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Who benefits?

February 24, 2003

Regional disparities and the campaign to “develop the west”



The “Great Development of the West” policy has been heralded as signaling a real commitment on the part of Beijing to reducing inequality and achieving development for all. Nicolas Becquelin examines the fine print, and argues that the campaign is actually a revamped state-project aimed at increasing extraction of resources, speeding up colonization of minority areas, with little or no attention to rights of any kind.








Ever since President Jiang Zemin formally announced in mid-1999 that China’s major economic blueprint for the years to come was “the Great Development of the West” (xibu da kaifa), many questions have been raised about the feasibility of such a top-down, one-size-fits-all, central state-imposed approach to development, and the risk of failure inherent in such a strategy.



After all, “the west” comprises no less than 12 provincial units (the autonomous regions of Xinjiang, Tibet, Inner Mongolia and Ningxia, the provinces of Qinghai, Gansu, Shaanxi, Sichuan, Yunnan, Guizhou and Guangxi and the municipality of Chongqing), covering three-fifths of China’s territory and containing over a quarter of the entire Chinese population. It is well known that the conditions of the 317 million people living in the western regions, a quarter of them ethnic minorities, lag far behind those of people in the coastal areas: GDP per person is half the national average and the standards of living are much lower in almost every respect, from health to education. As a result, over the years tens of millions of impoverished farmers from the west have left their homes to find work in the coastal areas and in the big cities.



The stated goals of the Development of the West are ambitious. Over the next decade, billions of yuan will be poured into major infrastructure projects across the western part of the country, including highways, railroads, airports, power plants, hydro-electrical and irrigation projects. Most of the money will come from public coffers, supplemented by some help from international lenders and investment from (it is hoped) foreign companies eager to find business opportunities in the interior provinces. Apart from the expected economic windfalls of such massive investments, which will stimulate the local economy, offer job opportunities and attract sub-contractors, the new infrastructure is to create an attractive environment for domestic and foreign investment. Only seven percent of the foreign direct investment (FDI) in China is currently directed to the western regions.



Although the central government is adamant that this new strategy is a logical continuation of the policy of “opening and reform” launched by Deng Xiaoping in the mid-1970s, in fact the top-down approach of the Great Development of the West is the opposite of the model of opening used in the special economic zones in the coastal areas, which was based on the decentralization of powers in the economic sphere. There has been little or no consultation with local levels in formulating plans for western development, and even now provincial and local governments are still unsure how this strategy will affect them.



There is no doubt that the central government considers the “opening up” of the western part of the country to be of crucial importance. As Premier Zhu Rongji stressed, the development of the west is “crucial to efforts to boost domestic demand, promote sustained national economic growth and bring about coordinated development of regional economies for eventual common prosperity; as well as crucial to strengthening national unity, safeguarding social stability and consolidating border defense.”



By all admissions, however, economic policies alone are unlikely to be sufficient if such ambitious goals are to be achieved.



For one thing, a key factor in the success of the strategy of the development of the west is attracting non-state domestic and foreign investment, in an effort to replicate the role of such funds in the rapid development of the coastal areas. But it remains far from clear why investors would want to go inland when everything they need, from preferential tax policies to human capital and integration with the global market, is abundantly available in the coastal areas. For sure, mining, oil and gas companies are likely to move in and tap into the rich natural resources situated in the western areas. Construction and large transportation projects will also stimulate economic activity, but the main objective will remain to deliver the west’s resources to the coastal areas. Long term benefits of such extraction to the west are likely to be indirect, and perhaps only ephemeral.



Another declared aim of the strategy is to rely on market forces to “open up” the economy and push necessary reforms forward. However, as well as the often-lamented lack of infrastructure, many other factors in the west make conditions quite different to those in the coastal region. Western provinces are burdened with a legacy of inefficient, socially irresponsible and expensive state-owned industries, which are themselves a result of past policies developed to industrialize the interior provinces.





Development needs unanswered



A more fundamental reason to question these grandiose plans is what they disregard in terms of development needs.



