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 government.

    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.

 (3) Tertiary Industry and Its Contribution

    Tertiary industry has become the largest industry in Tibet, with newly emerging sectors such as modern commerce, tourism, posts and telecommunications, catering, cultural entertainment and information technology developing rapidly. In 2008, the added value of tertiary industry in Tibet amounted to 21.964 billion yuan. More than half, or 55.5 percent of Tibet's GDP come from tertiary industry, easily making it top of the contributors of local GDP.

    Before the peaceful liberation in 1951, Tibet had no roads in the real sense. Local haulage relied mainly on humans and animals. After peaceful liberation, the first large-scale project undertaken by the central government in Tibet was the construction of highways among mountains more than 3,000 m above sea level that linked Lhasa with Sichuan and Qinghai, two neighboring provinces. After that, more investment funds were poured into the region to construct highways linking Tibet with Xinjiang, Yunnan and Nepal. Currently, the Tibet Autonomous Region has 15 main highways and 375 branch roads.

    By the end of 2008, almost all counties in Tibet are accessible by roads whose total length reached 51,300 km. Tibet now has a road network of five national highways, 15 main highways and 375 branch roads. Improvement has been made to the road network in rural areas, easing the bottleneck effect caused by poor transportation on the region's rural economic and social development, thus injecting vitality into the economy in urban and rural areas, and promoting balanced development between urban areas and farming and pastoral areas, as shown in Fig. 6.

    In recent years, the completion and operation of the Qinghai-Tibet railway has greatly spurred growing demand for tourism, cars, housing, catering and entertainment. In 2008 Tibet's retail sales of consumer goods came to 12.908 billion yuan, up 15.2 percent over 2007. Of these, the retail sales of consumer goods in urban areas stood at 6.428 billion yuan, up 14 percent over 2007; the retail sales of consumer goods at the county level or below totaled 6.48 billion yuan, up 16.4 percent over 2007. Looking at particular sectors, the wholesale and retail trade in 2008 yielded 10.459 billion yuan, up 18.1 percent over 2007; the retail sales for the lodging and catering sector recorded 1.951 billion yuan, up 3.8 percent over 2007; and the retail sales of other sectors hit 498 million yuan, up 7.3 percent over 2007.

    In the wholesale and retail sector above a designated size, retail sales of clothing, shoes, hats and textiles grew by 35.4 percent, that of petroleum products by 30.9 percent, that of gold, silver and jewelry by 20.4 percent, and that of food, beverages, tobacco and alcohol by 68 percent.

    Posts and telecommunications have seen unprecedented growth. In 1959, Tibet had only 276 telephones, mostly located in large and medium-sized cities like Lhasa. The earnings of postal and telecommunications services then totaled only 990,000 yuan. Now, Tibet has formed an advanced communications network covering every part of the region with Lhasa as the center, providing services such as optical cable and satellite transmission, combining program controlled exchange, satellite communication, digital communication and mobile communication. Statistics show that over the past 20 years the business transactions of the postal and telecommunications services in Tibet have grown at an annual rate of 34.4 percent, reaching 4.173 billion yuan in 2008, up 35.1 percent over 2007. By the end of 2008, telephone (including mobile phone) subscribers in Tibet totaled 1.562 million, an increase of 117,000 subscribers over the previous year. Now in Tibet there are 55 telephones per 100 persons, with the rural telephone subscribers numbering almost 27,000 households. In addition, Tibet has over 800 Internet websites, providing services to about 200,000 netizens.

    In 2008, the balance of deposits in both renminbi and foreign currencies in Tibet's financial institutions stood at 82.902 billion yuan, up 28.9 percent over 2007, with the savings of both urban and rural residents hitting 18.536 billion yuan, up 15.8 percent over the previous year. Also in 2008, the balance of loans in both renminbi and foreign currencies from financial institutions amounted to 21.932 billion yuan, up 13.3 percent over2007; cash receipts for the financial institutions totaled 79.532 billion yuan, up 3.8 percent over 2007; cash disbursements were 82.985 billion yuan, up 4.2 percent over the previous year; and the net cash injections amounted to 3.453 billion yuan, an increase of 407 million yuan over 2007.

    Tourism is playing an increasingly important role in Tibet's tertiary industry. Though it has unique natural, cultural and tourism resources, Tibet developed its tourism sector very late. Before 1978, there was almost no tourism in Tibet. In 1980, there was only one hotel that could receive overseas tourists, with fewer than 100 beds. The reform and opening-up policy has helped Tibet open its long-closed doors to the outside world, enabling its tourism to gain a considerable expansion. It has greatly improved its tourist reception capabilities, with 93 tour agencies of various kinds, and 62 star-rated hotels. The total fixed assets of the region's tourism sector stand at 1.78 billion yuan, with 12,032 employees.

    Since the completion and operation of the Qinghai-Tibet railway, Tibet's tourism has entered a period of rapid development. In 2008, 2,246,400 Chinese and foreign tourists visited Tibet, a figure bigger than the total number of tourists who went to Tibet between 1980 and 1997. Tourism revenue in 2008 reached 2.259 billion yuan, almost equaling the total revenue generated between 1980 and 2000. Tibet has now formed a tourism resources pattern, with Lhasa as the center, supplemented by Shigatse, Shannan and Nyingchi, and extending to Nagqu, Ngari and Qamdo (see Fig. 7).

    At present, in addition to its contribution to the region's GDP and revenues from foreign exchange, Tibet's tourism plays an increasingly significant role in increasing employment and tax revenues, and raising the living standards of both urban and rural residents. Tourism has become a major channel to create job opportunities and increase people's incomes.

 (4) Industrial Structure and Development Pattern

    Tibet's industrial structure has been increasingly optimized, as the region's economic aggregate is expanding, with its industries developing at a rapid and coordinated speed. This can be seen in Fig. 8, which shows the proportion of the added value of primary, secondary and tertiary industries in the region's GDP and the ratio between the three industries in the three years of 1959, 1997 and 2008.In 1959, the proportion of Tibet's primary, secondary and tertiary industries in the region's GDP was 73.60 percent, 12.60 percent and 13.80 percent, respectively; the added value of primary industry accounted for over 70 percent of the GDP, indicating that Tibet was then a typical agricultural society. In 1997, the proportion of Tibet's primary, secondary and tertiary industries in the region's GDP was 37.80 percent, 21.90 percent and 40.30 percent, respectively; the added value of tertiary industry made up over 40 percent of the GDP, indicating that tertiary industry had become the region's largest type of industry. In 2008, the proportion of these three types of industries in the region's GDP was 15.30 percent, 29.20 percent and 55.50 percent, respectively; the added value of tertiary industry accounted for over 55 percent of the GDP, indicating that tertiary industry was playing a dominant role.

