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ANYONE who’s ever dreamed of walking on the surface of Mars should visit Xinjiang Uygur Autonomous Region, China’s northwestern bridgehead into Central Asia.
The Gobi desert landscape that dominates the region’s south and west looks like something between the pit of an open-air iron ore mine and a vision of the planet post-nuclear apocalypse. A carpet of red-brown rocks covers vast, dusty flatlands that rise into craggy mountains on the horizon. In such tracts, there are no trees, and rarely any visible signs of life.
Life in Xinjiang huddles around the oases. As one approaches oasis cities like Turpan and Hami, greenery flourishes thanks to vast agricultural projects that expand on traditional Uygur “Kariz,” a subterranean system of irrigation built 2,000 years ago.
The reasons for Xinjiang’s aridity are the three enormous mountain ranges – the Tianshan, Kunlun and Pamir ranges – that encircle the autonomous region and deprive swathes of its territory of regular rainfall.
Xinjiang is also thousands of kilometers from significant bodies of water, meaning rainfall, when it does come, is minimal. The region is home to the Eurasian pole of inaccessibility – the farthest point from the sea in all of Eurasia. From the “pole” in the desert two hours’ drive north of Urumqi, the autonomous region’s capital, it’s 2,647 kilometers as the crow flies to the nearest sea, off the coast of Pakistan.
Owing to this far-flung geography, Xinjiang was long regarded as an underdeveloped backwater in China. Days’ journey by road and rail to the country’s eastern coast ports meant it missed out on the export-generated wealth of China’s early economic reform period.
The region’s fortunes began to change around the turn of the millennium as the Chinese government kicked off its “Develop the West” program, which aimed to encourage foreign investment and production for export in the country’s languishing inland regions.
Today, Xinjiang is getting richer, and fast. Average GDP per capita in the region, at around RMB 30,000, is just below the national average.
Xinjiang registered 10.7 percent GDP growth in the first half of 2012, 2.9 percentage points higher than the country’s average. Much of this growth thanks to something Xinjiang originally missed out in China’s early growth story – exports. Coupled with rising imports, export-generated earnings are the driving force behind the rapidly rising standards of living in the autonomous region.
The Long Road to Foreign Trade
Xinjiang shares borders with India, Pakistan, Afghanistan, Tajikistan, Kyrgyzstan, Kazakhstan, Russia and Mongolia. The obvious trade potential from so many neighboring countries was undermined in the 20th century by a lack of cross-border road and rail infrastructure.
But before the 1990s, politics meant that any discussion of the potential for cross-border trade was a moot point. That changed with the dissolution of the Soviet Union in 1991 and the establishment of friendly relations between China and the newly impendent nations of Central Asia and Russia.
Relations took a step forward with the formation of the Shanghai Cooperation Organization (SCO) in 1996, members of which now include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. SCO member states soon realized that their geography was an advantage – improving road and rail linkages between them could mean a massive boost to the region’s developing economies. The results to date and future potential for such cross-border trade cooperation were the topic of much discussion at the second annual China-Eurasia Expo, held in Urumqi in September this year.
“Alashankou, the inland port on the Sino-Kazakh border, was open to road and rail cross-border freight in 1992. It proves instrumental in China-Central Asian trade, linking China’s burgeoning rail network with the Kazakh national network. It marks a step forward,” said Che Tanlai, a researcher at the Ministry of Railways, at the expo.
“Cross-border trade in 1992 was small, amounting to a few hundred thousand tons,” noted Che. China’s growth story changed that. In the first seven months of this year, Alashankou witnessed cross-border trade amounting to 9.08 million tons of freight. Total cross-border freight this year is expected to top 16 million tons.
Xinjiang now has 17 first-grade and 12 second-grade land ports, making it the most internationally connected region in the country. Alashankou Port is the only first-grade port in China to boast a unified system of road, rail and oil pipeline infrastructure.