The strategy does aim to reduce regional inequalities between the coastal areas and the west. But there has been no sign that reforming the macro-economic policies that structurally disadvantage the western regions is on the agenda. Such policies include the fiscal system (which taxes raw materials proportionally more than manufactured goods and rural residents more than urban residents) and the distortion of the current price system (which continues to keep the prices of major agricultural goods and raw materials artificially low in order to support industrialization). These issues have been raised repeatedly by Chinese scholars and officials since the 1980s, but the central government clearly focused regional development on the coastal areas and the successive reforms have maintained, if not worsened, the comparative disadvantage of the interior regions.



Even more fundamental may be the overarching questions of infra-provincial inequalities (seen in even the most prosperous provinces of the coastal areas), the urban-rural divide, environmental sustainability and inequalities in provision of social services such as health, education and social security. These crucial factors are completely absent from the plans for the west, or appear only in the margins of official comments, with no substantial commitment made in terms of investment, and no clear objectives set for improvements.



The stated goal of the policy is to “increase the income of the population” and “bring prosperity to all nationalities.” But even on paper, it is not entirely clear how poverty alleviation will be achieved, other than through a “trickle-down” effect. The efficacy of the trickle-down approach is increasingly brought into question even in mainstream development circles, with many experts now agreeing that even in regions that experience substantial economic growth, poverty levels often remain the same or deteriorate further. Gains made by the poor—if any—are often much less significant than gains made by the non-poor, both in absolute and relative terms. Therefore, in terms of economic and social capacity, poor people end up comparatively more disadvantaged.



Of the poverty alleviation programs that target the officially designated “poor counties” (rather than targeting anti-poverty programs at poor people wherever they are, China designates “poor” rural counties where average income falls below a certain level and focuses such aid only on these areas), two-thirds rely essentially on the allocation of funds channeled through the bureaucracy. Even though the sums seem quite significant—over $1.5 billion per year—the top-down approach and the absence of effective control mechanisms jeopardize the impact on poverty. Corruption and waste due to poorly designed projects are often high in such programs. Local authorities frequently allocate a good portion of the funds to hazardous economic ventures, which provide avenues for construction and kickbacks. Food aid and financial assistance programs that are effectively distributed may create dependence rather than dealing with root causes of poverty.



Most of the time, the announcements made by the government on the allocation of funds are made out of context, and there appears to be little effort to assess local needs. Investments in and fiscal transfers to minority areas are usually presented as generous hand-outs from the central government, not as legitimate redistribution or measures mitigating mistaken policies of the past. And now less may be more: the authorities currently list any program or fund allocation in the west (including regular budgetary lines) as part of the development of the west policy, giving the false impression that much effort is put into “soft” infrastructure, such as education, environmental protection and welfare, when such disbursements may just be staying the same as before.





The rationale



If this strategy is not primarily concerned with addressing local needs (in the sense of bringing benefits, in a wholesale and sustainable way, to the largest possible number of people living in the western regions), what could be the rationale behind such efforts from the Party-state?



To try to answer this question, it is necessary to consider this strategy in historical perspective. Some authors, such as David Goodman, whose work has focused on provincial strategies during the reform area, have stressed that the “West” does not refer to an actual geographic area but is instead “a state-project.” This state-project, he argues, responds to three inter-related imperatives: to decrease inequalities in development, to encourage nation-building and to colonize areas that remain poorly integrated with the rest of China and which have a high percentage of (sometimes unruly) ethnic minorities.





Reducing disparities



It has become increasingly urgent to respond to the exponential growth in regional inequality. This is not a result of pressure from academic debate or provincial lobbying, but instead can be attributed to the more critical issue of maintaining the legitimacy of the development strategy adopted by China’s paramount leader, Deng Xiaoping, in the mid 1970s. Since the symbolic patronage of Deng is so crucial to the legitimacy of the current leaders, they have a strong incentive to address the problem of regional inequalities. Additionally, the examples of other countries where heightened disparities preceded implosion, such as Yugoslavia or Indonesia, means that the areas of the PRC that have been “left behind” are increasingly seen by the Chinese leadership as potential hotbeds of political challenge.



