Economic Dimensions of Autonomy and the Right to Development in Tibet

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© International Centre for Human Rights and Democratic Development, 2004.

The opinions expressed in this report do not necessarily reflect the views of Rights & Democracy. This report may be freely excerpted, provided credit is given and a copy of the publication in which the material appears is sent to Rights & Democracy.

INTRODUCTION 1

Autonomy refers to a political arrangement that would offer Tibetans increased voice in the governance and management of the ethnic Tibetan areas in China. Nonetheless, the highly politicized impasse surrounding "The Tibet Question" clouds many of the more practical issues that are implicit in the concept of autonomy. This entrenched posturing can be sidestepped if the principle of autonomy is addressed in developmental terms, thereby opening up dialogue under the rubric of an alternative language. The Right to Development provides just this framework, an appropriate lens through which to synthesize the issues of autonomy within a developmental analysis, thereby helping to guide policymakers through the thorny political underbrush.

This discussion paper will open with a brief presentation of two concepts from a development economics perspective: the right to development and ownership of development process. It will discuss how China has been exemplary in its application of these concepts at the national level as a matter of effective and substantive development policy. It will then examine the dilemmas of polarized growth in the Tibetan areas and the consequent outcomes of social exclusion and disempowerment, and suggest that part of the solution lies in the application of the same principles of the right to development and ownership at the sub-national ethnic level. One mining example will be used to illustrate this point. The paper concludes by tying these issues back to Canada's potential role in promoting dialogue between Beijing and the Tibetan exile leadership.

The Right to Development is a notion that has been supported by both China and Canada. In the 1986 Declaration, this is generally defined as "an inalienable human right, by virtue of which every human person and all peoples are entitled to participate in, contribute to, and enjoy economic, social, cultural and political development, in which all human rights and fundamental freedoms can be fully realized." (2)

In economic terms, the articulation of this right evolved in the post-war period as a means to assert the principle that developing countries should be able to pursue nationally tailored policies that would enhance balanced and sustainable development, defined as either industrialization or human development, just as all of the rich industrialized countries of the world have done and effectively continue to do. Essentially, it comes down to allowing developing countries the domestic space to innovate policies, institutions, and development strategies, and providing a conducive and supportive international framework to support these goals. Examples would include the provisioning of soft loans for infrastructure development without having attached conditionalities that simultaneously undermine ongoing development objectives, or else the regulation of capital flows and foreign exchange markets in a manner that promotes long-term development planning over short-term speculative bubbles and financial instability in the more peripheral countries of the international financial system.

This approach was opposed to pressures in the post-war international economic order for universalistic applications of economic policies bent on the integration of poorer countries into an asymmetrical system that favours the richer countries. It is this perspective that underlies current efforts by many developing countries and international organizations to negotiate a more equitable international economic order, i.e. one that enhances human development in the poorer countries (3). A recent example is the negotiating position taken by the G21 countries, led by Brazil, China, India and South Africa, at the World Trade Organization ministerial meeting in September 2003.

In recent years, these principles have come to be described as ownership, albeit this is a term that means different things to different people. Within the hegemonic discourse of neoliberalism in the 1990s, often described as the Washington Consensus, many scholars and policy makers have formulated ownership in terms of a participatory principle in project management, or else as a technique to create more responsibility among domestic actors in the dissemination of policies, such as by devising ways to increase fiscal responsibility among recipients. Sometimes, "ownership" has even been used as a rhetorical means to justify policies such as privatizing education, or else as a participatory guise to soften the fact that, after two decades of debt crises and financial instability in most of the developing world, effective policy space has been increasingly constrained by the dictates of international financial institutions.

Nonetheless, within the broader framework of the right to development, the concept of ownership should become a potent tool for augmenting the policy space. For instance, in order for governments to fulfill their various human rights obligations, particularly in the realm of economic, social and cultural rights, more space rather than less should be given to face the various constraints to development faced by each country, which differ in each case. The term ownership should actually represent the appropriation or re-appropriation of: direct ownership of development; of control over policy-making, meaning that governments can decide policies rather than simply deciding how to deliver them, and; of control over foreign involvement, such as decisions regarding who invests in what sectors and where, according to the needs and priorities determined by domestic constituencies rather than foreign non-elected technocrats.