Xinjiang’s foreign trade registered a new high in 2011, topping US $22.82 billion and growing over 33 percent year on year. According to customs statistics, last year exports totaled US $16.8 billion, registering growth of almost 30 percent, while imports jumped 44 percent to US $5.99 billion. Urumqi ranked top in the region for foreign trade volume, which stood at US$9.03 billion for the year, which was over 50 percent higher than 2010.
Getting to Know the Neighbors
In the first six months of this year, Xinjiang’s land ports reported an almost 20 percent year-on-year increase in vehicle arrivals and departures. Much of the ports’ outgoing freight heads for final destinations in the central Asian “stans.”
“In 2011, 73 percent of the total trade volume between Tajikistan and China came from Xinjiang,” said Damdorov Kalon, commercial counselor of the Embassy of the Republic of Tajikistan in China, at the China- Eurasia Expo in September.
“We anticipate a bright future for Xinjiang-Tajikistan economic and trade cooperation,” he added.
China has entered the best time in history in its relations with Eurasian countries, noted Chinese Premier Wen Jiabao in his keynote address at the expo. “Over the past 10 years, China’s trade with countries in Central, West and South Asia has surged from US $25.4 billion to over US $370 billion, growing at an average annual rate of 30.8 percent. Chinese companies have made direct investment worth US $250 billion in Eurasian countries and signed project contracts worth about US$470 billion,” he said.
In 2011, cross-border trade between Xinjiang and the five Central Asian members of the CIS (Commonwealth of Independent States) and Russia reached US $17.9 billion. The figure accounts for almost four fifths of Xinjiang’s entire foreign trade, according to He Yiming, head of the commerce department of the regional government.
In ensuring robust growth in cross-border trade going into the future, the construction and development of two border towns is key, said Nur Bekri, chair of the Xinjiang regional government.
Last year China’s State Council unveiled plans to transform part of Kashi, in Xinjiang’s southwest, and Korgas, a land port on Xinjiang’s border with Kazakhstan, into economic zones. The zones will be built over the next five years and industries will take shape by 2020, said Lu Min, an official from the Ili Kazakh Autonomous Prefecture where Korgas is located.
The zones will be afforded an array of preferential policies, including tax exemptions, subsidized electricity and low-interest loans for infrastructure. Korgas is already flourishing as a center for cross-border trade, said Lu. “In the first half of this year, the economic zone reported a trade volume of over US $5 billion, a 75.97-percent jump compared with the same period last year.”
In April, Korgas opened a China-Kazakhstan free-trade center on the border, which provides a duty-free shopping service and cross-border trade tariff exemptions for Chinese companies.
Reaching Further Afield
Korgas’ land port is helping to propel China-Kazakhstan economic relations to new heights. The country has already become Xinjiang’s largest trading partner; bilateral trade hit a record US $10.6 billion last year.
As China-Kazakhstan economic cooperation strengthens, the two countries’ governments have committed to significantly expanding transport links between them. The aim: to create a transport corridor connecting Chinese road and railway networks with Europe.
“With China’s support, a Western Europe-Western China international transport corridor is under construction. This large-scale project is a significant portion of which passes through Kazakh territory and will be completed by 2015. This corridor will reduce the freight transport time from China to Europe by two-thirds,” said Karim K. Massimov, Prime Minister of the Republic of Kazakhstan, last September.
As this “New Silk Road” becomes a reality, nations from out- side the Central Asian region are looking to tap into the Xinjiang market as their own “bridgehead”into the vast market of central China.
In April this year, Germany Volkswagen AG announced plans to open a new factory in Urumqi by 2015. The assembly plant will produce around 50,000 vehicles per year. German investment in China is already strong, reaching around US $33.7 billion last year. The Volkswagen investment in Urumqi will total US $133 million.
“We expect strong growth in China’s rural regions,” said Karl-Thomas Neumann, head of VW’s China operations, in a statement.