Decisions to rebalance the development of different regions have been made many times in the past, but have not had any real impact—not only are the disparities increasing, but they are doing so at a much higher rate than ever before. The authorities decided that making development a national priority and making it a central theme of the propaganda machine was the most likely way to diffuse existing political tensions. The pending retirements of Jiang Zemin and other top leaders combined with the subsequent delicate transition process in 2002 made this move particularly important.



However, because of its lack of effective redistribution measures, it is unlikely that the program as envisaged will balance economic development and reduce inequalities rapidly. If the experience of the coastal area is any guide, this model of development might actually increase social inequalities in the western regions. In the coastal areas, huge pockets of poverty continue to exist in the very provinces that are hailed as being at the head of the pack in terms of prosperity. The division between urban and rural areas is higher than ever, and even in cities the tenuous legal status of migrant workers causes a significant proportion of them to be regarded as second-class citizens. In the predominantly rural, multi-ethnic and geographically remote regions of the west, the gap is even wider.



Moreover, the model of the special economic zones was based on a policy of kaifang, or opening, which meant devolution of economic power from the center. This in turn created more autonomous local actors in the economic realm and created attractive conditions for foreign investment. In exchange, coastal areas were expected to implement certain key policies of the central authorities and to remit a share of their fiscal surpluses to central coffers. By contrast, the concept of kaifa, or development and exploitation, employed for the Great Development of the West is primarily based on massive public investment, with little economic autonomy granted to local actors. The long-term viability of this strategy depends on whether the market will supercede the state after this initial shot-in-the-arm.



So far, the response of international investors to the prospects of moving westward has been lukewarm. For example, interest from Hong Kong investors, who have always constituted a barometer of the business climate, has been negligible. During a high profile tour of the western regions for Hong Kong tycoons, organized by the Hong Kong government in 2000, the delegation dwindled in size as the trip progressed westward. Minimal commitments to invest were made, and these were mainly limited to Xinjiang and Sichuan provinces, which already have substantial infrastructure projects underway.



It is likely that in the coming years the western regions will witness a construction boom on a massive scale. Shiny new downtown buildings and endless residential blocks, showcases of modernity and development, will spring up in the cities, leaving the urgent needs of the population at large unmet. Necessary improvements in terms of education, health and basic services are unlikely to be addressed in any serious or systematic fashion, unless there is a change of emphasis.





Nation building



The second imperative of the development of the west is nation building, a Chinese version of the American conquest of the west. Numerous television programs and newspaper sections are now devoted to the exploration of China’s “Far West,” which is always presented as an almost virgin territory, rich in untapped resources and opportunities, waiting to be opened up by a collective effort of the nation. Such a depiction, however fanciful it may seem, fills a very important function in a political regime experiencing what can only be called a crisis in formal ideology.



One of the characteristics of socialist regimes (as well as other types of dictatorships) is a continuous succession of mobilization campaigns that perpetuate the domination of the state over the society. Such campaigns maintain the symbolism of a Party-state leading the people towards a better future, thus reinforcing its legitimacy while shifting the focus from the present (and its shortcomings) to an idealized future.



The mass mobilization of the Mao era is certainly a thing of the past, but the information monopoly of the propaganda machine remains a powerful ideological tool in the hands of the Party-state. The development of the west policy conveys the message that China is in motion and is becoming stronger—important elements in the domestic context of rising nationalism. For the provinces that have been well integrated for a long time, such as Sichuan or Shaanxi, the development of the west strategy reassures them of their place in the nation, despite decades of economic policies that have been distinctly unfavorable to their interests.





Speeding up colonization



It is hardly surprising, then, that ethnic minority populations that inhabit the west are largely seen as an obstacle to the new national project. The development of the west, according to Li Dezhu, Minister of the State Nationality Affairs Commission, is of “extremely high importance in solving China’s current nationality problem.” The “problem” seems to refer to Uighur and Tibetan demands for greater autonomy or independence, the response to which has been intense repression by the authorities since the PRC was founded. Gradual colonization by Chinese settlers has been the main method used to stabilize restive minority areas.



