THE NATURALRESOURCE CURSE IN
XINJIANG
Yin Weiwen
Graduate School of Public Policy, MPP/IP51-128231

Background Information about Xinjiang• In 2012, Xinjiang has a resident population of 22.32

million. Among them 8.47 million are Han Chinese, themajority ethnic group in China, and 10.52 million are theUyghurs, the most populated ethnic group in the region(Xinjiang Statistical Yearbook, 2013).
• The Gross Domestic Product (GDP) of Xinjiang in 2012 is7505.31 million RMB, and the GDP per capita is 33796
RMB in that year (Xinjiang Statistical Yearbook, 2013)• 1 USD= 6.2 RMB

Background Information about Xinjiang• Xinjiang has 40% of coal reserve, 22% of petroleum

reserve, and 28% of gas reserve in the country.
• The coal deposits in Xinjiang are of higher quality

compared to deposits in other provinces (less sulfur, moreaccessible).
• Oil-gas fields in Xinjiang are concentrated in Karamay,Tarim Basin, and Turfan Basin. They are three of China’s
17 major gas-oil fields in the land, and are among themost productive ones.

Background Information about Xinjiang

Why Xinjiang?
• Soon after Xi left Xinjiang, on April 30, 2014, a terrorist

attack happened in a train station in Urumqi.
• The Kunming Terrorist Attack on March 1, 2014: 33 dead,more than 140 injured.
• Since the 1990s the frequency of terrorist attacks byUyghur independence activists in Xinjiang has been
increasing.
• The oil and gas in Xinjiang are supposed to bringprosperity to local residents. But…
• Natural resource curse is a good theoretical framework…

What is a Natural Resource Curse?
• The view that natural resources and democracy do not go

together is often coupled with parallel literatures that findcorrelations between natural resources and slow
economic growth or the onset of civil wars. Taken
together, these literatures have given rise to the stylized
fact that there is a “resource curse.” (Haber and Menaldo,2011)• In other words, natural resource abundance is believed tohave some negative effect on either politicaldemocratization, or economic growth, or both
simultaneously. Such causal observation is usuallyreferred as “natural resource curse”.

Hypothesis

Natural resourceabundance and resource
exploitation in Xinjiang

Distributional inequality
between Han and theUyghurs against
background of
marketization

Han-dominatedgovernment respondswith repression(repression effect) andpatronage (rentier effect)

Strengthening of theauthoritarian rule

The Uyghurs rise tochallenge the authority

Literature Review
Whether the empirical results support the “curse”
SupportWhichdependent
variable thepaper isfocused on

Economic
GrowthNot Support

Warner (1995)
Sala-i-Martin andSubramanian (2003)
Collier and Goderis (2009)

PoliticalRoss (2001)
Democratiza Wantchekon (2002)
tion
Jensen and Wantchekon(2004)
Smith (2004)
Friedman (2006)
Goldberg et al. (2008)
Norman (2009)
Ross (2009)
Aslaksen (2010)
Ramsay (2011)

Haber and Menaldo(2011)
Wacziarg (2012)

Ross, M. L. (2001)• He explores the question of causality: if oil does haveantidemocratic effects, what is the causal mechanism?
• (1) a “rentier effect,” which suggests that resource-richgovernments use low tax rates and patronage to relievepressures for greater accountability;• (2) a “repression effect,” which argues that resource
wealth retards democratization by enabling governmentsto boost their funding for internal security;• (3) and a “modernization effect,” which holds that growth
based on the export of oil and minerals fails to bring about
the social and cultural changes that tend to produce
democratic government.

Ross, M. L. (2001)• Natural Resource and Ethnic Conflict (Civil War)• “Mineral wealth is often geographically concentrated. If it

happens to be concentrated in a region populated by anethnic or religious minority, resource extraction may
promote or exacerbate ethnic tensions, as federal,
regional, and local actors compete for mineral rights.
These disputes may lead to larger military forces and lessdemocracy in resource-rich, ethnically fractured statessuch as Angola, Burma, the Democratic Republic ofCongo, Indonesia, Nigeria, Papua New Guinea, Sierra
Leone, and South Africa.”

Goldberg, E. et al. (2008)• Using a new data set for the U.S. states spanning 73

years and case studies of Texas and Louisiana.
• In short, the American states look a lot like
contemporary accounts of many mineral economies:
Economic decisions were driven by the prospect of huge
returns in oil, rent seeking was prevalent, and state
governments colluded with private firms and each other tomaximize the rents they might extract from the oil industry.
• How about Xinjiang? Oil and gas exploitation represents
almost half of Xinjiang’s fiscal revenues (Becquelin,2004).