    In 1959, the ratio of added value of Tibet's primary, secondary and tertiary industries was 1:0.17:0.19; primary industry being the largest industry proves that Tibet was a typical agricultural society. In 1984, the ratio of added value of the three types of industries was 1:0.44:0.71; the plunging ratio of the added value of primary industry in the GDP indicates that it was beginning to lose its domination in the region's economy. In 1997, the same ratio turned out to be 1:0.58:1.07; the added value of primary industry historically gave way to that of tertiary industry. In 2003, the ratio became 1:1.17:2.38; the added value of tertiary industry made up more than half of the region's GDP, and the added value of agriculture took the last place. Tibet's industrial structure was upgraded again, forming a pattern with tertiary industry as the largest, secondary industry taking the middle place and primary industry as the smallest one in light of their weight in the region's GDP. This pattern has since continued, indicating the soundness of regional economic development.

    Thus, judged from either the proportion of the added value of the three types of industries, or the ratio between the three of them, Tibet's present economic structure has achieved a transformation from one mainly relying on the manufacturing sector, to one depending mainly on the service sector. An economic structure mainly supported by the service sector can help create more job opportunities, and will play an important role in preserving the region's ecological environment and traditional culture.

 II. Human Development: Goal of Economic Development

    Development, a multidimensional concept, is commonly understood as the development of the economy, an integral process of economic growth and the transition of the growth pattern. But the meaning does not end there. The word has also become recognized as the development of human beings. Economic development promotes the accumulation of social wealth, providing the necessary conditions and basic materials for human development. Human development, which improves the fundamental qualities of people and increases opportunities, is the ultimate goal of economic development.

    1.Population: Quantity and Quality

    Since the introduction in 1978 of the reform and opening-up policies, the exchange of human resources between Tibet and the inland areas has seen a steady increase, with more and more migrant workers seeking employment and business opportunities in Tibet. Yet the Tibetan population remains the overwhelming majority in the region, accounting for a steady 90% or more of the total population. Moreover, the increasing birthrate of the local Tibetan population is the major reason for the overall population boom, as shown in Figs. 9 and 10 [10] [11] while the total population of the Han and other ethnic groups has always been under 10% of the total population.

    The 1959 democratic reform brought unprecedented changes to the growth pattern of the population of Tibet, as a result of the ensuing economic development and improved medical services.

    First, in the less than 60 years from the peaceful liberation of Tibet in 1951 to 2008 the total population of Tibet increased from 1,228,000 in 1959 to 2,870,800 in 2008, and the population of the Tibetans increased from one million to 2.7 million. The family planning policy widely adopted in inland areas is not implemented in the vast farming and pastoral areas of Tibet. According to a sample survey, conducted by relevant statistical organization, of 1% of the resident population in Tibet, the annual growth rate of the local resident population for the past ten years has remained above 10,[12] far exceeding the national average. In contrast, during the two centuries before the democratic reform, the total population of Tibet increased by a mere 58,000, and the Tibetan population practically stopped growing.

    Second, average life expectancy is an important index of human development. The current average life expectancy in Tibet is 67 years, as shown in Fig. 11. In contrast, the figure was only 35.5 in old Tibet.

    Third, the mortality rate of population in Tibet has dropped significantly. The average mortality rate before the democratic reform was a stunning 28, and those of women and children-two vulnerable groups-were even higher, at 50 and 430, respectively. Currently the mortality rate of pregnant women and women giving birth has dropped from 50 in the early 1950s to 3.1 in 2007, and infant mortality rate has dropped from 430 to 24.5 in the same period (see Fig. 11).

    It can be concluded from the above that the population of Tibet has undergone a change in its development pattern. Old Tibet experienced two highs and two lows in population development -- "high birth rate and death rate, and low life expectancy and growth rate." In contrast, Tibet today sees a comparatively high birth rate and life expectancy, low mortality rate, and a steady growth in population. It is also clear that the assertion that "local Tibetan people are becoming a minority due to a large inflow of Han people into the region," made by some international non-governmental organizations and individuals, is a false assumption contrary to the facts.

  2. Education and Human Capital

    The government of the Tibet Autonomous Region attaches great importance to the establishment of an education system, with a view of spreading technology and culture as well as increasing the value of human capital. By the end of 2008, Tibet had 1,017 schools of various kinds at all levels, including 884 primary schools, 117 regular secondary schools, ten secondary technical schools, and six colleges and universities. Now, an education system with local characteristics has taken shape, covering education for preschool children, primary and secondary education, higher education, vocational education and adult education (see Table 2 and Figure 12). Before the democratic reform, education was monopolized by monasteries. Only some 2,000 monks and children of noble lineage were studying at government-funded schools and private schools, which shut their doors on the average farmers and herdsman.

    The illiteracy rate in Tibet was 95% before the democratic reform. To enhance the educational level and scientific and cultural qualities of the Tibetan people, the local government has increased spending on the establishment of an elementary education system, and made great efforts to eliminate illiteracy in young and middle-aged population. By the end of 2008, all 73 counties in the region had completed the task of "making six-year compulsory education available to all school-age children," with a 100% coverage rate. Some 311,800 students were studying in primary schools, and the enrollment rate was 98.5%. Seventy counties had realized the goal of "making nine-year compulsory education available to all school-age children," with a 90.2% coverage rate. The number of students studying in junior high schools reached 139,900, with an enrollment rate of 92.2%. The number of students receiving senior high school education is on the rise, as 44,600 students are now studying in senior high schools, with an enrollment rate of 51.2%. At present, the local population receives an average 6.3 years of education. For adults without school education, especially those under the age of 50, literacy courses and evening classes are provided, reducing the illiteracy rate to under 2.4% (see Fig. 13).

    In 2008, 29,409 students were studying at four-year colleges and universities and three-year junior colleges. With an enrollment rate of 19.7%, the region saw steady development in higher education, which has been enlarged in scale and significantly improved in teaching quality.

    The first secondary technical school in Tibet opened in 1959. By the end of 2008 there were around ten technical schools, with 21,000 students. Higher technical education in Tibet started during the period of the Tenth Five-Year Plan (2001-2005), and has been enjoying rapid development ever since. Now there are over 5,000 students studying in higher technical schools in Tibet.

