China’s New Silk Road: Implications for Xinjiang | 04 apr 17

Othmara Glas

Over the past three decades China’s economy has only known the way up. Although it is still growing, the recent development was marked by a slowdown. In 2015 the government finally accepted the “new normal” that in the upcoming years China’s economy will grow not in double-digit numbers anymore. After a GDP growth by 6.9 per cent in 2015 and 6.7 per cent in 2016, the announced goal for 2017 is 6.5 per cent.[1]

However, the economic growth has not come without costs. The air pollution is among the highest in the world. The living costs in the cities have raised dramatically. The gap between rich and poor is widening. The inequalities between urban and rural population grow when it comes to education, health care and social security. In addition, there is a growing inequality between regions and cities, which are much better developed on the east coast than in the western part of the country.

In 2013 China’s president Xi Jinping introduced a new project called “New Silk Road”. This initiative aims to connect China with Europe based on the ancient silk road, and alleviate some of the previously mentioned problems.


https://www.merics.org/en/merics-analysis/infographicchina-mapping/china-mapping/


The initiative, which is also called “One Belt, One Road”, has two components. While “road” refers to an overland route to Europe via Central Asia, “belt” describes the maritime routes to Southeast Asia, South Asia, and East Africa.[2] 


The project includes both hard infrastructure projects and soft projects, like e-commerce platforms.[3] The estimated costs related to the New Silk Road are overall $1 trillion. For the funding the Chinese government created three new multilateral institutions. In 2014 the $40 billion Silk Road Fund was established. 


One year later Beijing initiated the Asian Infrastructure Investment Bank (AIIB), that has 57 members, including Russia, Germany, the UK, and even Brasilia, and a capital of $100 billion. The rest of the money comes from international and regional development banks, participating governments, and private investors.[4] 


The New Silk Road can bring several advantages for China’s economy. On the one hand, the project contributes to the domestic economy by building infrastructure. On the other hand, it will help to open new markets for China’s export-based economy. New transports routes could ensure energy security, as they offer new supply channels. 


One core aim is to close the investment gap between the west and east of China. Especially, for the turbulent province Xinjiang the hope is that economic growth and increasing living standards may counteract ethnic tensions and separatist movements.

 

http://chinalacrosse.com/chapters/%E6%96%B0%E7%96%86-xinjiang-lacrosse/xinjiang-map/


Located in the north west of China the Xinjiang Uyghur Autonomous Region has borders with ten countries, including Russia, Kazakhstan, Pakistan and India. It became part of China in 1759 during the Qing Dynasty. Since then Han Chinese have been moving there, and Beijing used the migration as tool for assimilation. Hence, ethnic tensions between Uyghurs and Han Chinese has grown over centuries. 


Since the Chinese Communist Party (CCP) came into power in 1949, the government attempted to integrate Xinjiang into China, by improving infrastructure and communication networks, but also by cutting off the cultural and historic ties with Central Asia, especially after the Sino-Soviet split in 1960.[5] After the break-up of the Soviet Union and the independence of Central Asian states, calls for an independent Uighur state became louder, as well. 


Nowadays, the population in Xinjiang is close to 22 million. The biggest ethnic groups are Uyghur (46.4%), Han-Chinese (39%) and Kazakh (7%).[6] While Han usually practice Chinese folk religions, Uyghurs and other Turk peoples are Muslims. 


Violent clashes between Uyghurs and Han, as well as terror attacks by Islamic separatist movements are frequently reported from Xinjiang. Probably the best known is the East Turkestan independence movement, which claims that East Turkestan (another name for Xinjiang) should become an own country. Beijing says it fights the “three evils” of terrorism, separatism and fundamentalism there.


With the economic development plans of the central government, Xinjiang should become a transport hub in Central Asia. Already since 2011, a Chinese-Kazakh free trade area has been set up in the border town Khorgos. Further Special Economic Zones (SEZs) exist in Yining and Kashgar. Overall, 20 SEZs are planned in Xinjiang.[7] 


Yet, not only because of its location the region is of economic interest, but also because of its resources. Xinjiang has 40% of China’s coal reserve, more than one fifth of the oil reserves, and large natural gas reserves.[8] These need to be transported to the resource-demanding East and call for large infrastructure investments. Therefore, Beijing plans a “double opening” of Xinjiang – westwards to Central Asia and eastwards for a better integration in the national economy. 


Already in 2000, the “Develop the West” campaign was launched to decrease regional inequalities and improve the living standards in China’s western regions. The campaign aimed to develop Xinjiang into “an industrial and agricultural base and a trade and energy corridor for the national economy.”[9] 


Source: Deutsche Bank Research, China Chartbook, Province Xinjiang, April 2017.


More than $250 billion were invested nation-wide in the years from 2007 to 2009. While this first round rather focused on domestic issues, Beijing introduced a roadmap to boost “leapfrog development and lasting stability” in 2010, and to create a better linkage with Central Asia. One very specific aim of the plan was to approximate progressively the region’s per capita GDP by 2015 to national average.[10] 


This initiative might have been a reaction to the riots in 2009, when demonstrations of Uyghurs in the region’s capital Urumqi became violent, leaving 197 people dead and more than 1,600 wounded according to the government.[11] 


Source: Deutsche Bank Research, China Chartbook, Province Xinjiang, April 2017.

