XINJIANG'S PARAMILITARY AGRICULTURALISTS: A VISIT

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 004593

SIPDIS

E.O. 12958: DECL: 12/18/2033
TAGS: PHUM PTER PREL PGOV KIRF ECON EAGR CH
SUBJECT: XINJIANG'S PARAMILITARY AGRICULTURALISTS: A VISIT
TO THE XINJIANG CONSTRUCTION AND PRODUCTION CORPS

REF: A. BEIJING 3857

B. BEIJING 4327

Classified By: Classified by Economic Minister Counselor Robert Luke.
Reasons 1.4 (b/d).


1. (SBU) Summary: The Xinjiang Construction and Production
Corps (XJCPC) is a massive industrial and agricultural
conglomerate operation in the Xinjiang Uighur Autonomous
Region (XUAR). The XJCPC, divided into state-run farming and
industrial units, employs over 10 percent of Xinjiang's
population and plays an important role in Xinjiang's economy.
Originally founded by People's Liberation Army (PLA)
soldiers after the 1955 Communist takeover of the Region, the
XJCPC reportedly has a paramilitary component as well as an
economic development role, although the military aspects
appear limited. XJCPC units are partially independent from
the XUAR government, and have their own police and judiciary
systems. XJCPC farms are generally capital intensive,
relatively modern operations that are on the forefront of
implementing central government rural development goals of
consolidating land holdings and commercializing agricultural
production. End Summary.


2. (SBU) PolOff and EconOff visited Xinjiang Uighur
Autonomous Region (XUAR) as part of VPP Urumqi outreach
efforts November 10-14. Accompanied by Provincial Foreign
Affairs Office representatives, EmbOffs visited the northern
Xinjiang cities of Kelamayi (Uighur: Qaramay),Changji, and
Urumqi.

A Brief History of the XJCPC
--------------


3. (SBU) The Xinjiang Construction and Production Corps
(XJCPC) is a province-wide umbrella company that functions as
an agricultural and industrial conglomerate. The XJCPC was
founded shortly after Communist forces took over Xinjiang in
1955, and was partly a way to employ the People's Liberation
Army (PLA) soldiers left in the region following the conquest
of the province. The XJCPC's paramilitary roots were
reflected in its original mission statement of "defending the
borders and developing the land." Military regiments became
independent farming collectives under the XJCPC and to this
day individual XJCPC units use the number of the founding
military regiment. During the Cultural Revolution, XJCPC
also employed thousands of urban Chinese sent down to the
countryside.

XJCPC: Running Its Own Show?
--------------


4. (C) Since its founding, the XJCPC has evolved into a
self-governing corporation that functions largely
independently of the rest of Xinjiang, Xinjiang XJCPC
Development and Reform Commission Party Secretary Fu Yuanchao
told EmbOffs on November 13. Xinjiang Uighur Autonomous
Region (XUAR) officials who met with Emboffs said they do not
oversee the XJCPC in any way. As a largely independent
entity, the XJCPC has its own police force, judiciary and
court system. The XJCPC also runs its own broadcast and
print media (see below). However, XJCPC officials are quick
to emphasize that the XJCPC operates under Central Government
direction and law, and is under the joint leadership of the
Central Government and XUAR Government and Party. Fu
claimed, however, that XJCPC does not rely on fiscal
transfers from the Central Government.

Size Matters
--------------


5. (SBU) According to Fu, the various units of the XJCPC
employ 2,580,000 people, making it the single largest
employer in Xinjiang. Thirteen percent of the XJCPC's
employees are non-Han ethnic minorities, though only 40
percent of the total population of Xinjiang Province is Han.
The XJCPC,s Gross Domestic Product accounts for
approximately 13 percent of Xinjiang,s total GDP. The XJCPC
controls an estimated 20 percent of the province's arable
land, and consists of 14 primary units (13 agricultural and
one industrial) located throughout Xinjiang. The XJCPC also
comprises 175 agricultural farms, over 1,400 independent
enterprises, 13 companies in which it holds a controlling
equity stake, and 21 food processing and marketing firms.