    With substantial support from the central government, all of Tibet's 74 counties have undertaken to establish training bases for workers and farmers. In light of the needs of the labor market in Tibet, training courses in practical skills and techniques are also offered to farmers and herdsmen, covering areas such as farming, animal husbandry and mechanical maintenance. Training courses are also offered to surplus laborers from farming and pastoral areas for their future employment. In 2008, some 255,000 farmers and herdsmen across Tibet took part in such training courses, greatly improving the quality of the local labor force. In addition to improvements in the local education system, Tibetan students also enjoy opportunities to study in inland areas. Since 1985, the accumulated investment in Tibetan education from 18 provinces and cities in the inland areas has reached 576 million yuan. More than 300 kindergartens, primary and secondary schools have been rebuilt in all 74 counties. Since 1985, classes and schools for Tibetan students have been set up in 20 provinces (cities) across the nation, covering education from junior high schools to colleges and universities. By the end of 2007, there were 28 schools in China with classes for Tibetan students, including 19 junior high schools, seven senior high schools and two teacher training schools.

    In addition, 53 inland senior high schools accept Tibetan students, and over 90 inland colleges and universities now admit high school graduates from Tibetan classes. The inland junior high school Tibetan classes have an accumulated enrollment of 36,000 persons, and have fostered 18,000 qualified personnel for Tibet.[14]

    While modern education flourishes, Tibet has always paid special attention to education in the Tibetan language. As clearly stipulated in the Constitution of the People's Republic of China and the Law on Regional Ethnic Autonomy, the right of ethnic minorities to use and develop their own languages is protected and guaranteed. Regulations of the Tibet Autonomous Region on the Study, Use and Development of the Tibetan Language (2002 Revision) once again strengthened the legal status of the Tibetan language in education in Tibet. By the end of 2006, a total of 880 primary schools and 1,351 teaching institutions offered bilingual courses in Chinese and Tibetan, with 310,000 students, accounting for 95.60% of the total number of students in Tibet's primary schools. Moreover, 117 secondary schools offered bilingual courses, with over 110,000 junior high school and 28,000 senior high school students, accounting for 94.62% and 85.96% of the total number of junior and senior high school students, respectively. In the local teaching force, 15,523 teachers are bilingual. As an ordinary institution of higher learning, the Tibetan Traditional Medical College uses three models in bilingual teaching, with 589 students. In elementary and secondary education, both the Tibetan and Chinese languages are compulsory courses for Tibetan students; such courses are offered from grade one in primary school to grade three in senior high school. In the college entrance exam, the two languages are also subjects of examination, whose scores are taken50% respectively into the final score.[15]

  3. Public Services and Civil Projects

    In old Tibet there were only three government-run organizations of Tibetan medicine and a small number of private clinics, all shabby and with poor facilities. The total number of medical workers then was less than 400, averaging 0.4 for every 1,000 Tibetan people. In view of such a situation, the state has carried out a special health care policy in Tibet since the democratic reform in 1959. In cities and towns residents have personal medical insurance accounts with the individual contributing a certain percentage of his/her monthly salary to the account and his/her employer contributing some more depending on the individual's share. In farming and pastoral areas people enjoy free medical care. During the past 50 years, the state has allocated more than 1.8 billion yuan of special funds to develop the health care system in Tibet, and the medical subsidies for Tibetan farmers and herdsmen have exceeded 20 million yuan every year. At the end of 2008, there were 1,339 medical care organizations in Tibet, an increase of nearly 20 times over 1959; the number of hospital beds had increased to 7,127 from 480 in 1959, and the number of hospital beds for every 1,000 residents was 2.5, or 2.11 beds more than in 1959. The number of medical workers increased from 791 in 1959 to 9,098 in 2008, and the number of medical workers for every 1,000 residents was 3.05, or 2.41 more than in 1959. The numbers of hospital beds and medical workers for every 1,000 residents in Tibet were both higher than the national average, and were also higher than the average level of middle-income countries, as shown in Fig. 14.[16]

    In 2008 there were 80 disease and epidemic prevention and control centers and organizations, and 58 women and children's health care hospitals and stations. Serious epidemic diseases like tuberculosis, iodine deficiency disorders and Kaschin-Beck disease had been effectively controlled. Iodized salt had been introduced to 66 percent of the total population of Tibet. At present, more than 97 percent of Tibetan children have had vaccinations against serious ailments.

    Before the democratic reform, more than 90 percent of Tibet's serfs had no private housing. After the democratic reform, the farmers and herdsmen gradually obtained houses of their own, but the per capita housing area was still small and the living conditions poor. Since the 10th Five-Year Plan period (2001-2005), the People's Government of the Tibet Autonomous Region has actively invested in housing in farming and pastoral areas, and worked on key projects like rebuilding farmers' houses and constructing settlement centers for nomadic herdsmen. About 100,000 of the 400,000 rural households of farmers have rebuilt or newly built their houses. The living conditions of some farmers and herdsmen have been improved to a considerable extent. In early 2006, the regional government started across the region the "comfortable housing project" for farmers and herdsmen. During the11th Five-Year Plan period (2006-2010), the regional government will complete building new houses or rebuilding houses for 219,800 households, involving 1,252,000 farmers and herdsmen. It is projected that over 80 percent of Tibetan farmers and herdsmen will be settled in safe and comfortable houses in five years. By the end of 2008, the region had invested more than seven billion yuan to help 200,000 families, or about one million farmers and herdsmen to build new houses. The per capita housing area for farmers and herdsmen has now reached 22.83 sq m, close to the national average.

    For a long period of time, the poor drinking water quality for both people and livestock held back the rural economic development of Tibet. But since the peaceful liberation of Tibet in 1951 the central government has taken various measures to solve that problem. Especially since the 10th Five-Year Plan period (2001-2005), the central government has increased its investment in the construction of safe drinking water projects in Tibet's farming and pastoral areas, allocating close to 500 million yuan in total for such projects in all 74 counties in Tibet. During the 10th Five-Year Plan period, 4,525 safe drinking water projects of various types were completed across the region, benefiting 580,000 people and 5.56 million head of livestock which previously had difficulty obtaining safe drinking water, and making drinking water safe for another 200,000 people. Now the percentage of farmers and herdsmen who have running water available has increased from 12 percent in 2000 to 29 percent. In 2005, a rural safe drinking water program was initiated in Tibet, and the central government also increased the investment in related projects. By the end of 2007, the total funds invested in the program had reached 450 million yuan, and over 600,000 farmers and herdsmen in Tibet were provided with safe drinking water. While constructing the safe drinking water projects, the government has given priority to comfortable housing project sites, areas suffering from high arsenic or fluorine contamination in the water or Kaschin-Beck disease, border areas and areas inhabited by ethnic minorities with smaller populations. It is planned that safe drinking water will be provided in all farming and pastoral areas in Tibet by the end of 2010.

