ECONOMY OF XINJIANG | Facts and Details

ECONOMICS IN XINJIANG

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Kashgar market Xinjiang, resource-rich and strategically located on the borders of Central Asia, is crucial to meeting China's growing energy needs. The region has lots of oil and is particularly rich in coal and gas.

GDP growth in Xinjiang was 11.1 percent in 2013, among the best in the country. The Xinjiang region’s economy grew by 12 percent in 2012, compared to 2011, Urumqi’s GDP grew by 15 percent in 2008, much of it due to infrastructure spending by the central and regional governments. City residents — average annual disposable income reached a record 12,328 yuan ($1,813) in 2008.

The economy in Xinjiang grew 42 fold between 1965 and 2005. Even so many Uyghurs and other local people continue work off the land or in low skilled jobs. They complain they are denied good jobs because they lack Chinese language skills and that all the good jobs go to Han Chinese.

City dwellers in Xinjiang earned about $1,000 after taxes in 2005, up 8 percent from 2004, about double that of 1997. But this behind a national income of $1,300, which rose 11 percent. In Zhejiang Province the annual income is about double that of Xinjiang, The gap between Han Chinese and local minorities in Xinjiang is also quite pronounced.

As is true everywhere else in China, people in Xinjiang are trying to make money selling and trading what ever they can gets their hands on. Posters in Urumqi read "Raise Dogs, Get Rich" while those in the remain communes advise people, "Don't Sell. Give to the Unit." A sign at an embroidery factory read "Time is Money. Efficiency is Life."

The GDP of Xinjiang doubled from $28 billion in 2000 to $60 billion im 2008. To encourage foreign investment and new business, Beijing has offered tax breaks and other incentives to invest in Xinjiang. Plane loads of businessman from Hong Kong have been flow t scope for investment possibilities.

Violence and unrest, especially after the riots in July 2009, has hurt Xinjiang’s growth.One man from Jiangsu who arrived in Urumqi after he riots in July 2009 told the Los Angeles Times, “I head everything was great here, but when I got in, everything was scary.”

Xinjiang Production and Construction Corps

In the early 1950s, in one of the largest peacetime mobilizations in history, prisoners of war, decommissioned Red Army soldiers and “reform through labor” convicts were sent to the Gobi Desert and western China as members of the Xinjiang Production and Construction Corps, to build roads, canals, bridges and dams and transform a wasteland into a rich agricultural area of cotton, maize and rice, complete with its own cities. In some cases the condition were so severe that participants made furniture from sod bricks and used their own hair keep arm in the frigid winters.

The Xinjiang Production and Construction Corps was a combination farm, military garrison and prison. The first arrivals in 1954, including more than 100,000 demobilized soldiers. Some were coerced. The flow of Han Chinese from the east increased when the railroad was extended west, reaching Urumqi in 1962. Promises of food and clothing were used to attract residents of overcrowded cities like Shanghai.

For a long time most Han Chinese in Xinjiang worked for the Xinjiang Production and Construction Corps that over time came to run ran factories, farms and other enterprises. Under its jurisdiction was one of the largest communes in China’state Farm No. 128 of the No. 7 Division. Located 85 miles northwest of Urumqi, it employed 17,000 people (almost all Han Chinese) and had military-style checkpoints, irrigated orchards and cotton fields as well as its own foreign affairs office, television station, oil refinery and enterprises for marketing crops and forestry products.

The northern part of Xinjiang is dominated by”bingtuan”— military-run farms and businesses that employ predominately Han Chinese settlers or migrants. Hundreds of thousands of Han Chinese— recruited by the quasi-military Xinjiang Production and Construction Corps— pick cotton and potatoes on the corps extensive farmland. The bingtuans of the Xinjiang Production and Construction Corps were very profitable. Even today about one in six Chinese that live in Xinjiang — about 1.3 million people — belong to one. Few Uyghurs are given the opportunity to work on them.

