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China to turn Silk Road city into special economic zone

China hopes Kashgar, the crossroads of Europe and Asia, will become the launch pad for goods into South and Central Asia. But Uighur residents worry that the real goal is to weaken their identity.

November 17, 2010|By Barbara Demick, Los Angeles Times

The worst race riots in recent Chinese history, which left hundreds dead, erupted last year in Urumqi, about 700 miles away. The initiative for the economic zone grew in part from that unrest. Many economists, Han Chinese and Uighur alike, saw the roots of the violence in high rates of unemployment among young Uighur men.

And so in May, Chinese President Hu Jintao announced a $15-billion-a-year investment package at a special meeting of the Politburo on Xinjiang's economic future. The economic zone, like its inspiration, Shenzhen, will feature tax breaks, investment incentives and easing of regulatory requirements for new businesses. Along with the central government, the city of Shenzhen is sponsoring the Kashgar project, transferring $1.5 billion this year alone to support the new zone.

Much of the property in Kashgar is now owned by investors from Wenzhou, a city near Shanghai whose entrepreneurs are considered modern-day Marco Polos for their love of exploring and tapping the wealth of exotic realms.

Real estate agents from Kashgar were quoted by the Xinjiang Business Daily saying that prices for apartments went up as much as 30% and commercial property as much as 40% from March to July.

"Before locals bought apartments just for themselves. Now more and more speculators are coming in," one real estate sales manager told the newspaper.

Shortly after the article ran July 1, the General Administration for Press and Publications forced the newspaper and one other that reported on the real estate boom to run retractions and pay fines of $4,200 each for stories that "caused serious negative impact."

For China, Kashgar is a modern-day version of the wild west, a remote and exotic destination far closer to Afghanistan (160 miles) than to Beijing (2,100 miles). The first direct flights were introduced only in September.

The city is a convenient shopping hub for Central Asian businessmen, who arrive on tour buses and leave with vinyl shopping bags stuffed with Chinese-made wristwatches, DVD players, cellphones and athletic shoes to sell back home. With the exception of some artisanal knives and rugs, almost all the merchandise today is manufactured on China's east coast, something that should change with the economic zone status.

However, the Shenzhen phenomenon won't be easily replicated. The routes to western border crossings out of China run through harsh desert and wind-swept mountain passes frequently closed by weather and political turmoil.

Dru Gladney, an expert on Xinjiang at Pomona College, says Uighur economists believe job preference should be given to people with local hukous, or residency permits, so Kashgar's Uighurs as well as longtime Han Chinese residents get first crack at jobs. But he is pessimistic.

"If these guys are coming from Wenzhou to invest in Kashgar from outside, they're going to hire people from Wenzhou. That's how it works in China," Gladney said.

barbara.demick@latimes.com

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