A New Shenzhen

Article excerpt

Byline: Isaac Stone Fish

Beijing aims to turn the remote western city of Kashgar into the country's next big boomtown.

The dusty silk-road oasis of Kashgar sits at the precipice of empire. The westernmost city in China borders the remotest parts of Afghanistan and Pakistan; nondirect flights from Beijing, which became available only in September, take more than six hours. Kashgar's average income hovered at about $1,000 a year in 2008, low even for the poorer corners of China. Ethnic tension simmers. Muslim Uighurs, who make up the vast majority of Kashgar prefecture's mostly rural population of 4 million, feel like they're the underclass in their own heartland. Ethnically, culturally, and aesthetically, it's one of the least Han cities in China. Geographically separated from the rest of China by the fierce Taklimakan Desert, "Kashgar's not exactly at the center of things," says Willy Lam, a China analyst at the Chinese University of Hong Kong.

Yet the central government is trying to change just that. It's notable that the flying time from Kashgar to Beijing is the same from the West to East Coast of America, because if Beijing has its way, Kashgar will resemble China's Los Angeles--a regional economic hub in a far western hotbed of ethnic diversity. Beijing is currently showering attention and resources on the region in order to boost the local economy and develop further trade ties into Central Asia and Europe, but also to placate Kashgar's restive Uighur population. In 2009 the central government provided a large chunk of subsidies, some $7.4 billion for construction projects; earlier it spent $25 million on a new airline terminal. Despite protests from Uighurs and conservationists, the government last year tore down thousands of homes in the old city in tandem with a $448 million plan to move residents into government housing. As part of a development scheme to shift resources from rich areas to poor ones, the province of Guangdong is required to transfer $1.4 billion to Kashgar over the next five years.

The clearest signal that Beijing is serious about transforming Kashgar is that in May the government classified the area a Special Economic Zone, the first new one in more than 15 years. A designation held by only six areas in China, including the city of Zhuhai and the hopping tourism destination of Hainan Island, a Special Economic Zone means favorable tax policies, investment opportunities, and, supposedly, openness to the outside world. In Kashgar's case, that means exporting Chinese electronics, food, and household goods in exchange for raw materials from nearby nations in Central and South Asia in particular. Beijing hopes Kashgar will become "a window for countries in Central and South Asia to export Chinese products and explore foreign markets for Chinese products," says Prof. Chen Yao, deputy director of the Western China Development and Research Center of the Chinese Academy of Social Sciences, who advises the government on regional issues. Or as Kashgar Party Secretary Zeng Cun recently put it, "We want to turn Kashgar into a world-level international big city."

The role model for Kashgar is Shenzhen, China's most successful Special Economic Zone, which celebrated its 30th anniversary in August. In 1980 Shenzhen was a fishing village, and now it is one of the nation's wealthiest, most important cities, the urban hub of China's booming southeastern coast. Shenzhen grew over the past three decades by capitalizing on both its advantageous coastal location and proximity to Hong Kong and Taiwan (major sources of investment capital), but also on the huge Chinese government support that came with its designation as the first Special Economic Zone. Shenzhen has been mandated as a vanguard for Chinese economic reform; it was the first city to be allowed to receive foreign investment, and in 2009 the central government set up ChiNext, a NASDAQ-style stock exchange, there. …