Kashgar Market

Xinjiang Production and Construction Corps Cities Today

Today Shihezi is a tree-shaded, bustling oasis of city of 650,000 famous for its canned tomatoes, fiery grain alcohol and enormous cotton yields. Neatly laid out on a grid, its sidewalks graced by apple trees and elms, thecity is populated by the sturdy and defiantly proud who think of Xinjiang asChina’s version of Manifest Destiny, the doctrine undergirding the westward expansion of the United States in the 19th century. [Source: Andrew Jacobs, New York Times, August 6, 2009]

With a total population of 2.6 million, 95 percent of it ethnic Han Chinese, Shihezi and a string of other settlements created by the military are stable strongholds in a region whose majority non-Han populace has often been unhappy under Beijing’s rule. [Ibid]

With an annual output of goods and services of $7 billion, the settlements run by the bingtuan include five cities, 180 farming communities and 1,000 companies. They also report directly to Beijing and run their own courts, colleges and newspapers. [Ibid]

The grievances of Uyghur towards the bingtuan have multiplied even as Xinjiang has grown more prosperous, thanks in part to its huge reserves of natural gas, oil and minerals. Many Uyghurs complain about the repression of their Islamic faith, official policies that marginalize their language and a lack of job opportunities, especially at government bureaus and inside the bingtuan. [Source: Andrew Jacobs, New York Times, August 6, 2009]

During a recent visit to Shihezi, armed paramilitary policemen stopped every car and bus entering the city. But only Uyghurs were made to step out of vehicles for identification checks and searches. [Ibid]

Han Economic Exploitation in Xinjiang

Overseas-based Uyghur organizations, however, have charged that Beijing has never given Uyghurs any share of the vast profits from the exploitation of the XAR’s rich resources. While Xinjiang boasts one of China’s largest oil-and-gas reserves, exploration and related businesses are controlled by the country’s national petroleum monopolies such as Sinopec and China National Petroluem Corporation. Moreover, much of the benefits of progress have been taken up by Han Chinese businessmen and workers based in Urumqi and other urban areas. The annual per capita income in rural areas, where most Uyghurs live, is a mere 3,503 yuan (US$515). In the wake of the Shaoguan-riots, Uyghurs interviewed by Western journalists have complained that thousands of inhabitants of western and southern Xinjiang are obliged to work in coastal factories like the Shaoguan toy factory due to harsh conditions, such as unemployment in their home villages. [Source: Willy Lam, China Brief, July 23 2009]

Moreover, many Uyghurs view investment and other economic activities by the government and Han-Chinese companies with suspicion. XAR Governor Bekri has cited Xinjiang authorities’ 3 billion yuan (US$441.18 million) redevelopment of the old sector of the famous city of Kashgar as an example of urban renewal [of a magnitude] that is rarely seen in the rest of the world. The governor said that newly-constructed apartment blocs for Uyghurs will have much better protections against fire and earthquake. Yet, according to Nicholas Bequelin, a respected Xinjiang expert at the New York-based Human Rights Watch, many in the Uyghur community are unhappy with the sudden razing of Kashgar, a centuries-old cultural center of Uyghur civilization and one of the few remaining examples of traditional Central Asian architecture. [Ibid]

Political commentator Paul Lin said, “Chinese officials discourage employers from hiring Uyghurs, Uyghurs are paid less [than Han Chinese] for the same work and they barred Uyghur pilots from flying during the Beijing Olympics...for fear they would engage in terrorist activity.”

Trade in Xinjiang

Trade, roughly divided between imports and exports, tripled between 2000 and 2004 to $6 billion. Urumqi has become a major trading center for Central Asia. Everything form machinery and electronics to toys and rice cookers are sold. Some good are produced locally but most are shipped from the east. Trade is conducted in Mandarin, Uyghur and English. Afghan and Pakistani traders in skull caps and shalwar kameez come to buy clothes which they haul back home on plastic-wrapped bundles of cloth and boxes of consumer good. on buses trucks and planes

Trade soared in the 1990s after the collapse of the Soviet Union as raw materials flowed in to China from the former Soviet states and cheap Chinese consumer goods flowed out. But trade slowed after the September 11 terrorist attack, when borders controls were tightened as a response to increased fears about terrorism, separatism and weapons smuggling.

See Uyghurs.

