Beijing-based China Tibetology Research Center here on Monday published a Report on the Economic and Social Development of Tibet. Following is the full text:

Report on the Economic and Social Development of Tibet

China Tibetology Research Center

March 2009

Contents

Foreword

I. Growth and Change: Basis of Development

1. Growth of Economic Aggregate and Stimulation of Investment

2. Industrial Development and Structural Change

II. Human Development: Goal of Economic Development

1. Population: Quantity and Quality

2. Education and Human Capital

3. Public Services and Civil Projects

4. Income Level of Farmers and Herdsmen and Poverty Alleviation

III. Sustainable Development: Development Rooted in Environmental Protection and Green Industry

1. Environmental Situation and Protection

2. Economic Growth and Sustainable Development

IV. Government and Market: Encouragement and Promotion for Development

1. Market and Resource Distribution

2. Government and Development

V. Difficulties and Challenges: Obstacles to Development

1. High Development Cost

2. Unbalanced Development

3. Underdeveloped Human Capital

VI. Conclusion: Prospects for Growth and Development

Foreword

Economic development in its conventional sense is defined as a unification process of the growth of social wealth, optimization of industrial structure, improvement of people's ability to create wealth, and other factors. Economic development in its modern sense emphasizes human, fair, coordinated and sustainable development as well as GDP growth.

This report follows the general principles of economic development, accords with the basic facts of Tibet's economic and social development over the past 50 years, outlines Tibet's economic development, especially in the farming and pastoral areas, since the adoption of the reform and opening-up policy in 1978, with a focus on development in recent years, and sets the well-being of Tibetans, especially farmers and herdsmen who are the majority of the Tibetan population, as the yardstick. From this standpoint, the report discusses the economic and social development of Tibet, and presents an objective and equitable exposition, analysis and summary of the realities, achievements and challenges in these fields. The objectives of the report are to provide:

-- A blueprint for a comprehensive understanding of the economic and social development of contemporary Tibet by those concerned with this field;

-- A source for making policies related to the further economic development of Tibet;

 -- A review and summary of Tibet's economic development over the past 50 years since its democratic reform in 1959.

The China Tibetology Research Center, the promulgator of the report, is an academic research institution specializing in Tibetology. The authors of the report are Tibetan and Han Chinese researchers from the China Tibetology Research Center and other scholars who have been long engaged in the study of Tibet's development. In May 2008, the authors conducted on-the-spot surveys and case studies of the realities of Tibet's economic and social development after going through relevant materials and working out an outline. Following the completion of the first draft, the authors carried out another on-the-spot survey tour of Tibet in August and September 2008, adding new materials, and making revisions and improvements to the report. The structure and contents of the report are as follows:

I. Growth and Change: Basis of Development

Tibet's local GDP is growing rapidly, and its industrial structure is undergoing fundamental changes. The structural and proportional changes of the primary, secondary and tertiary industries signify a positive transformation of Tibet's conventional industrial structure, which exhibits both growth in quantity and enhancement of quality.

II. Human Development: Goal of Economic Development

Promoting human development is one of the main objectives of economic development. The studies of Tibet's human development index and related issues reveal that major indicators of the human development index, including population growth rate, GDP per capita, average life expectancy and average education level, of Tibetan residents, especially those of the Tibetan ethnic group, are experiencing revolutionary changes along with the rapid development of the local economy. Therefore, Tibet's development is characterized by improved quality of life and guaranteed rights and interests, as well as accumulated social wealth.

III. Sustainable Development: Development Rooted in Environmental Protection and Green Industry

As Tibet's economy is developing rapidly, the government is making increasing legal, administrative and financial efforts to protect the environment and improve the ecology of Tibet, and giving priority to ecological and environmentally-friendly industries in the process of framing industrial development policies and guiding the market. In China, Tibet is the place nearest to the sky and furthest away from pollution.

IV. Government and Market: Encouragement and Promotion for Development

As Tibet is undergoing a reform toward a market economy, the market is playing an increasingly important role in resource allocation, especially in the price system. In view of the intrinsically unbalanced resource allocation of the market mechanism in Tibet's farming and pastoral areas, and the comparative backwardness of those areas, as well as the low competitiveness of farmers and herdsmen, the local government is mobilizing its administrative resources, financial support from the central government in particular, to rectify shortcomings in the market and foster the development of the farming and pastoral areas and the people who live there. While the changes in the cities and towns throughout Tibet during the preliminary and intermediate stages of reform and opening-up remain fresh in our memory, the development of the farming and pastoral areas in recent years is even more impressive.

V. Difficulties and Challenges: Obstacles to Development

Since the democratic reform in 1959, and especially since the adoption of the reform and opening-up policy in 1978, Tibet has witnessed remarkable economic development. Nonetheless, for various reasons, many challenges remain, including high cost of economic and social development, underdeveloped market, unbalanced economic and social development in urban and rural areas, low market competitiveness of farmers and herdsmen, and underdeveloped human capital. These are the long-term challenges that Tibet has to address in order to achieve sound economic development.

