Internal Colonialism?

One wonders where Xinjiang fits into China’s “double-digit growth” and “opening to the world”. The party line is one of “subsidies” and “handouts” for a “backward” region. This language reeks of colonialism. Given Xinjiang’s status as a major resource provider for the rest of China, some scholars have said the party-state’s development model for Xinjiang lends itself to charges of “internal colonialism”: the internal transfer of resources outwards to more developed regions and the transfer of labour inwards, thus keeping the region in a peripheral state of underdevelopment vis a vis more developed “core” regions. One obvious means to promote development in Xinjiang would be to assist local small and medium size enterprises (SMEs) and provide incentives to employ locals instead of transferred or temporary labour.

A recent report from the Bank of Communications and Fudan University found that while SMEs had grown in every part of China, they have sadly contracted in the “western regions”. This has been a problem across China with the Wall Street Journal’s graphics illustrating the spectacularly low levels of credit provided to SMEs compared to rising levels for state-owned enterprises (SOEs). Everyone in China knows that the wages and benefits which come with employment by SOEs are huge- golden rice bowl? So no surprises then that the China Daily reported even larger wage growth for SOEs. Given that about two thirds of Xinjiang’s GDP is produced by SOEs, one would think this might be good news for Xinjiang. However, Wang Zhile, an economist at the Chinese Academy of Trade and Economic Co-operation, is instead celebrating the comparative advantage of the region as a source of cheap labour. Internal colonialism- maybe? Wang somewhat exaggerates that Xinjiang is a “hot destination” for foreign investment, which the China Daily excitedly claim will be the “new engine for China’s auto-biz”. Shanghai Volkswagen (a joint venture) intends to set up shop in Urumqi to the tune of $316 million. The question anyone interested in development will ask is will any of the benefits be captured? Not if they don’t employ locals. The story also ran with the mindboggling statistic that between 2009 and 2011 the number of cars in Urumqi doubled to 400,000 – that’s about a car for every 7.5 people and about three times the national figure. As if Urumqi air wasn’t filthy enough. Nevertheless, we should pause to wonder who is it that has all this money in Urumqi?

Finally, the idea that Xinjiang is a drain on the empire’s resources gets blown out the water again as officials quietly admitted that more electricity from the north of Xinjiang will be sentEast. Still no mention of subsidising backward China though! Vice Premier Li Keqiang, like the rest of China’s leaders at the moment, is seriously worrying about slowing national growth. The answer for the rest of China is “boost consumption”. For Xinjiang, the old “increase ties with Central Asia” gets wheeled out with no explanation of how. Exports out of Xinjiang dropped by 50% in 2010 yet imports recorded growth. Helping boost SMEs (ie local traders) and loosen border restrictions would be a very straight-forward way to boost development and alleviate charges of “internal colonialism”.