The vehicles will mainly be produced for the domestic market. But at least one German freight company, state-owned Deutsche Bahn, already runs a freight train service from Central China through Xinjiang on its way to Germany via Kazakhstan and Europe. This should – in theory – provide a direct transport connection for auto parts between VW’s new plant in Urumqi and company headquarters in Wolfsburg, Germany.
Another country with more than a passing interest in Xinjiang’s market is Turkey. Cultural and linguistic connections between the country and Xinjiang’s Turkic ethnic majority, the Uygur, ensure that Turkish goods – mainly foodstuffs – already enjoy widespread popularity in the autonomous region’s shops and malls.
In 2010 Ankara committed to opening a Turkish industrial park in Urumqi. The park is to occupy 66 hectares within the Ganquanpu Industrial Zone, 42 km from downtown.
On his April visit to China – the first by a Turkish Prime Minister in 27 years – Mr. Recep Tayyip Erdo?an made Urumqi his first port of call. He visited the budding Turkish Industrial Park before flying to Beijing for high-level talks, which yielded an historic Sino-Turkish nuclear energy deal.
At the September China-Eurasia Expo in Urumqi, Turkey’s Vice Prime Minister Ali Babacan gave an opening address alongside Chinese Premier Wen Jiabao and several other regional leaders. “A very positive step [in Sino-Turkey relations] has been the allocation of what is a very large piece of land to Turkish entrepreneurs in the form of this Xinjiang Economic and Technology Development Zone. The free flow of personnel, goods, energy and capital is a mutually beneficial situation,”Babacan said.
In his speech Babacan also estimated that Turkey plans to raise Sino-Turkey bilateral trade volumes to US $50 billion by 2015 and US $100 billion by 2020. “We believe that a ‘Silk Railroad’ connecting China to Central Asia, Turkey and on to Europe is an extremely important initiative. We are totally committed to realizing this project,” he added.
With such commitments, Xinjiang, long mentioned as an economic afterthought in China, is powering the development of the country’s far west. And as Central Asia as a whole becomes increasingly interconnected through trade and political initiatives, it’s the peoples of this diverse, landlocked region who are reaping the benefits.
The Gobi desert landscape that dominates the region’s south and west looks like something between the pit of an open-air iron ore mine and a vision of the planet post-nuclear apocalypse. A carpet of red-brown rocks covers vast, dusty flatlands that rise into craggy mountains on the horizon. In such tracts, there are no trees, and rarely any visible signs of life.
Life in Xinjiang huddles around the oases. As one approaches oasis cities like Turpan and Hami, greenery flourishes thanks to vast agricultural projects that expand on traditional Uygur “Kariz,” a subterranean system of irrigation built 2,000 years ago.
The reasons for Xinjiang’s aridity are the three enormous mountain ranges – the Tianshan, Kunlun and Pamir ranges – that encircle the autonomous region and deprive swathes of its territory of regular rainfall.
Xinjiang is also thousands of kilometers from significant bodies of water, meaning rainfall, when it does come, is minimal. The region is home to the Eurasian pole of inaccessibility – the farthest point from the sea in all of Eurasia. From the “pole” in the desert two hours’ drive north of Urumqi, the autonomous region’s capital, it’s 2,647 kilometers as the crow flies to the nearest sea, off the coast of Pakistan.
Owing to this far-flung geography, Xinjiang was long regarded as an underdeveloped backwater in China. Days’ journey by road and rail to the country’s eastern coast ports meant it missed out on the export-generated wealth of China’s early economic reform period.
The region’s fortunes began to change around the turn of the millennium as the Chinese government kicked off its “Develop the West” program, which aimed to encourage foreign investment and production for export in the country’s languishing inland regions.
Today, Xinjiang is getting richer, and fast. Average GDP per capita in the region, at around RMB 30,000, is just below the national average.
Xinjiang registered 10.7 percent GDP growth in the first half of 2012, 2.9 percentage points higher than the country’s average. Much of this growth thanks to something Xinjiang originally missed out in China’s early growth story – exports. Coupled with rising imports, export-generated earnings are the driving force behind the rapidly rising standards of living in the autonomous region.