VI. Conclusion: Prospects for Growth and Development

Although Tibet's society and economy were affected by the March14 Incident in 2008, the impact on most local industries was limited, except for temporary difficulties for tourism in Tibet. In the next few years, Tibet's economy is expected to maintain sound and rapid development in virtue of favorable factors such as increasing investment and transfer payments from the central government, rising income level of farmers and herdsmen, and burgeoning consumption by local residents.

I. Growth and Change: Basis of Development

Economic development is a process of creating and accumulating wealth. In economics, Gross Domestic Product (GDP) is a core indicator measuring the degree to which a country or region creates and accumulates wealth. It is also widely used to measure a country's or region's economic growth, or even the level of social development.

1. Growth of Economic Aggregate and Stimulation of Investment

To discuss the topic of growth and development, we first deal with the basis and conditions of development. In 2008, the GDP of Tibet was 39.591 billion yuan, and the per capita GDP reached 13,861 yuan. Although the per capita GDP in Tibet was much less than the national average of 22,698 yuan, we should take into account the fact that the economic growth of Tibet started from a very low level: At the time of the 1959 democratic reform, the total output value of Tibet was only 174 million yuan, and the per capita GDP was only 142 yuan.[1]

In reviewing the development history of the Tibet Autonomous Region over the past half-century, we can see that its economic development has experienced three main historical stages to achieve the growth of economic aggregate (see Figs. 1 and 2).

-- 1959-1965: From the democratic reform to the formal establishment of the People's Government of the Tibet Autonomous Region

The 1959 democratic reform abolished feudal serfdom, and made fundamental reforms in the ownership of the means of production, which prompted rapid economic development. As demanded by the serfs, who accounted for the overwhelming majority of Tibet's population, 95 percent or more of the land, livestock and other major means of production in Tibet that had been owned by the feudal upper class [2] (five percent of the population) were distributed among serfs; the private economy ownership of farmers and herdsmen was set up; and policies in favor of stable development were carried out. The reform of the ownership of the means of production greatly liberated the productive forces, and therefore Tibet saw unprecedented rapid growth in its economy. Some documents indicate that in the decade prior to the democratic reform in 1959, Tibet's economic aggregate was around 150 million yuan, showing that its economy was almost stagnant. In the six years from the 1959 democratic reform to 1965, when the Tibet Autonomous Region was established, Tibet's economic aggregate rocketed to 327 million yuan, with an annual growth rate of 11.1 percent. Tibet's economy entered a stage of rapid development.

-- 1965-1984: From the formal establishment of the People's Government of the Tibet Autonomous Region to the adoption of the reform and opening-up policy in 1978

After the People's Government of the Tibet Autonomous Region was formally established in 1965, the central government adopted policies one after another to give economic support to Tibet to guarantee its stable economic development. In 1984, when the inland areas saw initial achievements in reform and opening-up, the central authorities held the Second Tibet Work Symposium in Beijing. The meeting decided to continue the special preferential policy for rehabilitation in Tibet's rural areas: In farming areas "land should be used by individual farm households for their own production, a policy which would be kept unchanged for a long time to come"; in pastoral areas "livestock should be owned and raised by individual herder households, a policy which would be kept unchanged for a long time to come." In the same year, Tibet's government declared that it would carry out the policy of opening to inland China and to foreign countries. For this, 1984 is usually regarded as a key year in Tibet's opening-up. [3] We have noticed that in most of this period Tibet's economy experienced relatively stable growth, with an annual growth rate of 7.82 percent, although the growth rate was slower than that in the previous stage because Tibet's reform and opening-up was nearly six years later than inland China's, and it underwent the negative influence of the "cultural revolution" (1966-1976) at the start.

-- 1984-present: From the adoption of the reform and opening-up policy to the present

Since Tibet launched reform and opening-up in 1984, the strategy of opening-up and the basic role of the market have provided strong support for Tibet's economic development. In the meantime, the central government's policies and financial support, coordinated assistance from more developed inland provinces and cities and the joint efforts of the people of all the ethnic groups in Tibet combined to lift Tibet to a stage of the fastest economic growth in its history. The economic aggregate soared from1.368 billion yuan in 1984 to 39.591 billion yuan in 2008, an increase of 11.3 times within 25 years calculated by comparable price, and the annual growth rate reached a high level of 10.5 percent. To promote better and faster economic development in Tibet, the central government held the Fourth Tibet Work Symposium in 2001. The meeting decided upon 117 state-invested projects, involving a total of 31.2 billion yuan; moreover, the central government provided 38 billion yuan in financial subsidies, while 70 coordinated assistance projects and Tibet-aid funds from around the country involved over three billion yuan. Driven by such a huge investment, the economic aggregate of Tibet rose from 13.916 billion yuan in 2001 to 39.591 billion yuan in 2008, with a high annual growth rate of 12.4 percent. In 2006, the per capita GDP of Tibet exceeded 10,000 yuan, a milestone marking that Tibet was no longer in the last place in China economically. [4]

