China’s Xinjiang faces hidden risk from debt-heavy XPCC, with spending tipped to rise after US withdrawal from Afghanistan

Debt issued by the Xinjiang Production and Construction Corps (XPCC) and its subsidiaries is surging to fund social and security spending

But total profits of state firms controlled by XPCC declined sharply last year and the quasi-military group is in the cross hairs of Washington

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Xinjiang Production and Construction Corps controls Xinjiang’s cotton output, which accounts for 20 per cent of global supply. Photo: Xinhua

Published: 6:14am, 8 Oct 2021Updated: 9:12am, 8 Oct 2021

This is the fourth in a series of stories looking at China’s Xinjiang province and how the far-western region is coping economically under a series of US sanctions over alleged human rights violations and the widespread use of forced labour.

Spending on public security and poverty reduction in China’s Xinjiang Uygur autonomous region is expected to increase after the US withdrawal from Afghanistan, but indebted state-owned enterprises (SOEs), including the sprawling Xinjiang Production and Construction Corps (XPCC), are already putting pressure on local government finances.

The region’s economic well-being and social stability have become more important than ever after US troops were rapidly pulled out of Afghanistan and the Taliban quickly assumed control of the country, according to analysts.

Xinjiang in China’s northwest shares a narrow 70km (43-mile) border with Afghanistan, a country which Beijing fears could become a flashpoint for instability in Central Asia, as well as threatening other regional players such as Pakistan, Iran, Russia, India and Turkey.

SCMP Series

Xinjiang’s economy and the impact of US sanctions

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