In this regard, China is exemplary, not due to its adherence to the economic orthodoxy of the international financial institutions, but rather due to its stubbornness in maintaining policy autonomy within the sphere of its domestic economy, thereby protecting the space in which it could pursue its own eclectic - and ultimately successful - development strategy. In this way, China has emerged as a beacon after two decades of failed structural adjustment policies and the subsequent myopic confusion regarding 'getting policies right', followed by 'getting institutions right'. It has become a model for many developing countries in terms of its ability to enforce its right to development, even at a time when such autonomy has been abandoned throughout much of the developing world, either through force or through faithful conversion.

Many mainstream economists in many an Anglo-American institution still argue that it is despite rather than because of the protection of policy and institutional space in China that the country has undergone one of the most dramatic growth experiences in history (4). Yet there is an abundance of historical evidence to the contrary.

For instance, during most of the last 20 years of rapid growth, the country has maintained strict controls on capital flows and on foreign participation in the domestic economy. Under this protected framework, gradual reforms and gradual liberalization could be implemented within a long-term vision of the demands of economic restructuring and social transformation. Special economic zones, acting as platforms for foreign investment and for export-oriented assembly operations, were instituted strategically and were carefully contained from the domestic economy up until the early 1990s, already more than one decade into rapid growth. The accumulated savings from such operations have also helped China to buffer and stabilize its international capital and currency positions through massive accumulations of reserves, which are now the second largest in the world, second only to those of Japan, no doubt also buffering the fiscal and current account deficits of the US.

Accumulated finances, much of which is still wielded by various levels of the state or by state-owned enterprises, have been used to pursue a domestic industrial policy, funding projects in the domestic economy. Notably, well over 90 percent of investment in China is domestic - state, collective or private - and foreign direct investment actually plays a small albeit strategic role in the growth experience. Rather than a wholesale sell-off of state-assets as in Russia, which turned into a human development disaster, gradual privatization, with limits on foreign participation, has been tactically used to restructure state owned enterprises by selling off unprofitable or smaller tributary firms while consolidating and enhancing the profitable and competitive ones, with the intention to progressively cultivate a leaner set of state owned enterprises capable of competing in a gradually liberalized domestic and international economy. Also, these policies have aimed at ascending the production chain rather than getting caught in a trap of dependence on low value added manufacturing export processing, although these activities remain important to this day (5). In this way, China has managed to apply many of the most valuable lessons from successful historical cases of late industrializers, such as Germany, Japan, Korea or Taiwan.

Considering development in the Tibetan areas of China, it is useful to conceive of China as a collection of sub regions, with cores and peripheries that operate in a manner similar to the international economy. Ethnic groups within China also overlap with this regional mapping and the Han Chinese indisputably maintain an ethnic hegemony over the state and the core regions. They therefore call the shots with regard to policies in the western minority regions.

This is especially the case in the Tibetan areas. Due to the strong security interests of Beijing in the Tibet Autonomous Region (TAR) and its heavy reliance on external subsidies, development policy in the TAR is largely determined outside the province by Han Chinese in Beijing, the coastal provinces, and certain key centers in western China, such as Chengdu, Chongqing, Xi'an, and Lanzhou. These latter western Chinese cities play a dominant role in the governance of the Tibetan areas outside of the TAR, divided up between Qinghai, Gansu, Sichuan and Yunnan. Although policymaking may contain elements of philanthropy, it is easy for development strategies and their implementation to reflect the priorities of the core regions of China rather than the actual development needs of the Tibetan areas. This situation could be compared to Western aid to developing countries, which alleviates short term fiscal constraints yet reinforces the integration of developing countries into an asymmetrical economic order, often although not always through conditionality.