Investment has had a remarkable influence on the economic growth of Tibet. Analyses of Tibet's investment in fixed assets and local revenue and expenditure show that from 1959 to 2008 Tibet's investment in fixed assets grew from 29 million yuan to 30.333 billion yuan, and the annual growth rate reached 15.2 percent. In 1985, the second year of Tibet's opening-up, the investment in fixed assets accounted for 42.2 percent of that year's GDP, at least 10 percentage points more than in the past. From then on, Tibet's investment in fixed assets has grown by a big margin, and its proportion in the GDP has maintained a relatively high level. In each of the 10 years from 1984 to 1994, the proportion of Tibet's investment in fixed assets in its GDP was more than 40 percent. The figure rose to 66 percent in 1995, and dropped to between 45 and 47 percent in the two years from 1996 and 1998. From 1998, Tibet accelerated its investment in fixed assets. In the six years from 2003 to 2008, the proportion of Tibet's investment in fixed assets in its GDP has been more than 75 percent, over 20 percentage points more than the national average (see Table 1 and Figure 3).

Thus we can see that investment has played an increasingly important role in the economic growth of Tibet in recent years. But we must point out that most of the investment that local governments in Tibet use to develop their economy is not from self-accumulation or market allocation, but from the central government's fiscal transfer payment and input for various projects in Tibet, and assistance from more-developed inland provinces and cities.

Analyses of relevant statistics [5] show that the central government's transfer payments to Tibet amounted to 201.9 billion yuan between 1959 and 2008 and the figure totaled more than 154.1 billion yuan between 2001 and 2008, making up 93.7 percent of Tibet's financial revenue in the same period. This means that for every 100 yuan that Tibet spent, over 90 yuan came from the central As China's national strength has steadily increased since the introduction of the reform and opening-up policy, the central government has paid more attention and offered more support to the Tibet Autonomous Region, which is located in a border area in southwest China and whose economic development traditionally lagged behind other areas of the country. To accelerate Tibet's development, the central government held four Tibet Work Symposiums in Beijing in 1980, 1984, 1994 and 2001, respectively, providing more fiscal transfer payments and more investment in key projects for Tibet, bringing into being a framework for all places in China to provide assistance to Tibet. We have noticed that in the 22 years from 1985, not long after Tibet began the reform and opening-up, to 2007 the central government's financial subsidies for Tibet totaled 156.4 billion yuan. In 2007 alone, the central government's financial subsidy for Tibet was as high as 28 billion yuan, equivalent to the total subsidies Tibet received from the central government from 1959 to 1995. [6]

In addition to financial support, the central government also provides the investment for most of the major projects in Tibet. The Third Tibet Work Symposium decided upon 62 state-invested projects and 716 projects with assistance from other places, involving a total input of over eight billion yuan. The Fourth Tibet Work Symposium decided upon 117 state-invested projects, involving a total investment of about 31.2 billion yuan. Moreover, other areas have assisted Tibet with 70 projects, involving a total investment of over three billion yuan. In January 2007, the central government discussed and adopted in principle the Tibet Autonomous Region's Project Scheme in the 11th Five-Year Plan Period (2006-2010), planning to invest 77.88 billion yuan to build180 projects in Tibet. The total investment was expected to exceed 100 billion yuan.

In January 2007, the central government discussed and adopted in principle the Tibet Autonomous Region's Project Scheme in the 11th Five-Year Plan Period (2006-2010), planning to invest 77.88 billion yuan to build 180 projects in Tibet. The total investment was expected to exceed 100 billion yuan.

2. Industrial Development and Structural Change

(1) Primary Industry and Its Profitability

In 2008, the added value of Tibet's primary industry reached 6.051 billion yuan, making up 15.3 percent of the region's GDP. In the same year Tibet had a sown area of 170,200 ha for grain, and produced 950,000 tons of grain, exceeding 900,000 tons for the tenth year in a row. The grain output for each ha of farmland amounted to 5,581 kg, 3.1 times more than the 1,370 kg/ha in 1959. Data analyses [7] indicate that in 2008 Tibet had a grain output of 333 kg per capita, each person possessing nearly one kg per day, while before Tibet's democratic reform in 1959 its annual grain output was only 150 kg per capita and grain possession per capita was less than half a kg per day. These changes are shown in Fig. 4.

