This chapter examines development inequality in the Xinjiang Uyghur autonomous region (XUAR). It analyses the main socio-political dynamics underpinning the unequal distribution of resources and wealth within the region. The chapter also analyses impact of the transformations generated by these developments and state-building measures on the local populations, is primarily based on a quantitative and qualitative research methodology. It focuses on field-work conducted in the region between May 2007 and September 2012. The chapter also focuses on participant observation, interviews and data collection undertaken during the Kreditanstalt für Wiederaufbau Bankegruppe (KfW) missions to Kashgar Prefecture, which are part of the Sino-German poverty alleviation programme in Xinjiang. The chapter highlights how a fundamental factor of development disparities is not ethnicity in itself, which can be considered as a symbol of diversity and community engagement, but the way it is perceived and negotiated by subjects in their interaction with other subjects and with the context.