Kashgar as an Economic Center for Central Asia

Alessandro Rippa wrote in The Diplomat, “China’s westernmost city, Kashgar lies at the edge of the Taklamakan Desert, closer to Bagdad than Beijing. For travellers and traders coming from Central Asia and Pakistan, the city offers a first glimpse of China. Yet, in most cases, Kashgar strikes them for its similarities to the countries they have just left. Coming from inner China, on the other hand, Kashgar often leaves the impression of entering another country, particularly as one walks through the narrow alleys of the old town, or watches the crowd at the dusty livestock market on a Sunday morning. [Source: Alessandro Rippa, The Diplomat, October 14, 2013. Rippa is a Ph.D. student in Social Anthropology at the University of Aberdeen. He recently concluded a year of ethnographic research on the Karakoram Highway between Xinjiang and Pakistan]

“As a Pakistani moneylender who spends most of the year in Kashgar tells me, “If you look at the city, you will see that Kashgar is more developed than our capital, Islamabad. We don’t have such tall buildings in Islamabad, and this is like a small town in China!” A Tajik truck driver, enjoying a bottle of Chinese baijiu with his fellow countrymen, points to the quality of the roads as a sign of Chinese progress: “Everything is new, roads are broad and well paved. If you come to Tajikistan, you’ll see the difference with our roads.”

“Kashgar’s links to the Central Asian world – geographic and cultural – are thus not only a feature of its much-discussed “old town,” which at any rate is being transformed in a massive process of renovation. Central Asia is also an important part of the city’s future plans for development. This future, far from the artisans and mosques of the old town, is reflected in the current construction of the new Special Economic District.

Kashgar’s Special Economic Zone (SEZ)

The district will represent the core of Kashgar’s Special Economic Zone (SEZ), as the city was classified in May 2010. Investment money from Shanghai, Shenzhen and elsewhere poured in and five-star hotels, office blocks and residential buildings have sprung up. Alessandro Rippa wrote in The Diplomat, “Kashgar’s model is Shenzhen, transformed in thirty years from a small fishing village into a large city that is one of China’s wealthiest. If Shenzhen was chosen for its proximity to Hong Kong, Kashgar lies within a day’s ride of four different countries: Kyrgyzstan, Tajikistan, Afghanistan (though the border at the Wakhjir Pass is not an official border crossing point and it is not served by a road) and Pakistan. [Source: Alessandro Rippa, The Diplomat, October 14, 2013 ]

An exhibition in Kashgar displayed the plan for “the new Special Economic District is , the core of Kashgar’s SEZ. Here posters and brochures showed the modern look of the new Kashgar, while young hostesses explained the project while pointing at the impressive plastic model of the two “Development Twin Towers.” They say the two towers should be completed in three years, and with their 280 meters they will be the highest in Xinjiang. One of them will host the Kashgar Hilton Hotel, while the other will provide space for “high-end” offices. Next to this display, I was shown the model of a four-floor tax-free shopping mall, expected to open by the end of the year with brands such as Prada, Valentino and Louis Vuitton. On the walls, maps and posters showed Kashgar’s favorable location in Eurasia, underlying its proximity to the various capitals of the Central Asian “stans,” as well as Kabul, Islamabad and Delhi.

“I tried to visit the area where the new Special Economic District will be located. To get there, I had to cross Century Avenue, running down from the train station, and the railway itself. Contrary to what I was expecting, I found myself in the middle of the countryside. I first followed an old, narrow road, flanked by two lines of poplar trees and a water channel. Such roads are a quite common sight in Xinjiang’s numerous oases, but in this case I was expecting a busy construction site. After a while, I found what I was looking for in the form of a road of another kind: a modern six-lane highway, cutting straight through the fields. Han Chinese workers were asphalting it, while Uyghur kids rode their bikes and played on the unpaved sections. Following this road, I eventually found myself on the edge of a small lake, which I realize was just the northern section of the much bigger and partially artificial lake that will lie beside the two Development Twin Towers.