In 2008, Tibet had 24 million head of livestock, an increase of1.5 times over the 1959 figure of less than 10 million. In addition, the commercialization rate of Tibet's animal husbandry has markedly improved. A survey shows that before the democratic reform in 1959 the proportion of major kinds of livestock delivered to the slaughterhouse in Tibet was less than 10 percent. In 2008, the proportion of cattle, pigs and sheep delivered for sale was 19.8 percent, 57.2 percent and 30.8 percent respectively. In 2008, the output value of Tibet's livestock breeding amounted to 3.896 billion yuan, 5.1 times more than that in 1959. In 2008, Tibet's meat output was 242,700 tons, and the milk output 295,200 tons, an increase of more than two times the figures before the democratic reform in 1959. This data is shown in Fig. 5.

Modernization of agricultural production has been the major reason for the growing output of agricultural products. Before the democratic reform in Tibet in 1959, wooden plows were used for agricultural production, and yaks were used for threshing in rural areas. In some areas the slash-and-burn method of farming was still common. Since 1959, Tibet has made extensive efforts to carry out farmland capital construction and spread scientific ways of farming by building irrigation projects, improving soil and farming modes, promoting the use of new types of agricultural tools, and cultivating excellent seed varieties. Since 1990, comprehensive agricultural development projects and a series of infrastructure projects related to agriculture and animal husbandry have been carried out in the middle valleys of the "one river and its two tributaries"- the Yarlung Zangbo River, and the Lhasa and Nyangqu rivers.

In recent years, the central government and the local government of Tibet have regarded agriculture as the basis of the national economy, and a key industry, focusing government work on problems facing agriculture, rural areas and farmers, and increasing financial investment in the primary industry[8] by providing huge subsidies for things necessary for agricultural production such as excellent seeds, chemical fertilizers, agricultural machinery and diesel oil. The subsidies enable farmers in Tibet to purchase their materials for agricultural production at prices 30 to 50 percent lower on average than those in other areas of China. These measures for assisting agriculture have reduced farmers' burdens and spurred agricultural development. The supply of modern equipment related to agriculture and animal husbandry has been raised to a completely new level. In 2008, the total power of machinery for agriculture and animal husbandry reached 3.4 million kw, including 13,184 large and medium-sized agricultural tractors, 90,500 small and walking tractors, 2,684 combines, 22,605 threshing machines and 17,196 agricultural transport vehicles. Tibet's farming has basically achieved a transformation from "two oxen pulling a plow"[9] to modern farming, thus greatly improving the comprehensive agricultural production capabilities, the output rate of land, and labor productivity.

(2) Secondary Industry and Local Economy

Before the peaceful liberation of Tibet in 1951, industry in Tibet consisted of only a 125-kw small hydropower station built around 1931, a small mint and a small machinery factory. Owing to poor management and a shortage of auxiliary equipment, the hydropower station supplying electricity to a minority of senior officials and aristocrats had to close shortly after going into operation. At that time Tibet had only 120 people working in industry, with a negligible industrial scale and output.

Since the democratic reform in 1959, with the support of the central government, Tibet has begun to establish its own modern industrial enterprises, from scratch to a certain scale, later growing into a major force in the region's economic development. Currently, Tibet has set up a modern industrial system of over 20 sectors with distinctive local features, including energy, textiles, machinery, timber, mining, building materials, pharmaceuticals, printing, food processing, light industry and chemical industry.

Continual improvements in Tibet's industrial system strongly promote secondary industry and the region's economy. In 2008, the added value of Tibet's secondary industry reached 11.576 billion yuan, making up 29.2 percent of Tibet's GDP, in which industrial added value of Tibet totaled 2.968 billion yuan, accounting for 7.5 percent of Tibet's GDP. Tibet has formed a system consisting of new types of energy resources, with hydropower as the backbone, supplemented by other energy resources such as geothermal, wind and solar power. In 2008, Tibet generated 1.812 billion kwh of electricity, nearly eight times the 227 million kwh in 1984. Over the past two years, Tibet has had a total installed power capacity of over 600,000 kw, with nearly 2.1 million electricity consumers, by implementing the "Brightness Project," "Sending-electricity-to-villages Project" and a rural power network project. Electric power has become a reliable guarantee for people in Tibet to enjoy the benefits of modern civilization.

In 2008, Tibet produced 116,900 tons of chromium ore and greatly intensified the exploitation of ordinary building materials such as stone for the purpose of construction, with an annual output amounting to five million cu m and an output value exceeding 100 million yuan. In 2008, Tibet's building sector recorded 8.608 billion yuan in terms of added value, accounting for 21.7 percent of the region's GDP. With the growth of the construction sector, there are now more than 30,000 former farmers or herdsmen working in this sector in Tibet, with an increase of over 100 million yuan in revenue. In recent years, with the deepening reform of the housing system, real estate sector is gradually becoming a new growth point for the region's economy.