Current economic strategies in the Tibetan areas clearly fall into this pattern. Growth in the Tibetan areas has been resuscitated to some of the highest rates in western China since the mid-1990s, largely through a phenomenal increase in subsidization (7). In the TAR, a major share of such increased subsidies is directly or indirectly destined to the Qinghai-Tibet railway, currently in construction. The cost of this single construction project, estimated at its outset to require about 20 billion yuan of investment divided overall several years between the TAR and Qinghai, is equivalent to almost two times the entire GDP of the TAR in 1999. More generally, investment in fixed assets in the TAR was equivalent to 60 percent of its GDP in 2001, versus only 39 percent in China as a whole, already high by international standards.

Furthermore, unlike the rest of China, economic levers remain heavily concentrated in state hands. For instance, state-owned units in the TAR accounted for 95 percent of investment in fixed assets in 2001, whereas state-owned units in China as a whole accounted for less than half. Parallel to such investment in the TAR, the tertiary GDP category of "government and party agencies" has in fact been the fastest growing of the economy. This administrative category grew by about 46 percent a year between 1998 and 2001 and accounted for over 13 percent of GDP by 2001, which was close to the GDP contribution of the construction sector itself. In comparison, government and party administration in China only accounted for 2.7 percent of national GDP in 2000. In other words, the most obvious beneficiaries of current subsidization in the TAR have been state-related, most likely determined by priorities decided in Beijing.

Because most of the large construction projects are contracted to out-of-province companies, related investment and wages have very low circulation effects due to their considerable leakage from the local economy. In other words, money goes in and goes out, without much turnover to benefit local production or demand. This is exacerbated by the lack of linkages between the largely agrarian and non-industrial local Tibetan economy and the outwardly oriented project construction boom. Because the scales of these projects are large, the required skill levels high, and the capital requirements enormous, capital, material inputs and labour are largely supplied from outside the province. Companies and their staff and workers usually return home or to other national jobsites upon completion of the projects, taking the benefits of the acquired skills and earnings with them.

In this sense, much of the external funding to the Tibetan areas can be seen as a strategy to nurture and promote regional or national construction companies, subsidising the development of their expertise and capacity in large and complex engineering projects. For instance, the Qinghai-Tibet railway, which has represented a considerable feat of engineering to overcome the challenges of constructing across the high-altitude permafrost, involves a consortium of construction and engineering companies from around the country, many from the coastal areas. Indeed, following the length of the current railway construction, it appears that a single construction company from Chengdu has constructed almost all of the numerous bridges. This use of public development funds by Beijing is therefore comparable to the US strategy of using lucrative defence contracts to subsidize many US businesses, such as in information technology and aeronautics.

While this strategy has been beneficial for building strong and competitive national firms, a large share of western development funding is used for precisely this purpose rather than for local economic needs. The development of locally owned businesses and local expertise tends to be sidelined in the process. Many officials privately admit that in the end, eastern enterprises may benefit more from western development than the western provinces themselves (8). Again, parallels can be made to Western overseas development assistance used to promote Western business interests.

Unfortunately, the out-of-province companies tend to retain and 'repatriate' their profits from the lucrative construction contracts (9), investing them in other national projects rather than in the local economy. In contrast, locally owned businesses would tend to invest locally. Similarly, temporary workers also tend to repatriate their saved earnings, rather than investing or spending them in the local economy. Growth based on local ownership might not produce such spectacular growth rates, which are in any case the direct effect of increasing subsidies, but it would result in more integration and circulation within the local economy, thereby lessening the dependence on subsidies to produce growth.

As a result, the expansion of opportunities for local unskilled and semi-skilled labour has been limited. Both administration and large-scale construction projects tend to concentrate employment in high-skill and high-wage labour. This has been the basis of what is often referred to as the emerging Tibetan middle class, i.e. a privileged 15 percent of the Tibetan population with secondary education or above who fit well into the administrative expansion (10). Consequently, rapid growth has a low elasticity to employment compared with elsewhere in China. While economic activities for the lesser skilled 85 percent of the local population have increased with the boom, these have been more limited relative to comparable growth elsewhere in China and they have been focused in the lower end of construction work or in commercial and service activities, most of which are concentrated in the urban areas.