“As I continued my exploration, I noticed that the busiest site was further south, where a few buildings were already completed and others looked nearly finished. From a distance, I compared this dusty image with the posters and plastic model I have seen at the fair. I tried to picture the finished project in my mind, with neon lights, fountains and shopping malls, but on the hot and dusty construction site my imagination failed me. One of the workers told me that I was not allowed to go closer: “for your own safety.” I thus turned back toward the city center, stopping at a small restaurant along the way to eat some noodles in the shade of a veranda covered with grape leaves. I felt a little disappointed, as actual work at the Special Economic District was nowhere near as advanced as I had been told.”

Kashgar’s Trade Fair and Pakistani Traders

In June and July 2013, Kashgar hosted the ninth edition of the four-day Kashgar Central & South Asia Commodity Fair, an important attraction for Central and South Asian traders. Alessandro Rippa wrote in The Diplomat, “The main avenue was the impressive Kashgar International Convention and Exhibition Center, situated not far from the recently constructed Eastern Lake – a major attraction for Chinese tourists. Meanwhile, for the first time in 2013 the China Kashgar-Guangzhou Commodity Fair has been held as part of the main fair , though in a different location: the Guangzhou New City, a exposition complex in the South-Western part of town, on the Karakoram Highway, newly opened for the occasion. [Source: Alessandro Rippa, The Diplomat, October 14, 2013 ]

Central Asian traders praised China’s power and development. “Pakistanis, on the other hand, seemed impressed by the peaceful crowd of buyers and sellers. “Here we don’t have to worry about anything,” Ahmed, a gemstone trader from the Swat Valley, tells me. “And people have a lot of money. It’s good for business.” Pakistanis were, in fact, by far the most numerous foreign traders at the fair. With more than 200 stands, they alone outnumbered representatives from Kyrgyzstan, Tajikistan, Turkey and Uzbekistan combined. Many were familiar with Xinjiang, owning businesses in Tashkurgan, Kashgar and Urumqi. They sold gemstones, marble, rugs and other handicrafts imported from Karachi via the Karakoram Highway. This year, they told me, has not been a very good one thus far. Recurrent violence in Xinjiang is severely affecting domestic Chinese tourism in the region, their major source of business. “Even the fair, this year, is not as crowded as it used to be,” says Karim, a businessmen from the Hunza valley who owns different shops in Xinjiang. “But we are optimistic, it will get better in the future.”

“Most of the Pakistani delegation comprised occasional traders. They visit Xinjiang only twice each year, for the Central and South Asia Commodity Fair in Kashgar and for the bigger China-Eurasia Expo in Urumqi. Most are from Gilgit-Baltistan, a region in the north of Pakistan where tourism has been hard hit since 9/11, forcing them to seek out new business opportunities. China is, by far, the main game, and Kashgar represents for them the gateway to its growing market.

Oil and Resources in Xinjiang

Xinjiang contains about 40 percent of China’s coal, a fifth of its oil and natural gas. There are large deposits of gold, uranium salt and other minerals. The Junggar Basin in northern Xinjiang contains the largest coal reserves in China, with more 300 billion tons of ore.

The oil fields in the Tarim Basin and Taklimakan desert in Xinjiang Province are large but are also among the most remote in the world and expensive to develop. By some estimates they contain at least 74 billion barrels of oil— three times the proven reserves of the U.S. and one third of the proven reserves of Saudi Arabia. To get to the fields Chinese trucks are transported across the dunes by huge American-built trucks with colossal tires on roads made with sand-stabilizing plastic and tons of gravel brought in by yet more trucks. Reeds planted in nets are used to keep the dunes from covering the road.

Much of the oil lies in fields around Koral, in north-central Xinjiang, a so-called “instantaneous city” that has sprung up over night and filled with trading companies, shopping malls, a large nightclub district, a new airport and a population largely made up of Han Chinese hoping to strike it rich. Between the mid 1990s and mid 2000s Koral grew from 100,000 residents to 420,000 residents and is growing by 20 percent a year. Most of the jobs are going to Han Chinese not local Uyghurs and Kazakhs.

Many are now skeptical about the oil and gas potential of the region. Claims that the Taklamakan Desert and Tarim Basin contains as much oil as the United States appear to be overstated. Many of the deposits are more than 5,000 meters below the surface and are very expensive to harvest.

