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Chinese Gov’t To Invest $1.6 Billion In Xinjiang’s Textile Industry

The Chinese government announced its plans to invest 10 billion yuan ($1.6 billion) directly into the textile industry in the autonomous region, Xinjiang Uygur. The hope is that an infusion of capital will generate as many as one million new jobs, in an area that has suffered from instability as a result of ethnic conflict.

Most of that investment will be funneled into the construction of new infrastructure for textile facilities and to support already existing textile companies. In particular, Urumqi, the capital of Xinjiang, has been designated as the future regional center for textile and apparel commerce. Also, Shihezi, Korla and Aksu have all been singled out for investment.

Some note, however that the decision to so aggressively fund Xinjiang seems odd since that region has never suffered from real employment problems. In fact, it is the biggest importer of labor in Western China, having attracted more than 5 million migrant workers last year, one-fifth of the region’s total population. Each August brings millions of workers transported by train to harvest cotton.

Moreover, unemployment in 2012 hovered around 3.2%, the lowest Xinjiang has experienced in some twenty years. So why the substantial subsidization? Many believe the real problem in Xinjiang is persistent social unrest, exacerbated by the fact that minority groups account for over 60 percent of the population but generally lack the labor skills to work in the textile industry. So while Xinjiang has become a magnet for employment, its marginalized local population continues to languish economically, while superior-skilled workers are shipped in at their expense.

The new tranche of investment from the government is unlikely to mitigate this problem much since there seem to be no attendant quotas to hire locals. As long as the native population is under-skilled, new employment opportunities will continue to be filled by imported workers from surrounding provinces. The only way appreciable change could be created would be if some of that capital was directed toward vocational training for the local population.