Western companies profit from state development in East Turkestan


July 22, 2011

Amy Reger, Researcher, Uyghur Human Rights Project

According to Chinese and Western media reports, the world’s largest private-sector coal company, the St. Louis-based Peabody Energy, inked a massive deal with the Xinjiang Uyghur Autonomous Region government and the Communist Party of Xinjiang on July 14 to develop a coal surface mine that is expected to produce 50 million tons of coal per year. The mine will be one of the largest coal surface mines in China, and the Wall Street Journal estimates that it will generate billions of dollars in output every year. According to Peabody Energy, an exact location has yet to be selected for the mine.

Pictures on Peabody Energy’s website reveal smiling Peabody executives shaking hands with Chinese officials while clinching this and other deals. A picture of the signing ceremony, which took place in the regional capital of Urumchi, reveals the presence of Xinjiang Governor Nur Bekri, who heralded the agreement thus:

“The Communist Party of China Xinjiang Regional Committee and the Xinjiang People’s Government will fully support Peabody’s development in Xinjiang so as to start the cooperation program at an early date, which we believe will generate the best possible returns for both sides.”

The project sidesteps usual restrictions that require foreign companies to develop coal mines by investing in or cooperating with state-owned companies. One can only speculate that the combination of immense profits for both sides, the insatiable thirst of China’s east coast for energy, and China’s newly intensified development plans for East Turkestan aligned to grease the wheels of this agreement. Such development threatens the already extremely fragile ecological balance in the region, after decades of nuclear tests and massive population increases.

Peabody’s deal follows the visit of a 20-member delegation from the China Investment Promotion Agency (CIPA) to St. Louis in June. The delegation met with the mayor of St. Louis and a Missouri senator, who sought to strengthen economic ties with Chinese business leaders and provide a market for Midwestern goods in China.

In addition, Peabody Energy’s announcement follows the June U.S. visit of Xinjiang Communist Party chief Zhang Chunxian, as discussed in UHRP’s most recent blog post. Together with Nur Bekri, Zhang has presided over one of the most repressive periods in East Turkestan’s history, during which Uyghur webmasters have been sentenced to lengthy prison terms and death sentences have been handed down after non-transparent trials.

There has been a surge in energy, transportation, and infrastructure projects in the wake of the “Xinjiang Work Forum” that took place in May 2010, which outlined large-scale development plans, funded by tens of billions of U.S. dollars in aid. Development in these areas is carried out by government officials in the absence of consultation with grassroots stakeholders. The Xinjiang Work Forum and subsequent development initiatives have been carried out in large part in response to deadly unrest that took place in Urumchi on July 5, 2009. The acceleration in development has in turn heightened Chinese authorities’ perception that stability must be maintained in the region at all costs.

Chinese officials have acknowledged that a lack of employment opportunities was among the underlying factors behind the unrest in Urumchi. However, the benefits of development in East Turkestan have traditionally manifested themselves unequally among Han Chinese, Uyghurs and other ethnicities. Prior to the new push in development mandated by the Work Forum, employment rates for ethnic Han in Xinjiang were already much higher than those for Uyghurs and other minorities, and without the implementation of policies to address discrimination in regional commercial and government sectors, Uyghurs are likely to experience fewer benefits from official development programs than their Han counterparts.

According to a May 2011 press release, Peabody Energy has been honored for its corporate and social responsibility. However, the company has also been subject to criticism from Native American and environmental groups for its corporate practices. There have been concerns that Peabody Energy projects in Arizona, for instance, are threatening the health of Native Americans. Native American and conservation groups have filed a lawsuit that seeks a release of public records regarding Peabody Energy’s mining operations in Arizona.

A researcher from the Chinese Academy of Social Sciences stated that “the project will also bring many employment opportunities for local people”. However, UHRP has documented widespread systematic ethnic and gender discrimination in the recruitment process for state jobs in East Turkestan, and there is no evidence to suggest that hiring practices in the private sector are any better. In addition, there is no evidence to suggest that policies have been put in place together with the new development push in East Turkestan to address existing inequalities in hiring practices.

Peabody Energy’s new coal mine will also be developed at a time when Uyghurs and other non-Han peoples in East Turkestan are being forcibly relocated by government authorities. Tens of thousands of rural Uyghurs have been resettled in Kashgar Prefecture in the name of development and “earthquake safety”. Ethnic Mongolians in the region are also being resettled to urban areas in the name of a “herdsmen’s relocation and settlement program”.

