The X Factor
— A Vital Place Called Xinjiang

Strategically situated in the heartland of the Eurasian continent, the Chinese Autonomous Region of Xinjiang is no stranger to the vagaries of international trade and the machinations of major world powers. In the latter half of the 19th century, Russia and Britain played out part of their “Great Game” in Xinjiang, each vying for supremacy in the no-man’s land between the Russian and British Empires through espionage, intrigue and political brinkmanship. Further back in time the region was a vital link in the famed Silk Route, crisscrossed by thousands of kilometers of mercantile arteries facilitating the omni-directional flow of goods, thoughts and cultural identities.

Today, Xinjiang finds itself once more a key pawn in a game of geopolitical chess, and the stakes are higher than ever. Well-worn trade routes bearing heavily laden camel caravans have been replaced by multi-lane tarmacked highways and serpentine pipelines. Bustling market towns with legendary names such as Turpan, Kashgar and Yarkand increasingly cater to foreign tourists and upwardly mobile traders from neighboring states looking to cash in on the Chinese economic miracle.

China’s energy plans for the early 21st century were unveiled at the 2000 National People’s Congress. The focus was on construction of a now functional 4,200-km east-west network of gas and oil pipelines running all the way from Xinjiang to Shanghai. In May 2006 oil was pumped directly into Xinjiang from Kazakhstan for the first time, along a recently completed 960-km cross-border pipeline. When fully functional this pipeline will carry 20 million tons of Kazakh oil a year, accounting for 15 percent of China’s imports for 2005. It is just part of a 3000-km project that aims to join China to the Caspian Sea, thereby removing the need for China’s Middle Eastern oil supplies to navigate several potentially risky sea lanes.

Driven by the need to sustain a booming and energy-hungry economy, the Chinese government has made securing access to the largely untapped reserves of oil and natural gas in Central Asia a cornerstone of its economic policy for the next two decades. Exploitation of energy resources close to home is essential if China is to reduce its reliance on Middle Eastern oil and gas – at present Iran alone accounts for about 15 per cent of China’s oil imports. Energy deals by Chinese companies in politically sensitive areas such as Iran and Sudan have done nothing to ease Sino-US relations, and recent US attempts to contain these regimes have directly challenged China’s energy security policies. The need for China to secure a safe oil supply is the major driver in Chinese thinking toward its western neighbors.

China’s ever expanding pipeline network has the potential to bring about a significant strategic realignment of Xinjiang and the adjacent region. Central Asia, with its huge reserves of oil, gas and minerals, has already seen some sharp rivalry between the US, Europe and Japan. All of the major powers, in conjunction with multinational corporations, are seeking to secure alliances, concessions and possible pipeline routes in the area. Oil and gas pipelines to China from Turkmenistan and Kazakhstan could easily be extended to link into the pipeline networks of both Russia and Iran. This model has been dubbed the “Pan Asian Global Energy Bridge” – a Eurasian network of pipelines linking energy resources in the Middle East, Central Asia and Russia through to China’s Pacific Coast. A major part of the old Silk Route is inexorably turning into the “Black Gold Route” of the new millennium.

Despite its geographical proximity, China has played only a marginal role in Central Asia for the past century. Economically, politically and culturally the Central Asian states were firmly locked within Russia’s sphere of influence. The break up of the Soviet Union and subsequent independence in 1991 brought radical changes however, including the opening of the “Bamboo Curtain” to the East. Shuttle traders bringing consumer goods began to fan out across the region, then came big business and senior politicians. Beijing has set up trade missions in every Central Asian country, invested in local enterprises and infrastructure projects, and donated money to aid organizations. The Chinese government has also raised the profile of the Shanghai Cooperation Organization (SCO), which aims to promote the joint interests of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

Across Central Asia increasing numbers of Chinese shops, markets, products and traders pay testament to Beijing’s deliberate and well-orchestrated foreign and economic policies. In addition to its role as a conduit and supplier of fossil fuels, Xinjiang is experiencing rapid growth in cross border trade, and the province has become a bridgehead promoting China’s economic and trade ties with Central Asia and Russia. Trade between Xinjiang and Kazakhstan in 2005 was valued at more than US$6 billion, accounting for 73 percent of the total trade between the two countries, and it is predicted that the value of all Xinjiang’s foreign trade will top US$9 billion this year.

China and Kazakhstan are in the process of establishing a free trade zone, uniting 13 square kilometers of north-west Xinjiang (Port Korgas) with a smaller area of Kazakhstan near Alma-ata. With new railway lines, highways and an international trade centre under construction, the aim is to create an industrial hub which will further stimulate the multilateral flow of goods and services. A second border trade zone was opened in March 2006 at Jeminay - Xinjiang currently has 16 “land ports” open to foreign traders and businesspeople.

With Xinjiang bordering eight countries, the Chinese government is also working to encourage international trade in a south-westerly direction. A new highway is currently under construction across the Taklamakan Desert from Alar to Khotan, and China and Pakistan have recently agreed to open four new road links through the Khunjerab Pass, doubling the number of overland routes between the two countries. The Chinese government is also planning to build several new highways into Nepal from Tibet, to supplement the existing Kodari Highway and increase access to northern India. On July 6, 2006 the border between India (Sikkim) and China (Tibet) at Nathu La was open to trade for the first time in 44 years. China’s trans-border highways are no longer mere conveniences for the People’s Liberation Army, but instruments for the expansion of Chinese economic influence into the subcontinent, breathing new life into the former Silk Route’s southern branches.

The huge Chinese infrastructure investment in Xinjiang has been accompanied by a boom in tourism. The increasingly accessible Taklamakan dunes, snow-covered mountains, clear glacial lakes, fabled oasis towns and distinctive Uyghur culture are proving a major drawcard for both foreign and Chinese tourists.

According to the Xinjiang Tourism Bureau, the region received 88 tourists and earned US$46,000 in 1978. Last year it hosted more than 310,000 overseas travelers and recorded a foreign exchange income of nearly US$91 million, a 1,000-fold increase. Tourism-related turnover exceeded 11.6 billion RMB (US$ 1.4 billion), accounting for 5.3 percent of the province’s gross domestic product. One-day travel packages, especially from Kyrgyzstan and Kazakhstan have become increasingly popular, and a growing number of visitors from Hong Kong, Macau and Taiwan are also being attracted by Xinjiang’s scenic landscapes.

In the next five years, in order to consolidate tourism as one of its pillar industries, Xinjiang will step up efforts to promote a range of activities such as mountain hiking, resort skiing and desert trekking, as well as further developing tourist-related infrastructure. It is hoped that international air routes between the regional capital Urumqi and Japan, Hong Kong and Europe can be opened in order to increase accessibility.

So, what does the future hold for Xinjiang? Aided by lavish government pump- priming, a major resettlement program has made this unlikely backwater the richest province outside of China’s coastal capitalist belt. Ways of life are changing across the province, and changing fast. Under a long-term program announced in 1999 to develop the west, Beijing poured US$30.7 billion into Xinjiang, with the current five-year plan calling for an additional US$51 billion. The Chinese government is aware that only intelligent investment coupled with enlightened social policies and a genuine concern for the environment will support Xinjiang’s multiple roles as a thriving trade axis, centre for tourism and crucial energy gateway.

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