Spending for Stability in China’s Far West

by Michael Wines, The New York Times, July 7, 2010

A year after ethnic protests in western China left at least 200 people dead, China's central government has announced a plan to spend more than $100 billion in the region to “promote the fast and healthy development of the western areas,” according to a government newspaper.

Chinese leaders also announced tax breaks for coal, oil and natural gas, three major resources in the region. Speaking at a Beijing conference, Prime Minister Wen Jiabao said the changes would increase the share of taxes on resources going to local governments.

The plan appeared to be part of a dual strategy to help the economy by bolstering domestic demand and to soothe tensions in the region.

China’s National Development and Reform Commission, a top-tier economic planning agency, said the money would be spent to build railroads, coal mines, airports and power grids, among other infrastructure projects. It would be spread over the Xinjiang and Tibet regions, Inner Mongolia and Sichuan and Yunnan Provinces, which border Xinjiang or Tibet.

Far western China has become a prime development site, thanks to rich deposits of natural gas and other crucial resources. In weekend remarks at a conference here, President Hu Jintao said western China should become the bedrock of China’s energy programs, given its strategic reserves of oil and gas.

The new plan continues a longtime policy of promoting economic development in western China, where unrest among ethnic Tibetans and Muslims has been a constant source of concern to Chinese authorities. From 2000 to 2009, the government spent nearly $325 billion on development projects in the area, according to the state-run newspaper China Daily.

By the numbers, the investments have raised average incomes in the regions. But the investment has had no measurable effect on ethnic unrest, and some critics say the vast majority of the wealth has gone to China’s ethnic Han majority, which has moved into the areas to take advantage of the programs. Critics charge that the development programs are in fact a state plan to dilute ethnic majorities in Xinjiang and Tibet by giving Han Chinese citizens incentives to move into the areas.

At a conference this week, Chinese officials called the investment in western China a strategic move, designed to raise the living standards of the region’s people and shift growth away from China’s prosperous coastal areas.