    Owing to the natural conditions and climate, and the deficiency of fossil fuels in Tibet, the local people used to use firewood as their major fuel source. The use of firewood, as well as manure and straw in great amount has an unfavorable impact on the ecosystem and environmental protection in Tibet. Since 1980, the central and regional governments have taken measures to solve the problem of alternative energy sources, establishing successively a solar energy research institution, methane energy research institution and some other related institutions. In 2008, based on scientific evidence, the regional government began carrying out the alternative energy strategy, earmarking 5.2 billion yuan to develop new energy sources like methane and solar power, and by taking advantage of the opportunity to set up a new housing structure coordinating housing, energy use and manure disposal.

 4. Income Level of Farmers and Herdsmen and Poverty Alleviation

    The urbanization level of Tibet in 2007 was only 38.3 percent. This means that 61.7 percent of the Tibet population were farmers and herdsmen, who engaged in traditional farming and animal husbandry in rural areas. Facts and statistics show that while raising the urbanization level and the residents' incomes in cities and towns, the Tibet regional government is also making every effort to enhance support for farmers and herdsmen, expecting that through such support and development farmers and herdsmen can fully enjoy the fruits of reform and opening-up, and economic development.

    The per capita net income of Tibetan farmers and herdsmen was 3,176 yuan in 2008, 7.1 times and 18.1 times that of 1984 and 1978, respectively. The 30 years from 1978 to 2008 saw an annual average income increase rate exceeding 10 percent, which is quite high. These facts are shown in Fig. 15.[17] Meanwhile, the per capita income from investment and property income of Tibet's rural residents reached 448 yuan in 2007, accounting for 12 percent of their total income (see Fig. 16).

    Along with the continuous increase of per capita net income of farmers and herdsmen, Tibetan families' consumption level also improved markedly. The Engel coefficient of Tibet's farming and pastoral areas, which had fluctuated between 53.18% and 69.5% since the early 1980s, was 56% in 2008. Tibetan farmers and herdsmen are leading relatively comfortable lives. Durable goods like TV sets, radios, video recorders and cell phones have entered many Tibetan rural families, and about 20 percent of rural households have bought trucks or tractors. It is a trend in the pastoral areas of northern Tibet to buy the latest style of motorcycles. Many herdsmen change motorcycles as fast as city residents change their cell phones.

    Poverty in Tibet has also been alleviated as the overall income level has been raised. Before the democratic reform in 1959, the incidence of poverty was over 80% in farming and pastoral areas.[18] After the democratic reform, the central and regional governments implemented a poverty-alleviation policy throughout Tibet, striving to reduce the number of people suffering from poverty. In the mid-1990s, at the beginning of the "Baqi" Rural Poverty Alleviation Program,[19] Tibet had 480,000 people below the poverty line, and the incidence of poverty was below 23 percent. With support of the central government, the regional government is making insistent efforts to alleviate poverty. At the end of 2007, the number of people who didn't have enough food and clothing decreased to 70,000 from 480,000 before the "Baqi" Program was adopted, bringing the incidence of poverty to below 10 percent.

    The disadvantaged groups in the Tibetan population have been protected. In 2005, the People's Government of Tibet provided allowances to extremely poor farmers and herdsmen if their annual net income was below 300 yuan. Since 2006, a system of minimum subsistence allowances for rural residents has been instituted across Tibet, and the poverty line for allowances increased by a big margin again: Families whose average annual per capita income is below 800 yuan are covered, and 230,000 rural families have benefited from the policy. Since 2003, the regional government has several times raised the allowance for "five guarantees" families[20] in rural areas. The annual allowance for one person has been raised from 588 yuan in the past to 1,500 yuan. In 2008 it was increased again to 1,600 yuan, which is higher than the national average. Meanwhile, the minimum subsistence allowance for urban and rural residents was also increased to 260 yuan and 850 yuan, respectively.

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

    Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. In other words, it refers to the harmonious development of economy, society, resources and environmental protection, which compose an inseparable system. We should achieve the goal of economic growth while protecting the natural resources and environment, including the atmosphere, freshwater, sea, land and forests, on which mankind relies for existence, ensuring that future generations may inherit sustained development, and live in peace and plenty.[21]

    1.Environmental Situation and Protection

    As the main body of the Qinghai-Tibet Plateau, the Tibet Plateau is the source and upper reaches of many Asian rivers, as well as a "solid reservoir" on which several billion people on the lower reaches of those rivers rely for existence. According to well-grounded scientific evidence, the Tibet Plateau is the "starter" and "regulating area" of climate change of the Northern Hemisphere, playing an important role in conserving water sources and controlling the climate. Going beyond the region, Tibet's environmental benefits have a direct bearing on the future development of the Chinese nation as a whole and the fundamental interests of later generations, and also affect the future development of the people of South and Southeast Asia.

    In recent years, the government and legislative bodies have attached more importance to ecological building, environmental protection and sustainable development. Recently, the central government issued the Plan on Protection and Construction of the Ecological Security Screen in Tibet (2008-2030). According to the plan, China will, in more than 20 years' time, mobilize all the resources at its disposal to make Tibet a protective screen for regional ecological security. In addition, the Tibet Autonomous Region has formed a relatively systematic local legal regime concerning environmental protection; it has issued the Regulations for Environmental Protection in the Tibet Autonomous Region, Rules for Implementation of Management Methods of the Tibet Autonomous Region for Protection of the Environment of Construction Projects, and Methods of the Tibet Autonomous Region for Collection of Sewage Charges, and drafted the Regulations for Natural Protection in the Tibet Autonomous Region and Methods of the Tibet Autonomous Region for Comprehensive Management of the Urban Environment. All these laws and regulations have exerted a positive influence on environmental protection in Tibet.

    In protection of the atmosphere, we can take Lhasa as an example. In 2007, the concentrations of sulfur dioxide and nitrogen dioxide conformed to the grade II standard of the Ambient Air Quality Standards. The daily average concentration of inhalable particles ranged from 0.012 to 0.232 mg/cu m, and its annual average concentration was 0.057 mg/cu m. Throughout the year of 2007 Lhasa had 177 days with excellent air quality, 181 days with good air quality, and 7 days with the air slightly polluted. Therefore the proportion of days with good air quality or better was 98.1%. The air quality of Lhasa is noticeably better than that of the other big cities in China.

    In protection of natural grassland and forest, the government exercises a "felling by quota" policy, and strictly controls the scale of tree-felling in forests. Meanwhile, a rotation system is in place for lumbering bases, so as to help restore vegetation. A project for the protection of natural forest resources on the upper reaches of the Yangtze River in Tibet has been implemented in the three counties of Jomda, Gonjo and Markam, which have a weighty bearing on the ecology of the lower Yangtze Valley. Along the upper reaches of the Jinsha, Lancang and Nujiang rivers and the Yarlung Zangbo River valley, where sandstorm and soil-erosion hazards are serious, a project to reforest cultivated land is being undertaken. The government is also striving to promote the development of energy substitutes and fuel forests, and popularize solar energy in order to protect natural bush vegetation. The government of the Tibet Autonomous Region has formulated the Forestation Plan of the Tibet Autonomous Region and the Opinions on Acceleration of Afforestation.