In the post-Cold War context, however, Chinese leaders now see increasing socio-economic disparities and further marginalization as having exacerbated rifts in inter-ethnic relations. Chen Dongsheng, of the State Council’s Western China Development Office, declared that one aim of the development of the west policy was to “guarantee the inviolability of the borders and the political and social stability of those areas… We want to smash our enemies who want to use poverty and the contradictions between races to create a Kosovo-style crisis in Asia.”



The Chinese authorities have consistently stressed that the main threat to economic development in “minority areas” was social instability caused by “a handful of ethnic separatists.” Li Dezhu stated in a 2000 document that the imperative was to “stay on top of the overall situation for protecting national unity and unification of the motherland, thoroughly recognize and accelerate economic and social development.”



In Party parlance, encouraging “national unity” is a code word for repressing “ethnic separatism,” and discourses stressing national unity target “separatists.” For the authorities, what qualifies as separatism is not just violent opposition, but any collective expression of difference that is not sanctioned explicitly by the state. Religious activities, traditional gatherings and initiatives to protect or revive the cultural heritage of the ethnic minorities are all suspected of encouraging separatism. Even the use of local languages, such as Tibetan in Tibet and Uighur in Xinjiang, is effectively gradually being discouraged, as mastering Chinese has become a precondition for progressing in the educational system or finding a good job.



The overall conception of “economic and social development” for minorities, as articulated by Li Dezhu, is one in which success is achieved with the assistance of the more “advanced” Chinese society. As the eminent anthropologist Dru Gladney writes, non-Han are “subaltern subjects” in the state-project of the PRC—their role in history is ultimately to fade away into the great Chinese nation.



The official rhetoric has many similarities to the development projects of the western powers in their former colonies and of the USSR in minority regions. The building of railways, hospitals and schools were all part of an effort to “civilize” native populations, while the economic resources were extracted for the benefit of the metropolitan center. The administration, even while employing large numbers of indigenous people, was dominated by agents of the center. The reality in today’s minority autonomous areas is disturbingly similar.



Perhaps the most significant policy for “pacifying” ethnic areas since 1949 has been to progressively colonize minority areas with Chinese migrants. Whereas under Mao this was done forcibly, the main method currently advocated is to entice migrants from poorer regions to move to border areas using an array of economic and social incentives, from the leasing of individual plots to the easing of household registration transfers.



The development of the west policy is clearly intended to intensify this process, with the hope that a fraction of the flow of the floating population can be directed towards the western regions. The Chinese leadership, which has long been anxious about the potential threat to social stability represented by the large floating population of migrants and their concentration in the major cities, aims thus at killing two birds with one stone: alleviating the pressure of migrants and populating minority areas with Han settlers.





A proven strategy



As many commentators have noted, it is not the first time in history that the PRC has embarked on a massive effort to develop the interior. The disastrous Great Leap Forward (1957-1959), which resulted in a famine that claimed over 30 million lives, and the development of the Third Line (1964-1975), Mao’s plan to move industrial capacity inland to protect it in case of war, are often cited as precedents.



What is less known is that the central authorities have had more recent experience with this kind of centrally driven development. In the early 1990s, the central authorities announced that they would replicate the opening of the coastal areas in certain border provinces. The “Great Development of the Northwest” (xibei da kaifa) targeted five provinces (Xinjiang, Qinghai, Gansu, Ningxia, Shaanxi), and extended “the preferential policies of the coastal areas to the west.”



Among the stated goals of this policy were reducing disparities among regions, reinforcing national unity and the consolidation of the border areas. Premier Li Peng announced in Xi’an in 1992 that opening the northwest was “an important measure to reduce inequalities between the east and the west and walk towards a common prosperity.”