In contrast, locally integrated secondary productive activities have been under prioritized, falling as a share of GDP, and providing little potential to absorb local low skill labour. In most other regions in China, including Qinghai, growth has been rooted in the expansion of secondary productive activities. Furthermore, the low skill activities that have been created are precisely those which the lesser skilled Han and Chinese Muslim migrants tend to occupy as they arrive to take advantage of the subsidized bonanza, as opposed to the higher skilled Han staff and workers who are mainly arriving on temporary managerial and technical postings. Thus Tibetan rural-to-urban migrants and the Tibetan urban poor clash with these out-of-province 'spontaneous' migrants over the residual activities left over from the unproductive boom. This reinforces social exclusion among the local population given that the out-of-province migrants generally possess much higher skill levels than the local population and are emigrating from more competitive areas of China. This dilemma is perhaps best illustrated by the fact that urban poverty rates as well as urban household incomes among permanent urban residents in the TAR (mostly Tibetan) were both among the highest in the country by the end of the 1990s (11).

Therefore, although the strategy of 'national ownership' in China has effectively brought robust economic growth across the country, in the peripheral Tibetan areas it has generated a form of polarized and heavily dependent growth. The challenge is to avoid the emergence of social exclusion defined along ethnic lines, much as that observed in many Aboriginal communities in northern Canada, whereby local Aboriginals become marginalized even in the midst of economic expansion. In this regard, Canada has little to teach China besides the negative illustration of how social exclusion might operate in a peripheral multi-ethnic setting where the non-native ethnicity dominates.

Differences in education levels between locals and migrants are key factors determining such outcomes. The education gap between the Tibetan areas and the rest of China is so great that even as education slowly improves in Tibet, the current demands of polarized economic growth outpace the limited skills formation within the local workforce. Migrant workers fill the short fall. In addition, low skill employment in the services, such as tourism, in construction run by out-of-province companies, and in commerce provides a natural advantage to those who are literate and fluent in Chinese and who are connected to networks outside the province. Conversely, in locally integrated secondary productive activities, such as wool processing and textiles, Chinese would not necessarily be a competitive factor determining employment, yet this is where the creation of appropriate employment is the sparsest. The government counters that as the Tibetan workforce becomes more educated or skilled, it will naturally come to fill the roles currently taken by the migrants. Nonetheless, in light of labour market segmentation and exclusion, this hypothesis simply cannot be taken for granted unless the ethnicity of exclusion is clearly acknowledged and addressed by affirmative and pro-active policies to support Tibetan workers and businesses.

The key pivot point of exclusion rests on this concept of ownership of the development process. Ethnically defined exclusion is in part driven by the marginalization of Tibetans from the effective decision-making processes that affect their region. This being said, participatory frameworks, such as those that are popular with institutions like the World Bank or the Canadian International Development Agency (CIDA), will do little to affect this disempowerment if not backed up by substantive ownership. In this regard, participatory methods could be conceived as procedural 'ownership', although in many cases their application is more aptly described as a form of managerial devolution of implementation without necessarily impacting the content of that which is being implemented. Ultimately, wealth rules, and in this sense, the empowerment of Tibetans within their own development must start with effective rather than symbolic ownership.

This implies Tibetans investing, owning and running businesses in the dynamic and high-value added sectors of the economy. In other words, what is required is not only an emerging Tibetan middle class that is rooted in a junior partner position of local administration, but also Tibetan owned corporations, rooted in the ownership of local assets, using these assets to productive ends, and gradually progressing into increasingly complex projects. This would be the true meaning of local ethnic ownership. Tibetan-run corporations would tend to be more integrated into the local economy, working within local capacities and skill levels, and investing locally. Just as the Chinese leadership has understood and emphasized this aspect of ownership at the national level with regard to its integration into the international economy, so too should this be the focus of current efforts to intensify the integration of the Tibetan areas into the national economy. Essentially, this brings us back to the issue of the right to development, yet applied to a sub-national or ethnic level.