Literature Review (Formal Theories)• The Mechanisms• Ross (2001): repression effect, rentier effect,

modernization effect• Caselli (2006) argues that countries with large amounts ofnatural resources experience power struggles, in thesense that potential challengers have a stronger incentive
to seek to replace the existing government, or other formsof forced change in leadership.
• Caselli, F. and Cunningham, T. (2009) suggest that future

work should tackle distributional effects more explicitly.

Hypothesis

Natural resource
abundance and resource
exploitation in Xinjiang

Distributional inequality
between Han and theUyghurs against
background ofmarketization

Han-dominatedgovernment respondswith repression(repression effect) andpatronage (rentier effect)

Strengthening of theauthoritarian rule

The Uyghurs rise tochallenge the authority

Variables and MeasurementVariablesMeasurement

Data

Natural Resource
Abundance and Resource
Exploitation in Xinjiang
Distributional Inequality

Output of Oil and Gas

Xinjiang Statistical YearbookMigration,Unemployment, IncomeGap

Data on migration and relevant
empirical researches using
national population census data

Challenge
Uyghurs

Repression
Patronage

fromthe Frequency
ofMass GTD
Protests
Frequency of Extreme
Activities(including
Terrorist Attacks)
Public Security Budget
Internet CensorshipSocial Control Methods Frequency of Mass Protests
FiscalTransfer
Investment and News report

Methodology• Within-Case Analysis• Van Evera (1997: 58-64)• Congruence Procedures: When using congruence

procedures, the investigator explores the case looking forcongruence or incongruence between values observed on
the independent and dependent variable and values
predicted by the test hypothesis;• Process Tracing: In process tracing, the investigator
explores the chain of events or the decision-making
process by which initial case conditions are translated intocase outcomes.

Output of Crude Oil (10000 tons)

Output of Natural Gas (100 million cu. m )Migration Flood
Dependent VariableΔmipop= migration population from other provinces in2010 - migration population from other provincesin 2000

Independent Variables
Δsegdp= GDP of secondary sector of Xinjiang in 2010 GDP of secondary sector of Xinjiang in 2000,billion RMB

Δgdp= GDP of Xinjiang in 2010 - GDP of Xinjiang in2000, billion RMB

Δenpop= population working in energy industry ofXinjiang in 2010 – population working in energy
industry of Xinjiang in 2000!

Migration Flood
Model 1
ΔsegdpModel 23167.94***(315.47)

ΔenpopModel 3Model 4

3000.14***(237.67)
151.28***(28.21)132.93***(16.54)73.16***(13.04)Δgdp

2151.68***

Constant-3520.29

6051.86-1707.492(115.48)-5589.19***(2695.18)(3321.539)(2035.16)(1582.11)

84

84

84

84

Prob>F

0.00

0.00

0.00

0.00

R-square

0.55

0.26

0.75

0.86

AdjustedR-square

0.55

0.25

0.74

0.86

NumberofObservations

Note: The numbers in parentheses are standard errors. *p < 0.05. **p < 0.01. *** p < 0.001.

Migration Flood
Percentage of Ethnic

Oil or Gas Output

Minorities in 2010

Reported in 2007

XUAR

59.52

Not Applied

Urumqi City

25.09

Yes

Qaramay City

18.35

Yes

Turpan Administrative

74.98

Yes

30.65

NoChangji Hui
Autonomous Prefecture

24.69

No

Bortala Mongolian
Autonomous Prefecture

35.04

No

Bayangol Mongolian

40.71

Yes

77.11

No

Kizilsu Kirgiz
Autonomous Prefecture

93.22

No

Kashgar Administrative

92.00

No

96.41

No

Ili Kazak AutonomousPrefecture

64.78

No

Tacheng [Tarbagatai]

34.27

No

61.45

No

Offices
Hami [Kumul]
Administrative Offices

Autonomous Prefecture
Aksu Administrative
Offices

Prefecture
Hotan Administrative
Offices

Administrative Offices
Altay Administrative
Offices!

Unemployment Problem of Ethnic
Minorities• Zhu and Balchford (2012) believe it is the self-initiated/market-driven

migration that has a very direct impact on both demographic andemployment situations in ethnic minority areas.