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XJCPC enterprises include light industry, textiles, and
chemicals. The XJCPC runs 775 elementary and secondary
schools and has six schools dedicated to adult education. It
owns 206 radio and television broadcast stations and 33
newspapers. The XJCPC is the sole governing entity of the
city of Shihezi, which Fu claims has won national awards for
its "high level of development and civility."

Oasis Economies: Agriculture and Processing
--------------


6. (SBU) XJCPC units function as self-contained oasis
economies, brigade leader Wang Gongjun told EmbOffs during a
November 12 tour of XJCPC Farm Number 136 on the outskirts of
Kelamayi city. The XJCPC seeks to leverage economies of scale
in its production to maximize crop output. Party Secretary
Fu explained that XJCPC farms implement Central Government
rural development and agricultural policies like farms
elsewhere in China and XJCPC farms enjoy the same subsidies
and other preferential agricultural policies. Brigade leader
Wang explained that farmers in XJCPC Number 136 Farm contract
land just as farmers do elsewhere in rural China, and
families are responsible for production on their contracted
land. The Brigade Farm Number 136, however, also coordinates
agricultural production and provides a marketing channel,
serving the functions filled elsewhere in China by
specialized rural cooperatives and so called "dragon head
firms" (see Ref A).


7. (SBU) XJCPC Farm Number 136 primarily grows cotton, which
it processes in its own factory before sale, brigade leader
Wang explained. Farm Number 136 is also diversifying into
other crops to increase farmers, income and provide
employment, since XJCPC Farm Number 136,s plans to mechanize
cotton harvesting will decrease the need for labor (see Ref
B). XJCPC Farm Number 136 is building vegetable greenhouses
that it is turning over to farmers at subsidized prices.
Each greenhouse covers 1 mu (0.066 hectare) of land, and each
family will receive three greenhouses. Brigade leader Wang
claims that farmers will have permanent use rights to the
greenhouses and the land they are built on. Wang explained
that the greenhouses will produce enough tomatoes, cucumbers,
green peppers and eggplants in the winter to export to
neighboring central Asian nations.

Military Roots
--------------


8. (C) Founded to consolidate Communist control of China,s
far west border regions by inserting ethnic Han settlers who
could serve a security role, the XJCPC has historically been
a paramilitary organization. According to our contacts, the
XJCPC's military functions have largely been ceded to regular
central government military and border control forces, though
our interlocutors disagreed on whether military operations
still remain any part of XJCPC activities. Fu Yuanchao said
that the XJCPC no longer has a paramilitary component and
that the various units no longer have arms. In Kelamayi
City, Kelamayi Foreign Affairs Office Deputy Director Luo
Xiaohui said that while the XJCPC units still have weapons,
the paramilitary function is minimal. Press reporting
indicates that at least some XJCPC units conduct
military/border patrol readiness exercises and have a
function similar to reserve or national guard units.

Community Outreach, Community Tensions
--------------


9. (SBU) The XJCPC engages in large-scale community outreach
on a regular basis, Fu said. This outreach includes
agricultural and industrial training, financial donations and
monetary aid and free medical care for surrounding
communities. The XJCPC "respects minority religions and
customs," Fu said, and thus "enjoys the support of the entire
province." He further noted that 13 percent of the XJCPC
employees are ethnic minorities, including over 250,000
Muslims, and as such the XJCPC is a great source of
inter-ethnic solidarity amongst the working classes. (Note:
there are over 10 million Muslims in Xinjiang, thus 2.5
percent work for XJCPC.)


10. (C) Fu, like the Chinese media, emphasized that the
establishment and development of the XJCPC does not conflict
with the interests of Xinjiang residents and the XJCPC is a

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positive force "contributing to Xinjiang,s historical
development and economic growth." But according to a former
XJCPC employee who spoke with Emboff, non-Han Chinese
residents of Xinjiang strongly resent early leaders in the
establishment of the XJCPC.

Randt