In recent field visits to all three of the main Tibetan regions - Utsang, Kham and Amdo - one case of a Tibetan town illustrates these issues. The location was in a Tibetan area outside the TAR but it will not be identified to preserve anonymity. Nonetheless, the case illustrates many of the dynamics observed and reported throughout the Tibetan areas.

In recent years a mine was opened near this town. A Han Chinese couple developed the mine, one from the provincial capital (i.e. Xining, Lanzhou, Chengdu or Kunming) and one from coastal China. Because of this combination, the couple was able to pass through all of the administrative hurdles at each level of governmental jurisdiction and received the appropriate authorization to open the mine. Note that because the Tibetan areas are deemed ecologically sensitive zones protected at the national level since 1998 in response to flooding on the Yangtze, authorization for such resource activities is required at the provincial and even national level.

Initially, while work on the mine was at a less dangerous stage, the owners used some local Tibetan labour, but as work progressed, they used more and more Han labour from the Han areas of the same province. Most employment at the mine is now Han. There have been some spin-offs for local Tibetan businesses, such as local family-run transportation companies that carry out the ore to the provincial city. Also, the mine has become the main source of fiscal revenue for the local county government, although this is limited given the preferential policies that were required to attract the investors in the first place. Otherwise, most of the benefits of the mining development, including all of the profits and most of the saved wages, are essentially taken out of the community.

Furthermore, in an interesting twist on the preferential policies of western development, very little investment has been made in the mine per se. In most other places in China, such activities would entail a variety of requirements, such as the need to purchase or lease the land of the mine from the local government, to have a minimum level of investment or local employment, and to develop the mine according to certain safety and environmental norms, such as proper disposition of tailings and so forth. Most of these requirements were all waived in this mine under the pretext of making it easy for investors to develop the Tibetan areas. Taxes were kept low and contract prices with the local transportation companies were negotiated at a favourable rate. As a result, the mine has involved a minimal investment, with low overhead and low-tech operations, i.e. using wheel barrels. Obviously, the preferential policies provided the potential for a quick profit, which encouraged the outside investors to get involved in the first place.

This begs the question; why could the local community not set up and operate the mine themselves, thereby benefiting from the profitable opportunity and directing profits towards further community development? Such a venture could have been organized as a county-owned, cooperative, or even private operation, allowing local Tibetans to build up the expertise and confidence of bringing such economic projects to fruition. Locals described three constraints to such an outcome: lack of capital; lack of expertise, experience and education; lack of connections and networking (Ch. guanxi).

To start with the third point, as mentioned above, authorization for mining development is required from at least the prefectural and provincial levels of government, if not the national level, due to the associated ecological sensitivity of the Tibetan areas. While many of the county level officials are Tibetan, the higher levels of government are dominated by Han officials, almost entirely at the provincial level, even with regard to the affairs of the Tibetan Autonomous Areas (TAA). Also, social networking in China in itself requires a considerable amount of resources. Deals are known to be made in restaurants or other entertainment venues, just as golf courses feature prominently in the informal operations of American corporations. Common cultural affiliation obviously adds an element of 'cultural capital'. Local county officials, with few connections beyond the county or prefectural level and with limited resources, are often at quite of a loss in such an environment. The mere initial task of authorization represents a formidable obstacle, especially at the provincial or national levels. In this regard, the nationally mobile Han entrepreneur has a distinct and overwhelming advantage.

With regard to expertise, this is obviously a function of the very low levels of education in the Tibetan areas and the lack of acquired experience in non-traditional ventures. Many Han - and even many Tibetans - often complain that Tibetans are lazy because they do not show any initiative in business, such as in the case of this mine. This may be a symptom of lack of education. According to the 2000 census, the proportion of the population aged six and older without any schooling, and thus effectively illiterate, was 46 percent for Tibetans across China, while it was 21 percent for the Yi, 16 percent for the Hui Muslims, nine percent for the Uygurs and eight percent for the Han Chinese. Apparent lack of initiative could also be a symptom of disempowerment, due to the administrative hurdles mentioned above. Together, education and disempowerment are two critical elements determining the experience of social exclusion.