    Due to the effective protection of natural forest resources and afforestation, the percentage of forest cover in Tibet has kept growing. The afforested area jumped from 868 ha in 1990 to 19,069 ha in 2007, registering a more than 20-fold increase. The area of shelter-forest, which plays an important role in ecological protection, rose from 440 ha in 1990 to 13,132 ha in 2007, an increase of nearly 30-fold (see Fig. 17).[22]

    For the protection of biodiversity, the central government and the Tibetan local government have conducted extensive surveys of Tibet's biological resources. They have worked out scientific plans and programs for the protection of wild animals and plants, effectively protecting rare and endangered species. In accordance with the relevant State laws and regulations, the Tibet Autonomous Region has established forest law enforcement organs, conducting the "Hohxil Action Number One" and other special campaigns in the border areas of Qinghai, Xinjiang and Tibet to protect the Tibetan antelope and other rare animals. These campaigns have dealt a heavy blow to poachers and curbed law-violation activities that have done damage to wild animal resources. Meanwhile, the State invests millions of yuan each year in infrastructure facilities for forest security and forest fire prevention in Tibet, in a special project aimed at cracking down on poachers of Tibetan antelopes and in strengthening publicity concerning the protection of wild animals. Now the hunting of Tibetan antelopes has been brought under control.

    Since the peaceful liberation of Tibet in 1951, not one species in Tibet has been found to have suffered extinction. Biodiversity is effectively maintained, and biological types are continuously enriched. Red deer, generally considered by the international animal research community to have vanished in the 20th century, were discovered again in Tibet in the 1990s, and their numbers are increasing. As Tibet opens wider to the outside world, non-native creatures have been introduced from the inland areas to Tibet, where they are thriving today.

    In the construction of nature reserves, by the end of 2008 Tibet boasts 20 nature reserves, of which nine are national level nature reserves and 11 are nature reserves at the autonomous region level, with a total area of 41.263 million ha, accounting for 34.8% of the land area of Tibet. In addition, Tibet has established 21 eco-function reserves of different types (including one at the national level). A rationally distributed nature reserve network of different types is basically in place (see Fig.18).

    In order to restore the natural ecosystem, human activities such as economic development are strictly limited in the established nature reserves. As a result, the ecological environment in most of the nature reserves has become stable, and the prospects are quite good. Breeding grounds, habitats and important ecosystems for rare and endangered species, important wetlands for migratory birds, as well as natural landscapes, geological sites and biological sites of scientific importance are now well protected. Jimmy Carter, former president of the United States, once commented on the construction of Tibet's nature reserves. President Carter doubted if it would have been possible for any other region in the world to designate 40% of the land area for natural protection over the past 20 years. He said that it was no easy job to preserve an endangered species from extinction. But, the diligent Tibetan people did it! They preserved nearly all their native species-from the snow leopard, wild yak and antelope to the musk deer, including some of the world's most mysterious and rare animals.

 2. Economic Growth and Sustainable Development

    In the course of the modernization of Tibet, much attention has been paid to the relationship between the exploration and utilization of natural resources and eco-environmental protection. While following the laws of nature, Tibet has taken both long-termand overall interests, both the need for development and the bearing capability of resources and the environment into consideration. Natural resources that should not be explored and used are strictly protected, while the exploration and utilization of needed resources are done with clear objectives, to prevent any undesirable impact on ecological functions. Efforts are being devoted to safeguarding Tibet's ecological security and offering a beautiful environment for people of all ethnic groups in Tibet. Environmentally-friendly industries, including tourism and Tibetan medicine and pharmacology have been designated as pillar industries.

    Tourism is generally acclaimed as an environmentally-friendly industry that saves resources. Tibet is rich in tourism resources, and its tourism has rapidly developed following the speeding up of reform and opening-up. From 1990 to 2008, Tibet's tourism earnings and their contribution to the GDP grew markedly. Tourism earnings jumped from 6.84 million yuan in 1990 to 2.259 billion yuan in 2008, a 329.2-fold increase, and a 2.3-fold increase over the figure for 2000. While tourism earnings accounted for 0.2 percent of the GDP in 1990, it made up 5.7 percent of the GDP in 2008.

    With high added value and scientific and technological contents, Tibetan medicine and pharmacology saves resources and causes little pollution to the environment. Its development not only has promoted the development of Tibet's pharmaceuticals industry as a whole, but has also contributed to regional economic growth. The output value of Tibet's medical and pharmaceutical industry jumped from 248 million yuan in 2000 to 642 million yuan in 2008, registering a 1.6-fold increase.

    Tibet has paid much attention to the exploitation and utilization of ecological energy resources. The region stresses the exploitation and utilization of water energy while exploring and introducing other types of ecological energy resources. In 2007, Tibet invested 140 million yuan in a project to construct facilities using methane and solar energy and wind-driven generators, alternative energy resources to replace the traditional firewood. The methane project had been implemented in 43,000 households throughout Tibet, enabling 125,000 people to use methane; 400,000 solar stoves had been introduced, with well over one million users. In addition, the power of various types of solar photoelectric facilities totaled 9,000 kw, the construction of solar water heaters and solar-heated rooms were 200,000 cu m and 250,000 sq m, respectively, and the number of small wind-driven generators reached 135.

    Though rich in mineral resources, the People's Government of the Tibet Autonomous Region shows an attitude of protection towards resources so as to ensure sustainable development. For projects for which the conditions are ripe, the local government will standardize the market operations under a unified planning to improve the value of mineral resources. The mining of other mineral resources is strictly limited to protect the environment and resources.

    In the initial period of the building of the Qinghai-Tibet railway, top priority was given to environmental protection and ecological security. The railway was constructed along the Qinghai-Tibet highway, without opening a new passageway. The design plan takes plateau vegetation, area of frozen soil, protection of wild animals, and three wastes (waste gas, waste water and industrial residue) control fully into consideration. Thus, the construction of the Qinghai-Tibet railway, or the "Heavenly Road" has not only promoted the economic growth of Tibet ,but also managed to protect the ecological environment.