Several hundred successful wells have been sunk at Tarim No. 4 Field, where workers labor every day in temperatures that reach 104̊F in the summer and drop to -22̊F in the winter. A worker at the field told National Geographic, "There are sandstorms. You can't see farther than one meter. then the cars stop, and the exploration stops. But the drilling always goes on." The oil men here refer to themselves as China's "soldiers of oil."

More than 60 companies from 16 countries shave expressed interest in developing oil in the Tarim basin. In December 1993, Exxon and a Japanese-Indonesian venture won the right to explore the first block. Texaco, Japan petroleum and Elf Aquitaine won the right to search in the second block.

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Raisin making

Agriculture in Xinjiang

Uyghurs have traditionally practiced oasis agriculture. Water rights rather land were valued as property and passed down through inheritance.

Outside many Xinjiang villages and towns there are cotton and wheat fields and apricot orchards. High poplar trees line many of the fields. These places are nearly silent except for birdsong, the rustling of poplar leaves in the breeze, the mooing os milking cows and the bleating of sheep. [Source: BBC]

Oasis water is directed into feeder channels that distribute water throughout an elaborate grid network. Every piece of land is granted so many hours of water according to its size. When each man has his share, his feeder is closed off with a big stone and another one is opened for someone else. The distribution is supervised by a "water bailiff" who is paid in crops from the irrigated fields.

Uyghurs grow a large variety of grains, vegetables and fruits. Melons of various kinds grow well in dry climates, Cotton is grown as a cash crop. Xinjiang is China’s leading cotton producer. It produces 38 percent of the country’s total. Much of it is grown in irrigated desert near Aksu and Kashgar.

Watermelons grown in irrigated plowed rows and grapes grown on trellises are shipped all over China. Chinese planners want to harness glacier meltwater to irrigate wheatfield to alleviate the country's grain shortage. Winemakers also have high hopes for the region.

See Darzai Commune

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Karez tunnel

Karez Tunnels

Karez Tunnels underlie large areas of Turpan depression and are found througout Xinjiang. One of the ancient world’s great engineering feats, they are underground canals and boreholes used to carry water — from melted snow, springs and water tables under hills — from the highlands to farming areas. Some date back to the time of Alexander the Great.

Karez tunnels follow slopes down hill and are built underground so the water doesn't evaporate in the hot sun. From the sky they look like a long rows of gopher holes, giant anthills or donuts. These holes are outlets for vertical shafts that provide ventilation, and a means of excavating material. Dirt is piled around the entrances to prevent potentially-eroding rainwater from entering the system. Most of the holes are about 10 to 30 feet deep but some drop down almost 100 feet.

The karez system in Xinjiang ranks with the Great Wall of China and the Grand Canal in terms of time and labor spent building it and may exceed them as an engineering feat. The tunnels carry water, much of originally snow melt from the Tian Shen Mountains, to oases like Turpan. The combined length of all the karez canals in Xinjiang is around 1,900 miles, with about 60 percent of them still in use today.

Karez tunnels have largely been dug by hand from head wells on high ground near the source of the water to places where the water is used. It is believed millions of hours of forced labor was needed to build them. The long, downward slopping tunnels were dug using the vertical holes to reach the underground tunnel from the surface.

Karez technology was imported from Persia (Iran), where the wells are called qanats. The tunnels have traditionally been communally owned, with villagers splitting the cost of building and maintaining them. Holes used to dig the tunnels are used by laborers today to reach the underground canals, which from time to time have to be cleared of dirt and rubble.

Digging the tunnels and maintaining the karez system is hard and dangerous work. The men who do the digging, repairing and cleaning have traditionally been highly skilled and well paid. To repair the tunnels workers climb down the entry shaft to the tunnels. There they clean out the tunnels and stabilize weak sections with ceramic hoops. The work is often done by lantern light in extremely cramped conditions— most of the tunnels are barely large enough for a man to crawl through.

Image Sources: Mongabey; CNTO; Louis Perrochon; University of Washington

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

Last updated July 2015