May 20, 2010 / 3:24 PM / 8 years ago

China in growth push for restive Xinjiang region

BEIJING (Reuters) - China will mount a vast investment drive in troubled far-west Xinjiang region, revamping taxes on energy operations in a bid to lift living standards and stifle ethnic unrest, state media said on Thursday.

Paramilitary policemen attend an anti-terrorism drill at a military base in Hami, Xinjiang Uighur Autonomous Region April 7, 2010. REUTERS/Stringer/Files

The package of tax reforms, government investment targets and investment incentives for the tense region bordering central Asia emerged from a conference attended by Chinese President Hu Jintao and other senior leaders, state television reported.

Xinjiang’s population of 21 million is mainly divided between Muslim Uighurs, long the region’s majority, and Han Chinese, many of whom arrived in recent decades.

Last July, Uighur protests in Xinjiang’s regional capital, Urumqi, gave way to attacks that targeted Han Chinese. At least 197 people died in the initial violence, and two days later Han residents held protests and staged revenge attacks on Uighurs.

China’s ruling Communist Party has since been crafting policies to strengthen its hold on Xinjiang, and officials have suggested that economic woes lay behind the ethnic anger.

A government meeting that ended on Thursday approved measures that President Hu said would help ensure Xinjiang became a prosperous part of China, immune to separatist forces, which Beijing says are active from central and southern Asia.

Hu told the three-day meeting that Xinjiang “has an especially important strategic status” for China, the China News Service reported.

Hu said the region should undergo a spurt in development so that its average economic output per resident reached the national average by 2015. “We must engage in vigorous economic development, accelerate the pace of development,” he said.

OIL AND GAS RESERVES

Xinjiang has oil and gas reserves and is spanned by a gas pipeline linking China to central Asian suppliers. Its economy grew by 8.0 percent in 2009, compared to national GDP growth of 8.7 percent. But many Uighurs are poor, and even well-educated ones can have difficulty finding steady, well-paid jobs.

Among the new policies was a long-expected revamp on a resource tax in Xinjiang, which produces roughly 13 percent of the country’s total crude oil and 28 percent of natural gas.

The resource tax for oil and gas produced in Xinjiang will be levied based on price instead of quantity, effectively raising the revenue for the regional government.

This policy will cut into revenues for energy firms operating in the region, including PetroChina and Sinopec Corp.

The government will also relax policies about using natural gas in Xinjiang in an effort to attract more companies who use it for production.

Chinese Premier Wen Jiabao told the meeting that the fixed asset investment goal for Xinjiang in the government’s next five-year plan from 2011 would be more than double the amount in the current plan that ends this year. Banks will be encouraged to expand services in the region, he said. (Additional reporting by Chen Aizhu; Editing by Ron Popeski)

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