    It is worth noticing that the central government is to invest nearly 20 billion yuan to build a protective screen for the ecological security of the Tibet Plateau during the 11th Five-Year Plan period (2006-2010). In addition, more than 90% of Tibet's financial revenue and over 70% of its fixed assets input rely on the central government's financial transfers, as well as assistance from other provinces and cities, greatly alleviating resources consumption and environmental pressure caused by regional development, and playing an irreplaceable role in the environmental protection and ecological improvement of Tibet. Without these supports, even if Tibet could maintain rapid economic growth, it would have paid a high environmental price.

    Today, while pursuing rapid economic growth, Tibet has also gained remarkable achievements in protecting its ecological environment, making a striking contrast to the view that "Tibet's ecological environment has been destroyed" held by a handful of people in the world.

 IV. Government and Market: Encouragement and Promotion for Development

    The evolution of history has proved that building and perfecting the market and its system can optimize the distribution of essential factors of production and promote the flow of manpower, merchandise, capital and services, in order to achieve a better division of specialized labor, update concepts and boost economic development. While stressing the market's fundamental role in development, we should also recognize that the government should play the role of a night watcher to maintain order, property rights and social stability, as well as institute strategies for economic development, provide public services, encourage competition, prevent monopoly, minimize negative external economic effects, promote fair distribution, alleviate and decrease poverty, and so on.

    1. Market and Resource Distribution

    Now, the market system has been established primarily in Tibet, and the market's function in regulating local economic life is obvious.

    Government control on prices of consumer goods, including the prices of farm produce and many other products, has been lifted. The free flow of manpower, materials and capital in Tibet has been realized. Today, Tibet's markets are full of commercial goods from all over China and the rest of the world. During the time of the planned economy daily foodstuffs like vegetables were in short supply, and many Tibetan residents would bring vegetables from inland areas on their flights back to Tibet. After the market mechanism was introduced the unreasonable price gap between consumer goods and agricultural goods created by the planned economy vanished. The price rise of most agricultural and livestock products far exceeds that of consumer goods, and farmers and herdsmen have profited greatly from the market. For instance, in the time of the planned economy a kilo of yak meat cost less than one yuan but now people have to pay more than 20 yuan for the same amount of meat. A robust yak could even swap for a walking tractor.

    Various markets of different nature have been established. Besides commodities markets that have sprung up all over Tibet, specialized markets of means of production, human resources and securities have emerged in Lhasa and other medium- and large-size cities and towns. The market is beginning to play the fundamental role in resource distribution. Enterprises have become major players in the market who have the final say over their production and operation. In a period of 25 years from the democratic reform in 1959 to the introduction of the reform and opening-up policies in 1984, Tibet's industrial development was dominated by state-owned and collectively-owned enterprises. Not until 1985 did industrial enterprises of a different nature emerge in Tibet. By 2007, there were 148 non-state-owned and non-collectively-owned industrial enterprises, whose output value accounted for nearly 60percent of the total industrial output value, playing a significant role among the industrial enterprises in Tibet. The businesses of these enterprises are completely directed by the need of the market. Even the production and operation of state-owned enterprises follow the market laws and are regulated by the market rather than by government instructions (see Figs. 19 and 20).[23]

    According to an on-the-spot survey, farmers who remained self-sufficient for long periods with low levels of marketization have begun to tailor their production to the needs of the market. The following are two representative examples. Example one: many farmers are increasing the acreage of rape and high-quality highland barley, for which there is a growing demand and price rise, but at the same time reducing the area of winter wheat. Example two: farmers are beginning to buy modern machines like tractors and automobiles and at the same time reducing the number of horses, which rely on large areas of grassland and a lot of feedstuffs but are of not much use nowadays. Furthermore, more and more farmers and herdsmen are transferring extra products and labor to where the needs of the market lie.

    Many farmers and herdsmen are selling their surplus agricultural and animal products at fairs and farmer's markets in medium and large cities like Lhasa and Shigatse, especially at the morning fairs in Shigatse and other county seats. Besides, labor markets for farmers and herdsman have been formed in many cities and towns in Tibet. For example, in the slack seasons labor markets of considerable size can be found in Lhasa, where farmers and herdsmen congregate and wait for people to employ them.

    Because farmers and herdsmen make up an overwhelming proportion of Tibet's total population, and because their income level is an important index to measure their quality of life and the degree of economic development in rural areas, scholars from the China Tibetology Research Center have conducted three successive research projects in three villages[24] in Tibet in 1996. In 2008,the latest research findings showed that the proportion of farmers at the medium-income level was on the rise, while that of those at the high- and low-income levels had decreased. This kind of income structure is widely considered to be rational. The function of the market in optimizing farmers' income structure should not be neglected. In the early days of the reform and opening-up, there were no other means to increase farmers' incomes except traditional agriculture, animal husbandry and the small handicrafts industry. At present, one of three sources of income of over half of Tibet's farmers and herdsmen comes from the market; two of three sources of income of the top ten percent farmers and herdsmen come from the market. So, the market and market economy have indeed boosted the development of the farming and pastoral areas. This also shows that the socialist market economy with Chinese characteristics and in line with the Tibetan situation advocated by the central government well suits Tibet's development, and fuels its economic growth (see Figs. 21 and 22).

 2. Government and Development

    This report studies government's acts and functions in the development of Tibet not only because the government should shoulder many responsibilities and obligations, but also because in recent years one important driving force behind Tibet's rapid economic growth is investment. Especially in the past five years, the amount of investment in fixed assets has accounted for over 75% of the region's GDP. Of this, financial transfers and investment in the construction of major projects from the central government account for a very large proportion. Take 2008 as an example. The investment under the state budget accounted for 75.9%of the investment in fixed assets. Thus, investment from the government plays a significant role in Tibet's economic development. In other words, investment in Tibet is largely decided by the central government.

    As capital-the most crucial and a comparatively rare resource for Tibet's development-is in the hands of the government, the government's strategy for economic development and where to make the investment will have a great impact on Tibet's economic development.

    From the beginning of the reform and opening-up in 1978 to the end of the 20th century, the Tibetan local government, based on the theory of stratified development adopted by the inland areas and many countries and regions in the rest of the world, invested heavily in the construction and rebuilding of infrastructure in cities and towns as well as infrastructure connecting cities and towns with farming and pastoral areas. This was known as the "blossom in the center" strategy. However, this investment strategy, plus the defects in the market, may increase the discrepancy between urban and rural areas. For instance, from 1997 to 2000 the average increase of farmers' and herdsmen's annual net income was 8.1 percent, a little bit lower than the rate of increase in the previous five years. However, Tibet's GDP during the same period maintained a high, double-digit rate of increase, and investment from the central government and assistance from other areas of the country soared. Against this background, the discrepancy of income between farmers and herdsmen in Tibet on the one hand and urban residents on the other seemed to be widening. This situation drew keen attention from the central government, Tibetan local government and domestic and foreign scholars.