The Long Road to Foreign Trade
Xinjiang shares borders with India, Pakistan, Afghanistan, Tajikistan, Kyrgyzstan, Kazakhstan, Russia and Mongolia. The obvious trade potential from so many neighboring countries was undermined in the 20th century by a lack of cross-border road and rail infrastructure.
But before the 1990s, politics meant that any discussion of the potential for cross-border trade was a moot point. That changed with the dissolution of the Soviet Union in 1991 and the establishment of friendly relations between China and the newly impendent nations of Central Asia and Russia.
Relations took a step forward with the formation of the Shanghai Cooperation Organization (SCO) in 1996, members of which now include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. SCO member states soon realized that their geography was an advantage – improving road and rail linkages between them could mean a massive boost to the region’s developing economies. The results to date and future potential for such cross-border trade cooperation were the topic of much discussion at the second annual China-Eurasia Expo, held in Urumqi in September this year.
“Alashankou, the inland port on the Sino-Kazakh border, was open to road and rail cross-border freight in 1992. It proves instrumental in China-Central Asian trade, linking China’s burgeoning rail network with the Kazakh national network. It marks a step forward,” said Che Tanlai, a researcher at the Ministry of Railways, at the expo.
“Cross-border trade in 1992 was small, amounting to a few hundred thousand tons,” noted Che. China’s growth story changed that. In the first seven months of this year, Alashankou witnessed cross-border trade amounting to 9.08 million tons of freight. Total cross-border freight this year is expected to top 16 million tons.
Xinjiang now has 17 first-grade and 12 second-grade land ports, making it the most internationally connected region in the country. Alashankou Port is the only first-grade port in China to boast a unified system of road, rail and oil pipeline infrastructure.
Xinjiang’s foreign trade registered a new high in 2011, topping US $22.82 billion and growing over 33 percent year on year. According to customs statistics, last year exports totaled US $16.8 billion, registering growth of almost 30 percent, while imports jumped 44 percent to US $5.99 billion. Urumqi ranked top in the region for foreign trade volume, which stood at US$9.03 billion for the year, which was over 50 percent higher than 2010.
Getting to Know the Neighbors
In the first six months of this year, Xinjiang’s land ports reported an almost 20 percent year-on-year increase in vehicle arrivals and departures. Much of the ports’ outgoing freight heads for final destinations in the central Asian “stans.”
“In 2011, 73 percent of the total trade volume between Tajikistan and China came from Xinjiang,” said Damdorov Kalon, commercial counselor of the Embassy of the Republic of Tajikistan in China, at the China- Eurasia Expo in September.
“We anticipate a bright future for Xinjiang-Tajikistan economic and trade cooperation,” he added.
China has entered the best time in history in its relations with Eurasian countries, noted Chinese Premier Wen Jiabao in his keynote address at the expo. “Over the past 10 years, China’s trade with countries in Central, West and South Asia has surged from US $25.4 billion to over US $370 billion, growing at an average annual rate of 30.8 percent. Chinese companies have made direct investment worth US $250 billion in Eurasian countries and signed project contracts worth about US$470 billion,” he said.
In 2011, cross-border trade between Xinjiang and the five Central Asian members of the CIS (Commonwealth of Independent States) and Russia reached US $17.9 billion. The figure accounts for almost four fifths of Xinjiang’s entire foreign trade, according to He Yiming, head of the commerce department of the regional government.
In ensuring robust growth in cross-border trade going into the future, the construction and development of two border towns is key, said Nur Bekri, chair of the Xinjiang regional government.
Last year China’s State Council unveiled plans to transform part of Kashi, in Xinjiang’s southwest, and Korgas, a land port on Xinjiang’s border with Kazakhstan, into economic zones. The zones will be built over the next five years and industries will take shape by 2020, said Lu Min, an official from the Ili Kazakh Autonomous Prefecture where Korgas is located.