Finally, lack of capital should in principle be a fairly minor obstacle. Given the small investment that was required for the above-mentioned mine, the equivalent could be easily covered with grants or soft loans. Considering the current flood of subsidies that are entering the Tibetan areas, such funding would represent a relatively painless diversion.

Following the lessons of this mining example, Canadian foreign policy towards China, including development assistance and private sector policies, could act to promote local ownership and the right to development in Tibet through the following strategies:

Develop a holistic program to promote local ownership in Tibetan areas


• CIDA has offices in Beijing and deals regularly with the provincial capitals that govern the Tibetan areas. It could therefore assist with key networking, bureaucratic and authorization requirements for Tibetan-owned initiatives.
  
  
• Canadian development assistance is also already involved with education projects in western China. Given that China already prioritizes the compulsory nine-years education from primary to lower middle school, Canada should complement this policy by emphasizing projects in vocational training and adult education, which effect immediate improvements in the skill levels of the existing adult labour force. These could be coordinated with Tibetan investment initiatives.
  
  
• Finally, financial support for local investment initiatives could easily be provided through existing programmes, such as the Canada Fund.
  
  
• If these various elements were combined under a holistic strategy, they could promote local ownership in the Tibetan areas in a way that empowers local Tibetans without being invasive to Chinese interests in the area.

Recognize social exclusion in Tibetan areas and develop mitigating strategies as a priority within CIDA's new policy for ethnic minorities in China


• There should be minimum recognition that social exclusion is a reality in the Tibetan areas of China. It is not simply a matter that these areas are poor and need help to get richer, but that there is an ethnically exclusionary dynamic within current growth itself.
  
  
• Essentially, it involves acknowledging the right to development of Tibetans as an ethnic group, rather than as mere individual citizens of the Chinese nation, as well as the role of ethnic ownership in making human rights both substantive and effective. This will require the design of affirmative policies to support Tibetan workers and businesses.

Promote dialogue between Chinese authorities and representatives of the Dalai Lama


• There are already many domestic actors in China - both Han and Tibetan, including a wide range of scholars, officials, educators, journalists and businesspeople among others - who are contesting the exclusionary nature of growth in the Tibetan areas and who are arguing that the unresolved impasse between Tibetans and the Chinese state maintains the tight policy space and lack of effective autonomy in the Tibetan areas.
  
  
• In this opportune moment, if a country like Canada were to add momentum to the rising consensus within China on the issue of negotiations with representatives of the Dalai Lama, it would be a significant contribution towards stability in the restive region.
  
  
• This strategy would be coherent with current Canadian policy for China. In its recently released "China Country Development Programming Framework (2004-2009)", CIDA plans to take particular consideration of both the concept of local ownership and the challenges faced by ethnic minorities (12). The link between the concepts of ownership and ethnic minorities is an obvious guiding principle for Canadian development assistance, and one that they would have the power to implement.
  
  
• The issues of the right to development, ownership, exclusion, autonomy and dialogue are all tightly woven together. Therefore, Canadian policy will remain ineffective in addressing the three former without addressing the issues of autonomy and dialogue.

Tibetan autonomy need not be seen in terms of a politicized standoff between different perspectives of sovereignty. The economic dimension of autonomy - that is, Tibetans having more say over the development of their traditional areas - can easily fit into the framework of the Chinese polity as well as within currently defined Canadian foreign policy and development assistance to China. Essentially, it is synonymous with the right to development.

Such an understanding of autonomy and the right to development would involve a relaxing and devolution of policy space to Tibetans in the Tibetan areas, just as Beijing has done with most other provinces of China since the beginning of the reform period. One of the main obstacles to doing this remains the paranoia of the Chinese leadership towards Tibetan expressions of self-determination. Without doubt, there remains unfinished business between Tibetans and the Chinese state.

