State-Capitalism with Xinjiang Characteristics

(Industrial) development has once again been dominating the headlines on Xinjiang. Xinhua proudly announced that Xinjiang, which already accounts for half of China’s cotton output, has set a new record for cotton production (838.31kg per mu). Last month Xinhua celebrated the cotton harvest with a pictorial (see above photo) showcasing how the development of industry and the happiness of ethnic minorities go hand in hand. Let’s hope this development strategy has a plan B given that the water resources required to keep the industry going in a desert region are finite. It is important to remember that the cotton industry was highly unprofitable in the 1990s but was used to justify land reclamations and to attract Han-Chinese migrants from outside Xinjiang to staff this labour-intensive industry.

News that PetroChina are opening 10 blocks to foreign firms for oil and gas exploration is relatively unusual in a region where the economy remains dominated by domestic state-owned enterprises (SOEs). However, the fact that the procedure is by “invitation only” indicates the ongoing importance of the party-state in Xinjiang’s opaque political economy. Nur Bekri has publicly expressed his eagerness to involve Indian business in Xinjiang to recreate the “Silk Road”. Nevertheless, Indian businessmen declined the chance to participate in a trade conference in Urumchi. It seems a Mr Wang who has been making funny phone-calls to all the airline companies pretending to be an East Turkestan “terrorist” may be putting them off. Bekri seems equally keen to retain the role of the state in the economy with calls for State-owned enterprises to invest in India’s infrastructure. Has this particular area of investment reached saturation point for now within Xinjiang leading SOEs to expand outwards in search of capital? The role of the state in the Xinjiang economy (accounting for about 2/3 of GDP) is an opportunity to build a foundation for sustainable development. However, it appears to be directed primarily towards maintaining the profitability of large-scale SOEs. Is it unrealistic to expect the government to re-direct state-owned enterprises towards the promotion of socio-economic development to provide employment in Xinjiang?