Peabody Energy’s deal follows a June 2011 article about UK-based consultancy Buro-Happold, which has completed the infrastructure and environmental engineering planning for Beitun, a “vast new city” in East Turkestan. While a senior partner for the firm explained in the journal Building.co.uk that “there are parts of Africa where you wouldn’t feel comfortable” due to moral concerns of working there, he apparently feels no qualms about doing business in a region where the death penalty continues to be handed down to political prisoners. The firm’s chief executive, Paul Westbury, spoke highly of the efficiency of autocratic governments, saying, “If you want to get something done in China [or] Saudi Arabia, they get it done. I mean, holy cow, this stuff moves like the wind and that is bloody refreshing.”

Westbury had this to say about the relative accomplishments and morals of China and the Western world:

“The Chinese government has brought 400 million people out of poverty in the last 10 years,” he says. “The Western world has brought 1 million people out of poverty in the last 10 years. The Chinese government do some things that we regard as not right for modern society, but go back 50 to 100 years in British society and we were doing much worse.”

According to Buro-Happold’s website, the Beitun project will increase the population of the current town from 30,000 to half a million over a period of 20 years, and the new city is designed to replace the current capital of the prefecture, Altay, which is in the northern part of East Turkestan. “Located west of the town, the new city will serve as the north western gateway to China, providing a new industrial centre that will facilitate the extraction of the local mineral resources.” It is unclear what the political motivations are by moving the capital from Altay to Beitun.

Senior partner Mike Cook dismissed the prospect that Buro-Happold might be unwittingly drawn into a development program aimed at helping create “ethnic unity” in the region.

Ethnic Kazakhs constitute somewhere around half of the population of Altay Prefecture. There have been concerns that development programs in the area have displaced ethnic Kazakhs and Tuvans. According to one report, “locals say that Chinese officials have frequently ordered nomads to move to other areas, in order to make way for hotels, restaurants and other tourist infrastructure.” In May 2011, the Xinjiang Provincial Public Security Department reported that Altay Prefecture was holding its 29th “ethnic unity education month”, which would be used to carry out “ethnic unity” work and to build a “harmonious relationship, with Xinjiang characteristics, between the police and the people”.

It is unclear where the approximately 270,000 residents of the new city of Beitun are coming from. This development raises concerns of both Han in-migration to East Turkestan, which has exacerbated ethnic tensions, and environmental sustainability, in light of burgeoning development and an increase in population. Geographer Stanley Toops has written extensively on the effects of politicized development on water resources in the region. In Xinjiang: China’s Muslim Borderland, he warns of the ecological effects of development, including severe water shortages, that are beginning to occur in the absence of measures to control population. Toops highlights the environmental degradation that has taken place in Kazakh areas as a result of government policies.

New York Times blogger Andrew Revkin cited concerns about the environmental effects of Peabody Energy’s new coal mining deal, pointing out the danger in increased carbon dioxide emissions and the effects of coal production on climate change. Revkin’s blog notes that the deal was announced as China continues to expand its use of coal, despite the country’s attempts to portray itself as “green” because of its wind turbine and solar panel manufacturing.

A Chinese researcher also expressed concerns about coal production in light of the new Peabody Energy deal. Jiang Kejun, an official with the Energy Research Institute of the National Development and Reform Commission, said that more attention should be paid to clean and renewable energy resources, which are abundant in the region. He noted that costs of transporting coal to other parts of China, where demand is greater, are high. In addition, he asserted that China’s coal demand would peak in less than a decade, meaning that coal companies will have to work harder to find customers in the face of weakening demand.

If the executives of international companies such as Peabody Energy and Buro-Happold are interested in ensuring that their business initiatives in East Turkestan adhere to best practices and international human rights norms, they may refer to a United Nations document issued in 2003 entitled “Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights“. The document outlines corporations’ responsibilities to abide by such international instruments as the Convention Against Torture, the International Convention on the Elimination of All Forms of Racial Discrimination, the International Covenant on Civil and Political Rights. The document specifically calls on business enterprises to ensure the respect of “indigenous peoples and other vulnerable groups”.

As regional officials in East Turkestan seek to attract more foreign investment and development in the region, it is highly likely that similar deals will be forged in energy exploitation and municipal planning projects. According to official Chinese statistics, foreign direct investment in the region tripled in the 2006-2010 period over the previous five-year period, and this amount can be expected to increase following enormous central government investment in the region and development plans mandated by the Xinjiang Work Forum.

In light of the speed and scale with which development is taking place in East Turkestan, there is a real need for oversight into business developments and the awarding of contracts. However, foreign companies are not likely to face accountability in China for the environmental impacts of their business ventures or the effects they have on indigenous populations. For the foreseeable future, it appears that both Chinese officials and Western companies will reap sizeable benefits from development initiatives in East Turkestan. Much less clear is how Uyghurs and other “ethnic minorities” will benefit from such initiatives, when they lack a voice in the development process.