LONDON -- I have spent most of the last two months traveling in the poor areas of western China (the mountain areas in south Ningxia, Qinghai and Gansu) and in Uzbekistan. What a contrast! You could describe the development process in western China as two steps forward and one step back, while in Uzbekistan it is one step forward and two steps back.
It has been two years since I was last in this part of western China. The changes that have taken place are stunning. The whole area is humming with activity. Massive amounts of capital have been poured into western China under the "three 70s" policy: 70 percent of all funds raised by the sale of bonds by the central government; 70 percent of all foreign aid going into China; and 70 percent of all redistributed tax revenues have all been used to finance capital development in the west -- and it shows.
The centers of the cities have been transformed by the capital inflows. Huge high-rise hotels, government buildings and Communist Party offices have sprung up in the central squares. Roads have been upgraded; in Yinchuan, capital of Ningxia, 10-lane highways have been built leading out of the city to the four-lane long distance highways. New railways are being built and airports constructed.