Financial Times
July 25, 2011 10:45 am
By Kathrin Hille in Hotan

On the outskirts of the remote desert town of Hotan in China’s far west where Uighur men last week attacked a police station lies an industrial park that was built to bring economic hope to the region.

Hotan Zhejiang Industrial Park, a two square-kilometre area of land plots for factories on a grid of broad streets, partly financed by the affluent coastal province of Zhejiang, was designed to create jobs and alleviate some of the underlying economic problems that helped spark last week’s unrest.

But Hangzhou Boulevard, the main axis through the park, is a road to nowhere. While local officials say all the plots have been sold, not a single person or vehicle can be seen on the streets. The park is instead home to just a handful of factories and the land is mainly occupied by jade speculators.

When Uighurs turned on their Han Chinese neighbours two years ago in the worst ethnic violence for decades in Xinjiang, Beijing rethought the way it rules the vast region. Home to the lion’s share of the country’s onshore energy reserves, Xinjiang is populated by a Turkic people, most of whom do not want to be part of China.

In an attempt to tweak its economic development approach, Beijing revamped a programme under which richer provinces act as donors and investors for different parts of Xinjiang. It promised to bring in fresh investment and vowed that more attention would be paid to regional disparities.

Nowhere are Xinjiang’s social and economic problems – and Beijing’s difficulties in addressing them – more evident than in Hotan. Uighurs account for 96 per cent of the 2m population of Hotan prefecture, the poorest in the province. Here, more than 70 per cent of this ethnic group work in agriculture, indicating that their access to often better-paying jobs in services and industry is extremely limited.

As a result, many young people leave Hotan to try their luck in the provincial capital of Urumqi, but often lose out to better educated Uighurs, or Han candidates, in the job market. Government officials say most of the rioters in 2009 were migrant workers from southern Xinjiang where Hotan is located.

The industrial park built by Zhejiang – Hotan’s sponsor under the original Xinjiang partnership programme – has done nothing to improve the lot of Hotan’s population.

Zhejiang invested Rmb40m ($6.2m) to build the park’s basic infrastructure, says Zhong Ming, Communist party secretary of the management bureau that runs the park.

On one end of Hangzhou Boulevard, a few factories, including a rose oil plant, a Uighur medicine factory and a building materials facility, can be seen. According to the management bureau, 27 factories have started operating. Mr Zhong says they “employ mostly local Uighur rural residents”, but so far only 500 jobs have been created.

Most investors who bought plots are in no hurry to build factories. Xinjiang’s oil, gas and coal reserves – the big draw for China’s state-owned enterprises – are hundreds of kilometres north of Hotan.

For outside investors, the town’s only valuable asset is Hotan jade. Every year when the snow melts on the Kunlun mountains, which separate Xinjiang from Tibet, the Yurungkash River carries the precious stones downstream, leaving them right at the feet of Hotan residents.

The ground in the industrial park, which is situated on a former riverbed, is covered with stones and most of the still empty plots have been dug up in search of jade.

Given that one small piece of Hotan jade can fetch tens of thousands of renminbi, land costing Rmb50,000 for just under seven acres is dirt-cheap for speculators.

“This ‘help for Xinjiang’ does not help us at all, they are giving away what belongs to us,” says one Uighur jade trader who asked not to be named because of fears for his safety. He used to dig for jade in the river close to the industrial park but has been forced to move to less rich stretches of the river after the government banned digging in this section on the grounds of flood prevention work.

Recognising that the Zhejiang partnership has not paid off, Hotan is starting afresh. Under the changes made to Xinjiang policy last year, Beijing, Tianjin and the province of Anhui have replaced Zhejiang as Hotan’s partners and each has committed to investing a minimum percentage of their fiscal revenues in Hotan.

Beijing is building an industrial park across from the Zhejiang-sponsored site, only six times larger. Basic construction of roads, power and water infrastructure is expected to be completed in September.

But many locals doubt that this latest effort will yield better results than the last. Several senior posts in the Hotan city government have been filled by officials from Beijing and critics fear the partnership will fuel corruption and more land speculation.

“The only thing the Beijing government cares about is how they can profit from this,” says one Hotan resident who asks not to be named for fear of government retribution.

But Mr Zhong remains optimistic. “These things take time. The park will fill up and in the longer run we will be talking about several thousands of jobs.”