January 30, 2019 / 6:46 AM / 10 months ago

Breakingviews - Xinjiang is an extreme case of China's growth woes

Ethnic Uighur people walk in front of a giant screen with a picture of Chinese President Xi Jinping in the main city square in Kashgar in Xinjiang Uighur Autonomous Region, China September 6, 2018. The screen broadcasts a slideshow of images of Xi on loop, including propaganda images of his previous visit to Xinjiang. Picture taken September 6, 2018. To match Special Report MUSLIMS-CAMPS/CHINA REUTERS/Thomas Peter

HONG KONG (Reuters Breakingviews) - Xinjiang is becoming an extreme example of the economic woes ailing China’s poorest provinces. Beijing says it is de-radicalising the Uighur population in the far-western region with vocational training camps. Mass detentions, however, are not helping businesses or jobs, and investment has tanked. It’s the bleeding edge of a damaging capital retreat from the country’s hinterland which has already pushed at least 23 regions to slash 2019 targets: hardly a recipe for revival.

    The incarceration of vast numbers of Uighurs, a Muslim minority, has drawn heavy criticism from human rights advocates. The government, however, claims the centres serve an educational purpose. They say members of this economically disadvantaged ethnic group will learn Mandarin and professional skills.

    There is little evidence that’s working. There has been brutal ethnic violence in Xinjiang, and a lack of economic opportunity surely contributes. But a policy encouraging members of the Han majority to migrate to the area means they, not locals, dominate politics, business, and the extraction of its vast energy and mineral reserves, exacerbating inequalities.

     Beijing’s “Western Development Strategy”, put into place in 2000, was supposed address regional imbalances by better connecting impoverished areas to eastern China and overseas markets. The Belt and Road programme should have helped Xinjiang in particular, linking it to neighbouring Kazakhstan, Russia, and ultimately to Europe.

    Yet the country’s current cool-down has disproportionately impacted the interior. Central bank data shows credit flows into Xinjiang and adjacent Qinghai, home to the Hui Muslim minority, slowed by 70 and nearly 80 percent respectively in the third quarter, compared to the previous year. Tibet and Inner Mongolia also saw numbers plunge. Worse, methodological tweaks introduced in September mean the actual funding figures for all regions could be even more dire. In Xinjiang, after a camp-construction boom in 2017, fixed asset investment fell every month in 2018 and was down by a quarter year-on-year in December, compared to a nearly 6 percent increase in eastern provinces. Officials slashed the area’s 2019 GDP target to 5.5 percent down from 7, among the country’s lowest.

    Rotten morally, Beijing’s western policy is bad business too, not least for firms like Alibaba and Starbucks who hoped to tap fresh demand in poorer provinces. China can do better.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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