ABSTRACT
This chapter argues that Xinjiang's economic development has been shaped by a powerful confluence of environmental and socio-political factors. The Xinjiang government receives tax payments from the central government's operations in the oil and gas industries. Major role in Xinjiang's economy is a natural consequence of the province's oil and gas reserves and the large investments for exploration, production, and transport to market. The local economy also benefits indirectly from the employment created by the energy industry and from Beijing's support for infrastructure development. The new states of Central Asia can use investment inflows rather than exports to finance imports, at least in the short run. In the longer run, they can improve their balance of payments by supporting the development of export or import-substituting industries. A summary measure may be found in the accounting balance between expenditures on final consumption and capital formation, on the one hand, and gross domestic product produced in Xinjiang, on the other hand.