The zones will be afforded an array of preferential policies, including tax exemptions, subsidized electricity and low-interest loans for infrastructure. Korgas is already flourishing as a center for cross-border trade, said Lu. “In the first half of this year, the economic zone reported a trade volume of over US $5 billion, a 75.97-percent jump compared with the same period last year.”
In April, Korgas opened a China-Kazakhstan free-trade center on the border, which provides a duty-free shopping service and cross-border trade tariff exemptions for Chinese companies.
Reaching Further Afield
Korgas’ land port is helping to propel China-Kazakhstan economic relations to new heights. The country has already become Xinjiang’s largest trading partner; bilateral trade hit a record US $10.6 billion last year.
As China-Kazakhstan economic cooperation strengthens, the two countries’ governments have committed to significantly expanding transport links between them. The aim: to create a transport corridor connecting Chinese road and railway networks with Europe.
“With China’s support, a Western Europe-Western China international transport corridor is under construction. This large-scale project is a significant portion of which passes through Kazakh territory and will be completed by 2015. This corridor will reduce the freight transport time from China to Europe by two-thirds,” said Karim K. Massimov, Prime Minister of the Republic of Kazakhstan, last September.
As this “New Silk Road” becomes a reality, nations from out- side the Central Asian region are looking to tap into the Xinjiang market as their own “bridgehead”into the vast market of central China.
In April this year, Germany Volkswagen AG announced plans to open a new factory in Urumqi by 2015. The assembly plant will produce around 50,000 vehicles per year. German investment in China is already strong, reaching around US $33.7 billion last year. The Volkswagen investment in Urumqi will total US $133 million.
“We expect strong growth in China’s rural regions,” said Karl-Thomas Neumann, head of VW’s China operations, in a statement.
The vehicles will mainly be produced for the domestic market. But at least one German freight company, state-owned Deutsche Bahn, already runs a freight train service from Central China through Xinjiang on its way to Germany via Kazakhstan and Europe. This should – in theory – provide a direct transport connection for auto parts between VW’s new plant in Urumqi and company headquarters in Wolfsburg, Germany.
Another country with more than a passing interest in Xinjiang’s market is Turkey. Cultural and linguistic connections between the country and Xinjiang’s Turkic ethnic majority, the Uygur, ensure that Turkish goods – mainly foodstuffs – already enjoy widespread popularity in the autonomous region’s shops and malls.
In 2010 Ankara committed to opening a Turkish industrial park in Urumqi. The park is to occupy 66 hectares within the Ganquanpu Industrial Zone, 42 km from downtown.
On his April visit to China – the first by a Turkish Prime Minister in 27 years – Mr. Recep Tayyip Erdo?an made Urumqi his first port of call. He visited the budding Turkish Industrial Park before flying to Beijing for high-level talks, which yielded an historic Sino-Turkish nuclear energy deal.
At the September China-Eurasia Expo in Urumqi, Turkey’s Vice Prime Minister Ali Babacan gave an opening address alongside Chinese Premier Wen Jiabao and several other regional leaders. “A very positive step [in Sino-Turkey relations] has been the allocation of what is a very large piece of land to Turkish entrepreneurs in the form of this Xinjiang Economic and Technology Development Zone. The free flow of personnel, goods, energy and capital is a mutually beneficial situation,”Babacan said.
In his speech Babacan also estimated that Turkey plans to raise Sino-Turkey bilateral trade volumes to US $50 billion by 2015 and US $100 billion by 2020. “We believe that a ‘Silk Railroad’ connecting China to Central Asia, Turkey and on to Europe is an extremely important initiative. We are totally committed to realizing this project,” he added.
With such commitments, Xinjiang, long mentioned as an economic afterthought in China, is powering the development of the country’s far west. And as Central Asia as a whole becomes increasingly interconnected through trade and political initiatives, it’s the peoples of this diverse, landlocked region who are reaping the benefits.