Although the nominal GDP has grown from $102 in 2011 to $144 in 2016, the disparity between the eastern and western regions has become bigger. For example, in the same period the nominal GDP in Shanghai has grown from $297 to $413.


Another problem is the discrimination of Uyghur people on the labor market. In the energy sector a vast number of managers and construction workers are Han Chinese.[12] In the cross-border barter trade with Central Asia Han Chinese simply displaced Uyghurs.[13] 


In addition, the Uyghur population is concentrated in the rural south of Xinjiang and seldom lives in cities, leaving around 80% who still live from farming.[14] 


The New Silk Road could be an opportunity for the creation of jobs, the development of the infrastructure and the local economy in Xinjiang. Better infrastructure might increase the influx of both Chinese and international tourists. 


Intensified economic cooperation with its neighbors could contribute to regional stability. However, Beijing would become more dependent on Xinjiang and its energy resources, making Beijing more vulnerable to political unrest in these regions. 


Moreover, the central government need to take care that not only Han Chinese profit from the New Silk Road project.[15] Particularly state-owned enterprises should seek to employ Uyghurs. The profits of the region’s companies should go back to the province itself to a large amount and not end up in Beijing’s cash box. 


Another way would be to attract more foreign investments in Xinjiang. Not only states from Central Asia, who will host parts of the New Silk Road, but also other Muslim countries like Saudi-Arabia look to invest there. Even Iran, with a Shia majority, could have an interest to invest in Xinjiang to strengthen its status as regional power. 


Although, over the past years China has tried to attract foreign investment of Arab countries, and links between Uyghur and Arab Muslims have increased, the government is wary of support for separatist movements in Xinjiang.[16] The ongoing repression of the Muslim population gives also room for more radical forces like the “Islamic State”, which endangers the stability in the region.[17]


Xingjian plays a key role in the New Silk Road project. Beijing needs to find a way to get as much benefits as possible for the province and to pacify it, as radicals are one of the biggest threats to the whole project. 



[1]

CNBC:

China aims for around 6.5 percent economic growth in 2017.

04 March 2017.

http://www.cnbc.com/2017/03/04/china-sets-2017-economic-growth-target.html

[20 March 2017].

[2]

Alexander, Danny 56 Institutional Investor • February 2017

[3]

Guluzian, Christine:

Making Inroads: China’s New Silk Road Inititive

. Cato Journal, Vol. 37, No. 1 (2017). 135-147. P. 136.

[4]

Ibd.

[5]

Brown, Rachel:

Where will the new silk road lead? The effects of Chinese investment and migration in Xinjiang

and Central Asia.

The Journal of Politics and Society. Vol. 26, 2016. 69-91. P. 71.

[6]

According the 2010 Statistical Yearbook.

[7]

Roberts, Dexter:

China Tries to Bring Growth to Its Restless Xinjiang Region

. Bloomberg. 12 December 2014.

https://www.bloomberg.com/news/articles/2014-12-11/chinas-development-of-xinjiang-spurs-resentment-from-uighurs

[21 March 2017].

[8]

Wong, Edward:

China invests in Region Rich in Oil, Coal, and also Strife

. The New York Times. 20 December 2014.

https://www.nytimes.com/2014/12/21/world/asia/china-invests-in-xinjiang-region-rich-in-oil-coal-and-also-strife.html

[21 March 2017].

[9]

Clarke, Michael: Xinjiang and China’s Rise in Central Asia - A History. 2011. P. 151

[10]

Tiezzi, Shannon:

China Doubles Down on Economic Development in Troubled Xinjiang

. The Diplomat. 7 May 2014.

http://thediplomat.com/2014/05/china-doubles-down-on-economic-development-in-troubled-xinjiang/

[23 March 2017].

[11]

Wong, Edward: China Announces Development Plan for Restive Xinjiang Region. The New York Times. 28 May 2010.

http://www.nytimes.com/2010/05/29/world/asia/29china.html

[23 March 2017].

[12]

Pai, Hsiao-Hung: Scattered Sand: The Story of China’s Rural Migrants. 2013. P. 285.

[13]

Cooley, Alexander: Great Games, Local Rules: The New Great Power Contest in Central Asia. 2012. P. 77.

[14]

Roberts (2014).

[15]

Guluzian, Christine:

Making Inroads: China’s New Silk Road Inititive

. Cato Journal, Vol. 37, No. 1 (2017). 135-147. P. 138.

[16]

Eisemann, Joshua/ Heginbotham, Eric/ Mitchell, Derek: China and the Developing World. Beijing's Strategy for the Twenty-first Century. 2015. P.129.

[17]

  Ooi, Su-Mei/Trinkle, Kate:

China’s New Silk Road and Its Impact on Xinjiang

. The Diplomat. 5 March 2015.

http://thediplomat.com/2015/03/chinas-new-silk-road-and-its-impact-on-xinjiang/

[21 March 2017].

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