China plans new economic zones near western border
The Hindu, 11 October 2011
By Ananth Krishnan
China has unveiled new plans to speed up the construction of two economic development zones in far-western Xinjiang, pledging greater investment, fiscal subsidies and measures to accelerate connecting the border region to Pakistan through railway lines and air routes.
The State Council, or Chinese cabinet, outlined the measures in a policy document released on Saturday, which, for the first time, detailed Beijing’s already announced ambitious plans to set up two economic development zones in the frontier cities of Kashgar and Korgas, respectively located near China’s borders with disputed Pakistan-occupied Kashmir (PoK) and Kazakhstan.
The measures come as a number of companies which have planned to invest in the region have expressed concern over recent violence in Kashgar. Knife and bomb attacks in July, blamed by the local government on terrorists with links to Pakistan-based groups, left at least 20 people dead. The region has also seen ethnic unrest between the native Uighur population and Han Chinese migrants. Many companies have voiced fears that investment promised in plans to transform the city into a “Shenzhen of the west” have failed to materialise, according to representatives of three companies which have recently set up businesses in the region. Shenzhen, a sleepy southern fishing village, was China’s first Special Economic Zone, transformed into a major trading hub.
Saturday’s announcement is being seen as a move to boost the confidence of companies. The guidelines said the central government would offer subsidies every year until 2015, exempt enterprises from income-taxes, and offer loans at discounted rates. It would also adopt fiscal subsidies and tax breaks in both zones. Yang Jihong, an official with the Korgas zone, located near the city of Yining, told the State-run China Daily newspaper that Saturday’s policy document was the most detailed yet since plans for both zones were first announced in May 2010.
“This is a long-awaited policy for us,” he said. “Although more time is needed to work out and finalise detailed measures, the guidelines have a milestone significance for the zone’s development.” The measures also laid emphasis on boosting rail connectivity across China’s western border, saying the government would increase investment and ‘actively promote’ the construction of a China-Pakistan railway line, which would run from Kashgar through Pakistan-occupied Kashmir (PoK). It would also support airlines which opened routes from Kashgar to neighbouring countries.
Mr. Yang, from Korgas, said the government had also approved the construction of a railway facility at the town and lines to, which, when completed, would become “the biggest transshipment station in Asia.”
A railway line through Kyrgyzstan to Uzbekistan will be built. Much of the development in Kashgar and Yining is expected to be led by State-run companies, which will invest 991.6 billion yuan ($155 billion) in Xinjiang from 2011 to 2015.
In August, Wang Yong, Chairman of the State-owned Assets Supervision and Administration Commission (SASAC), warned these companies, which account for 70 per cent of Xinjiang’s industrial output, to boost local employment and not “expand blindly [and] abuse resources.” Locals have expressed concern in the past that high investment has not brought commensurate benefits to the local economy in terms of employment.
For instance, in Jiashixian, a high-tech industrial area near Kashgar, much of the investment was from companies in southern Guangdong, who also brought their own employees.
“There are few Uighurs working here,” a representative of a company from Foshan, in Guangdong, involved in growing and selling high- end flowers said in a recent interview. Another plant, also run by the Foshan government, which has pledged 213 million yuan, hired only a few dozen locals. Saturday’s document appeared to seek to address these concerns. It said companies would receive discounts on electricity and transportation costs if they hired more people.