    We should point out that, during the early and middle periods of the reform and opening-up, concentrating limited resources on key areas and starting from the easy and then moving to the difficult and letting the development of one small spot lead the development of a larger area is a choice that suits the realities in Tibet, where the land is vast, capital is limited and infrastructure backward. This development mode was based on the successful experiences of the development in China's inland areas as well as those of developed countries in their early stages of development.

    After initial success of the construction of infrastructure in cities and towns, and as the increase in the infrastructure's functions began to have an effect on the vast farming and pastoral areas, the government of Tibet decided to shift the focus of development and construction to the farming and pastoral areas whose demand for development was now more urgent than before. From 2000, "increasing the incomes of farmers and herdsmen has become the top priority of local government's work in the farming and pastoral areas, and it is the foremost task in their economic work." They put this passage in the autonomous region's Government Work Report of that year. In each of the following years, governments at all levels in Tibet all regarded solving the issues concerning "agriculture, farmers and rural areas" satisfactorily as their top priority. In its newly-instituted 11th Five-Year Planof Development, the People's Government of the Tibet Autonomous Region reiterated: "We must make sure that preferences are given to grass-roots areas and farming and pastoral areas in terms of all investment projects and the allocation of capital."

    Thanks to the investment from the central government and the people-oriented development strategy of "aiding people, helping people and making people rich," after 2000, the Tibetan government greatly raised the standards of the "three guarantees," aiming at ensuring compulsory education for children of farmers and herdsmen in the countryside. The system of cooperative medical care has been established in most farming and pastoral areas. Comfortable housing project for farmers and herdsmen was completed. So was the project that provided clean drinking water to people and animals. Moreover, people with lowest income in the farming and pastoral areas received basic livelihood allowances from the government.

    While respecting laws of the market, the government takes various macro-control measures to make up for the shortcomings of the market. The practice of the development of modern economy has proved that the market itself has the propensity to "favor the strong and neglect the weak," which means that the market tends to allocate rare resources to regions and people that can make more efficient use of them. Without macro-controls and interference from the government, the backward farming and pastoral areas with relative low returns on investment face the danger of being mercilessly rejected by the market, and the farmers and herdsmen who lack competitive strength are in danger of being marginalized by the market.

    So governments at all levels in Tibet earmarked more funds to promote the development of the farming and pastoral areas, and to increase farmers' and herdsmen's incomes. They also implemented policies regarding loans, taxation, etc., giving preferential treatment to those in the farming and pastoral areas. In addition, they experimented with other macro-control measures, among which, two policies were particularly welcomed:

    First: to guarantee that farmers and herdsmen enjoy complete employment rights, the people's government of the Tibet Autonomous Region stipulated that civil engineering projects funded by the government should recruit at least one third of their workers from among farmers and herdsmen. Efforts are made to employ farmers and herdsmen in all working posts for which they are competent.

    Second: As Chinese Caterpillar Fungus, with its soaring prices, has become an important source of income for farmers and herdsmen, the government of the Tibet Autonomous Region soon promulgated regulations that grant the right to pick Chinese Caterpillar Fungus to local farmers and herdsmen. The regulation not only protected the resource and immediate interests of farmers and herdsmen, but also ensured that the Fungus was picked in an orderly manner.

    One result of a long-term investigation conducted by the China Tibetology Research Center in Tibetan countryside shows that, at present, one of the three sources of the income of over half of the farmers comes from government subsidies, and that nearly half of the income of the ten percent of farmers at the bottom of the income level comes from government subsidies. This underlines the fact that the government plays a significant role in alleviating poverty, aiding the poor and promoting coordinated development.

V. Difficulties and Challenges: Obstacles to Development

    The year 2009 marks the 50th anniversary of the democratic reform in Tibet. Over the past half a century, after the stagnation before the democratic reform, Tibet has successively experienced steady growth under a planned economy and rapid development since the adoption of the reform and opening-up policy in 1984. Although the Tibet Autonomous Region has obtained worldwide recognition for its economic, human and sustainable development, the region still faces many difficulties and challenges due to historical, geographical and social factors.

    1. High Development Cost

    The infrastructure and other conditions for development in Tibet have greatly improved. However, Tibet is situated on the Qinghai-Tibet Plateau, known as the "third pole" of the world, far from China's inland areas and other major regional markets. The region's development is still restricted by objective conditions, including its remote geographic location, frigid climate, lack of oxygen, fragile environment and sparsely distributed population. The findings of the China Tibetology Research Center show that the overall price level and economic development cost of the Tibet Autonomous Region are usually over 50 percent higher and over 70 percent higher than the national averages, respectively. In other words, a commodity that costs one yuan in the inland areas sells for more than 1.5 yuan in Tibet, and a matter that costs one yuan to solve requires more than 1.7 yuan in Tibet. High development cost will remain a long-term challenge on Tibet's way to economic development. It has a great bearing on the gap of production benefit between enterprises in Tibet and in inland areas.

    Furthermore, Tibet's economic development is confronted by tremendous social barriers. With its origin in the society of feudal serfdom of old Tibet, modern Tibetan society is still underdeveloped and must overcome many difficulties in order to develop. Apart from various adverse social factors from the interior, Tibet has had to deal with interference from the exterior. The March 14 riot in Lhasa and other places of Tibet in 2008 serves as an undeniable example. The incident severely affected the social stability of Tibet, and hindered its rapid economic development to different extent, exerting a detrimental effect on the previously booming development of tourism. Therefore, another big challenge facing Tibet in its development is how to eliminate the negative effects brought about by non-economic factors, especially those created by separatist forces on Tibet's economic development.

    2. Unbalanced Development

    The problem of unbalanced development, the gap between urban and rural areas in particular, is common in developing countries and regions. Despite active government measures to narrow such a gap in Tibet and the overall trend of the narrowing of the gap over the past few years, the problem in Tibet remains more conspicuous than in other regions of China. Take the income level, the focus of government and public concern, for example. In 2007, the income levels of urban and rural residents in Tibet were 19.2 percent and 32.2 percent lower than the national averages, respectively, as shown in Figs. 23 and 24, and the ratio between the income levels of urban and rural residents in Tibet was 4.0:1,much higher than the national average of 3.3:1. Tibet, along with other provinces and autonomous regions in western China, including Gansu, Guizhou, Qinghai and Ningxia, is typical of places with a large urban-rural gap. Unbalanced regional development characterized by urban-rural gap is another obstacle to the economic development of Tibet.     