There are many Chinese within China, in influential positions, who are aware of the Dalai Lama's 'Middle Path' approach to Tibetan autonomy and find it to be a reasonable starting point for dialogue. They understand that Beijing's reluctance to fully engage in the dialogue process is the inheritance of past political posturing. Canada should add its weight behind this progressive momentum existing within China. This in itself might be our country's greatest contribution to bringing improved human rights and development to the Tibetan people.

Andrew Fischer is a development economist and a PhD candidate at the Development Studies Institute of the London School of Economics. Other publications include Poverty by Design: The Economics of Discrimination in Tibet, Montreal: Canada Tibet Committee, 2002, http://www.tibet.ca Return

See for instance http://www.unhchr.ch/development/right.html Return

For an excellent contemporary summary of these issues, analysed in the perspective of current international trade negotiations, see the UNDP sponsored book by Kamal Malhotra (editor and lead author), Making Global Trade Work for People, London: Earthscan, 2003. Return

For instance, see Jeffrey Sachs and Wing Thye Woo, 'Understanding China's Economic Performance', Journal of Policy Reform, 4 (1), 2000. Return

For an excellent discussion of the commodity traps of manufacturing processing, see UNCTAD, 2002 Trade and Development Report, Geneva: United Nations Conference on Trade and Development, 2002. Return

The discussion and statistical information in this section has been taken from a forthcoming book by the author, Andrew Martin Fischer, State Growth and Social Exclusion in Tibet: Challenges of Recent Economic Growth, Copenhagen: NIAS Press, 2004. Return

By 2001, subsidies were equivalent to 71 percent of GDP in the TAR and 27 percent in Qinghai, having increased by 136 and 160 percent respectively since 1998. In the TAR, the most subsidized province of the country, every yuan of GDP increase in 2001 was met by 2.1 yuan of increased government spending in the same year, 94 percent of which was subsidized. This in fact represents a remarkable inefficiency of subsidies, or a strongly negative elasticity of subsidies to growth. In Qinghai, the second most subsidized province, every yuan of GDP growth was met by 0.9 yuan of increased spending, 80 percent of which was subsidized. Return

Goodman noted this in his interviews with many Qinghai officials in 2001 and 2002. See David Goodman, 'Qinghai and the Emergence of The West: Nationalities, communal interaction and national integration', The China Quarterly, forthcoming in 178 (June 2004). Note that the situation would be even more extreme in the TAR. Return

The 'lucrative' is not to be underemphasized. While these areas have been cash starved for much of the reform period, it seems that since 2000, in particular in the TAR, there has been a flooding of funds, amounting to a project bonanza for those with connections. The bonanza works its way down the construction chain as each contractor takes advantage of the abundance of cash, relatively free from the supervisory regulation that would normally accompany such spending in other parts of China. For instance, it is common to overhear construction contractors in Beijing who have been working in the TAR swapping stories with much aghast about the delivery of poor quality materials, such as impure cement, and so forth. Return

Labour starts to become skilled from the level of secondary education onwards. According to 2002 population surveys, approximately 15 percent of the permanently resident population in the TAR (mostly Tibetan) had secondary education and above, and the proportion was the same for all Tibetans within China as a whole. In contrast, the equivalent measure in Sichuan was almost 50 percent and over 50 percent in China as a whole. This measure therefore corresponds well with the representation of Tibetans among staff and workers. For instance, over 70 percent of staff and workers in state-owned units in the TAR in 1999 were ethnic Tibetans, representing almost ten percent of the workforce. Added non-state corporate units and the small number of individually owned units that are mostly in the urban areas would probably account for the rest of the more educated 15 percent of Tibetans. Return

For instance, urban TAR incomes in 2001 were the seventh highest in the country, neck and neck with coastal provinces such as Fujian and Jiangsu. The poverty measures are taken from Athar Hussain, 'Urban Poverty in China: Measurement, Patterns and Policies', InFocus Programme on Socio-Economic Security, Geneva: International Labour Office, January 2003. Return

See http://www.acdi-cida.gc.ca/CIDAWEB/webcountry.nsf/VLUDocEn/China-ProgrammingFramework#1. Return