• In a free market where companies, including state-owned ones,

emphasize efficiency, Han Chinese do have more advantages simply
because they can speak Mandarin Chinese more fluently than theUyghurs, for whom Mandarin is a completely different language.
According to a survey, only 19.88% of the Uyghurs have the ability tospeak Mandarin, ranking the 50th among the 54 minorities surveyed(Han, 2013).

• That’s the reason why the ADB report of 2001 identifies language

policy in Xinjiang as one of the most fundamental obstacles to theupward mobility of the Uygur (Asian Development Bank, 2002:276-277).

• Two Case Studies.

Challenges from the Uyghurs
Terrorist Attacks in China (GTD)
2520

15

10

50
2000

2001

2002

2003

2004

All

In Xinjiang

2005

2006

2007

2008

2009

2010

By Uyghur Separatists (including suspected, excluding unkwown)

2011

2012

YearDatePlace

1990

April 5thAkto County, Kizilsu Kirgiz
Autonomous Prefecture

1992

February 5th

1993

June 171997

February 5th

UrumqithKashgar
Yining City, Ili Kazak
Autonomous Prefecture

February 25thth

2008

August 4Kashgar

2009

July 5th

Urumqi2012

February 28th

July 18th
2013

rd

Bachu County, Kashgar

June 26th

Shanshan County, Turpan

April 23

August 20

Yecheng County, Kashgar

November 16th

Bachu County, Kashgarth

Shufu County, Kashgar

December 30th

Shache County, Kashgar

January 24th

Xinhe County, Aksu

th

Wushi County, Aksu

December 15

2014

Yecheng County, Kashgar
HotanthFebruary 14!

UrumqiRepression• According to official statistics released in January 2013,

regional authorities allocated 9.34 billion RMB to thepublic security sector in 2012, a 23-percent increase over2011.
• Information blockade that was introduced after the street

riots on July 5th, 2009: the SMS system was completely
shut down for almost 7 months, while it took 10 months torestore the very basic access to the Internet.
• The frequency of mass protests that broke out in Xinjiang(very counter-intuitive).

Repression• There have been 267 mass protests with more than 100

participants in the past 13 years in Guangdong. Incontrast, at the same period, the number is 5 in Xinjiang.
• Bovingdon (2013; 21-22) gives his explanation in this way:

officials and public security personnel have kept a tight lid
on public protest in Xinjiang; as a consequence, mostprotest has been individual or private. He also notices thatthe frequency of protests in Xinjiang was declining while
they were on a dramatic rise in the rest of China.

Patronage• Less than one year after the July 5th riots, in May 2010,

top central government and Communist Party leadersheld a “work forum” to set state economic and politicalobjectives for Xinjiang. The meeting marks the first workforum directed at the XUAR.

Patronage• (1) 19 provinces and municipalities, places in the rest of Chinathat get particular benefits from Xinjiang’s oil and gas, havebeen designated as Xinjiang partners. They are required tocontribute 0.3 to 0.6 percent of their fiscal revenues from 2011
to 2020 to support Xinjiang’s development. Starting in 2011 theregion will receive more than $10 billion in financial aid fromthis program.
• (2) Producers of crude oil and natural gas in Xinjiang will belevied a new 5 percent tax. This new tax system will be basedon sales price instead of on volume as it was before. CNPC's
annual crude oil production in Xinjiang is 18 million tons, while
Sinopec produces 7 million tons each year. If the resources tax
is collected at 5 percent, CNPC and Sinopec, China's top two
oil companies, will add 5 billion RMB ($732 million) in tax
revenue to the region annually as oil prices stabilize at $80 perbarrel.

Conclusion

Natural resource
abundance and resource
exploitation in Xinjiang

Distributional inequality
between Han and theUyghurs against
background ofmarketization

Han-dominatedgovernment respondswith repression(repression effect) andpatronage (rentier effect)

Strengthening of theauthoritarian rule

The Uyghurs rise tochallenge the authority

Policy Suggestion• Promoting the usage of Mandarin Chinese will be beneficial foranyone in the job market.
• In fact, the communists’ language policy before the 1990s

should be responsible for the poor Mandarin Chinese
knowledge of many Uyghurs youth.
• Of course, it would be better if Han Chinese in Xinjiang canfollow some good measures in Mao era and learn Uyghur
language while Mandarin is promoted by the government, as
this can mitigate ethnic estrangement between Han Chinese
and the Uyghurs to some extent, and appease those who feel
offended by the government’s language policy.