Considerable effort was put into showcasing policies in Xinjiang, as proof that Beijing was rebalancing its regional development program in favor of the interior. However, the reality proved quite different. Throughout the 1990s, the authorities pursued policies designed to increase the exploitation of natural resources in Xinjiang (especially oil, minerals and cotton) and channel them to the eastern seaboard. New highways were built across the autonomous region, financed in part by international lending institutions. Border crossings between neighboring Central Asian countries were opened and hundreds of thousands of Han settlers from poorer interior provinces gradually settled in Xinjiang, attracted by the availability of work, land and economic opportunities. The Han population in Xinjiang increased from 37.5 percent to 39.5 percent of the total for the autonomous region between 1990 and 2000. This number reflects mass immigration, particularly considering that ethnic minorities have much higher rates of demographic increase than the Han population.



For indigenous populations the impact was brutal. Socio-economic marginalization and colonization increased as economic activities shifted more and more towards the Han segment of the population. In February 1997, the brutal suppression of a demonstration in Yining against Chinese policies and religious repression resulted in an outbreak of violent opposition that left nine dead and dozens injured. If the development of Xinjiang in the 1990s is any indication, the development of the west might very well increase the tensions between Hans and non-Hans living in minority areas.





Where are the people?



Analyzing the strategy of the development of the west policy in terms of a state-project sheds light on the core rationale behind it—state-building—and hints at the real hierarchy of objectives. Territorial assimilation and strengthening of control over peripheral areas are paramount, economic stimulus mechanisms come second and mitigating impact ranks last.



For this reason, what can be expected in terms of results seems to be the following: rapid urbanization and the emergence of regional urban centers, such as Chongqing, Xi’an and Chengdu and to a lesser degree the capitals of the autonomous areas; ribbon development along the transportation axis; inflow of migrants to minority areas; and acceleration of the exploitation of natural resources channeled to the eastern seaboard.



The regional economy of some provinces can be expected to pick up in terms of GDP, while many areas will be left behind, especially the countryside, where more than 80 percent of the population in the western regions currently lives. In minority areas, increased control by the center will be translated into the expansion of urban centers populated largely by Han.



Viewing the development of the west as a state-project also hints at what is not likely to be the outcome: substantial reduction in inequality and regional disparities, environmentally sustainable development, or greater control over their own fate by minorities and local communities. Above all, these policies represent continuity with those pursued by the Chinese regime over the past 50 years, in terms of territorial accretion, assimilation and strengthening of control over peripheral areas and massive industrialization programs. Hence, the entirely top-down approach of the development of the west policy is inherent in its very nature.





Double standards



Much of the international community—in particular international lenders—has been disturbingly willing to ignore the manifest deficiencies of this policy, reflecting the common willingness to apply standards to China that would not be acceptable elsewhere. It is now overwhelmingly recognized that development and poverty reduction programs must be designed bottom-up, as, in the words of the World Bank, “Poverty is experienced at the local level, in a specific context, in a specific place, in a specific interaction.” Rights are considered a key component of successful anti-poverty strategies. But such considerations are not applied to China, aside from largely ineffectual and pro forma “social and environmental impact assessments” that fail to involve genuine consultation.



Accountability, non-discrimination, equality and participation are now recognized as essential elements of a successful development strategy. Accountability prevents programs from going off track due to incompetence, corruption or waste; non-discrimination insures that certain groups of people are not perpetually marginalized or forced into poverty because they are denied access to resources on the basis of their social, religious or ethnic background; and equality and participation ensure that affected communities have a way to express their needs and have their voices heard. These constitute components of a rights-based approach that recognizes that if local communities are to meaningfully participate in poverty reduction strategies, they must be free to organize without restriction (right of association), to meet without impediment (right of assembly) and to say what they want without intimidation (freedom of expression). Further, they must have access to the relevant facts (right to information).



It hardly comes as a surprise that China lags in these respects, but this helps to explain why it prefers waging a Great Development of the West campaign rather than tackling long overdue political reform. t





References




  • David Goodman, ed., China's Provinces in Reform: Class, Community and Political Culture. London: Routledge, 1997.

  • “One Strategy, Multiple Agendas.” China Development Brief. Autumn 2000.

  • Tibet Information Network, China’s Great Leap West, Nov. 2000.

  • Voices of the Poor: Crying Out for Change. World Bank, 2000.




Nicolas Becquelin is the Research Director in HRIC’s Hong Kong office.

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