han Chinese settlers, some of whom may be drawn from those displaced by the Three Gorges Dam. The settlement of Chinese in Xinjiang over the last 40 years has led to fierce competition between the two groups for control of vital water supplies. Each Uygur town is essentially an oasis and the establishment of state farms and labour camps has often led to an overuse of water resources and destruction of the ecology. The Uygurs' economic existence is now put into question and their poverty, poor education opportunities and high birth rates provide fertile ground for extremism. Until the recent unrest, Beijing had treated Muslims as less of a threat to the country's stability than Tibetans because they had no equivalent of the Dalai Lama. But Muslims have become increasingly angered by policies aimed at reducing the number of children entering religious schools and the way atheist Communist Party members treat their customs. In October 1993, a succession of demonstrations took place in Xining, Qinghai province, with up to 9,000 people marching through the streets protesting against what they claimed was an anti-Muslim book. At least five people lost their lives and, at one point, paramilitary police stormed the town's religious school. Among China's Muslim population, the Uygurs probably have the strongest reasons to revolt. Xinjiang and areas of Inner Mongolia were the only parts of China to declare independence after World War II. Soviet leader Josef Stalin first backed the fledgling state, hoping it would serve as a buffer to a Kuomintang-ruled China. But, after Mao Zedong's communists rose to power, the leaders of the new state were either sent to prison camps or put on a flight to Beijing which 'disappeared'. When communist general Wang Zhen conquered Xinjiang, he settled huge numbers of soldiers and convicts in the region. Instead of the promised right to secede, Xinjiang became a 'self-governing' province and nationality policies were implemented. These included an attempt to create the illusion that Xinjiang Muslims were different from their counterparts outside China's borders. In fact, the Uygurs are Turks who speak Turkish in a region which used to be known as Chinese Turkistan. The post-1949 boundaries of Xinjiang are so vast that they include substantial populations originating from other nations, including Kazakhs, Mongols and Tajiks, all of whom are at odds religiously and linguistically. After the communist victory, the Uygurs staged a series of uprisings. But, given the overwhelming distances in Xinjiang a united movement proved impossible to organise. Among the various ethnic groups in Xinjiang, the Uygurs are not only the largest, totalling nine million, but also have the strongest ties abroad. Indeed the former Soviet Union provided exiles with a radio station to broadcast anti-Chinese propaganda. The official line from Beijing is that the Xinjiang unrest is a result of 'splittist plots' formulated by hostile Western forces - but other, more likely, suspects exist. In Afghanistan there is the fundamentalist Taleban and the Uzbek warlord, Abdul Rashid Dostum. Then there are the rebels fighting just across the border in Tajikstan, as well as such distant potential sponsors as Iran or Wahabi fundamentalists in Saudi Arabia. Beijing has also chose to say nothing about the various Uygur exile groups in Kazakhstan, Turkey and Germany. One theory is that disaffected Uygurs might be receiving help from pan-Turkish militants in Turkey. Some people there, including former Turkish president Suleiman Demirel, dreamed of founding a union out of the ruins of the Soviet empire. Yet the romantic sentiments of Turkish solidarity have not led to any great economic ties, let alone political links. Both Uzbek strongman Islam Karimov and his Kazakh counterpart, Nursultan Nazarbayev, have been far keener to nurture ties with Moscow. Whichever nation or organisation is sympathetic to the Xinjiang Muslims' cause, there is nothing to stop Western diplomats in Beijing pointing out to their mainland counterparts the dangers of selling arms and nuclear technology to Muslim countries deemed by the West - the US especially - to be funding terrorists around the world. With so much at stake in the aftermath of Deng Xiaoping's death, President Jiang Zemin's response to the bombings has been sharply scrutinised. A photograph of Mr Jiang, grinning broadly and wearing a four-cornered embroidered Uygur cap, appeared on Wednesday on the front page of every national newspaper. On television, the President was at pains to show the warmth he felt for the Uygur singer and delegate to the Chinese People's Political Consultative Conference who gave him the cap and then sang at a banquet held in the Great Hall of the People honouring the various minority delegates. But official responses cannot hide economic realities. In the last few years, China has switched from being an exporter of many key commodities to becoming a major importer. In order to keep its economy growing, it must ensure steady and increasing supplies of many raw materials. The heady expansion of the 1980s has run up against the limits of China's natural resources - the nation's coastal waters have already been overfished, for instance. This has encouraged a renewed determination to hang on to Tibet and Xinjiang and to expand claims to such places as the Spratly Islands which might hold the key to limiting China's strategic dependence on the outside world. Set against this, the demands of a few Uygurs will count for little.