    3. Underdeveloped Human Capital

    Human capital refers to the capital acquired from investment inhuman resources and is the aggregate of human physical performance, skills, knowledge and experience, with a value irreplaceable by other forms of capital. Nowadays, human capital has become the decisive force in economic and social development.[25] Compared with the past, the human capital of Tibet's population with Tibetans as the majority has markedly improved, yet is still not sufficient for the rapid economic development of the region. The gap in human capital is even more conspicuous between Tibet and other regions in China. In 2008, the national and Tibet's average years of education were about 8.5 and 6.3, respectively. Tibet, along with the provinces and autonomous regions in western China, including Guizhou, Ningxia, Gansu and Qinghai, ranked the lowest in terms of education level. In the same year, 94 and 67 out of every 10,000 people in Tibet received higher and secondary education, respectively, far lower than the national corresponding figures of 192 and 198.

    On-the-spot surveys indicate that the farming and pastoral households in Tibet, vigorously supported by the government, are trying every possible means to transfer surplus labor to industries of higher levels. However, restricted by underdeveloped skills, working skills in particular, and scientific and technological knowledge, the job of transferring surplus labor from Tibet's farming and pastoral areas poses a formidable challenge. Even the already transferred surplus labor mostly undertakes work that doesn't require high technical skills, normally with low payment. The region's rapid economic development sets increasingly higher requirements for human capital. The problem has severely impeded the economic development of Tibet's farming and pastoral areas, and income increase of farmers and herdsmen. Therefore, at the present stage, Tibet has to make great efforts to remove the obstacles of low population quality and inadequate human capital for economic development.

 VI. Conclusion: Prospects for Growth and Development

    Although Tibet's social and economic development was affected by the March 14 Incident in 2008, the incident was quickly quashed, and Tibet's economic development has maintained a strong momentum. On-the-spot surveys and relevant statistics show that the impact of the March 14 Incident on most industries in Tibet was limited, except for temporary difficulties for tourism. The total grain output of Tibet in 2008 reached 950,000 tons, an increase of more than 10,000 tons over the previous year and topping 900,000 tons for ten years running. The grain yield per ha was 5,581 kg. In 2008 the output of rape and vegetables was 59,200 tons and 460,000 tons, an increase of 13.6 percent and 2.1 percent over 2007, respectively; the output of meat and milk was 3.4 percent and 2.0 percent higher than in the previous year. The added value completed by Tibet's secondary industry was worth 11.576 billion yuan in 2008, an increase of 7.9 percent over 2007. It is worth mentioning that as stability was restored to Tibet, tourism has shown notable signs of recovery. In the latter half of 2008, especially during the week-long National Day holiday, a considerable number of Chinese and foreign tourists were coming back to Tibet. Although Tibet's tourism performance in 2008 could not be compared with that of the previous two years, trade, transportation, and posts and telecommunications in Tibet developed rapidly. The added value contributed by Tibet's tertiary industry reached 21.964 billion yuan in 2008, 12.4 percent higher than in 2007.

    Moreover, investment remains a strong driving force for Tibet's economic growth. In the first half of 2008, despite the disturbance of the March 14 Incident, investment in fixed assets amounted to 9.013 billion yuan, an increase of 9.2 percent over the same period of the previous year. At present, Tibet is increasing investment in accordance with the Tibet Autonomous Region's Project Scheme in the 11th Five-Year Plan Period (2006-2010), which had been approved by the central government. According to the Scheme, 77.88 billion yuan will be invested in Tibet for the construction of 180 projects. When these projects are completed, the total investment will exceed 100 billion yuan. Such an enormous investment will maintain Tibet's economic growth at a relatively high level, providing the region's economic development with promising prospects.

    In addition to the stimulation of investment, local demand and consumption are giving an increasingly stronger impetus to Tibet's economic development. In 2008, the per capita net income of farmers and herdsmen in Tibet surpassed 3,000 yuan for the first time in history, 13.9 percent higher than in the previous year. A survey conducted among 100 households in the farming and pastoral areas of Tibet by the China Tibetology Research Center in 2008 shows that, with the increase of income, 30 percent of the households surveyed planned to build new houses in the next five years; nearly 60 percent planned to buy mobile phones in the next one or two years; 20 percent planned to buy tractors; 15 percent planned to buy motorcycles in the next three years; and five percent planned to buy automobiles in the next five years. Therefore, consumption demand and investment will probably form a joint force to promote the sound and rapid economic development of Tibet.

 Notes:

    [1] Tibet Statistical Yearbook 2000. Beijing: China Statistics Press, 2000. Tibet Statistical Yearbook 2008. Beijing: China Statistics Press, 2008.

    [2] The feudal upper class refers to aristocrats, government officials and upper class monks before the democratic reform in 1959.

    [3] Gyaltsen Norbu and Dorje Tseten. A Brief History of Tibet's Economy. Beijing: China Tibetology Press, 2000.

    [4] See the report by Karma Dorje and Lhapa Tsering carried on Tibet Channel in Xinhuanet dated December 28. The report originally appeared at http://unn.people.com.cn/GB/channel450/451/1352/200112/28/143468.html

    [5] Tibet Statistical Yearbook 2008. Beijing: China Statistics Press, 2008.

    [6] Tibet Statistical Yearbook 1990 and Tibet Statistical Yearbook 2008.

    [7] Ditto.

    [8] See relevant section in Part IV of this report.

    [9] A traditional Tibetan farming technique--two oxen pulling a plow. One farmer guides the oxen, another supports the plow and a third sows the seeds. Or there is no such a person leading an ox, and clod is crushed with a mallet when plowing is completed.

    [10] Tibet Statistical Yearbook 2008. Beijing: China Statistics Press, 2008.

    [11] Data of the Population Census of China in 2000: Tibet Autonomous Region. Beijing: China Statistics Press, 2001.

    [12] Tibet Statistical Yearbook 2008. Beijing: China Statistics Press, 2008.

    [13] Tibet Statistical Yearbook 2008. Beijing: China Statistics Press, 2008.

    [14] http://info.tibet.cn/focus2008/2008xzssysz/index.htm.

    [15] "Tibetan Language Develops with Care and Protection", www.chinatibetnews.com, December 4, 2008.

    [16] Tibet Statistical Yearbook 2008. Beijing: China Statistics Press, 2008.

    [17] Tibet Statistical Yearbook 2008. Beijing: China Statistics Press, 2008.

    [18] Lhorong Dradul. On Poverty and Anti-Poverty in Tibet. Beijing: China Tibetology Publishing House, 2000.

    [19] The program was the first poverty alleviation guiding principle with specific goals, objects, measures and deadline in the history of New China. In 1994, the Chinese government determined to launch a large-scale poverty-alleviation drive by mustering manpower, material resources and financial resources from all walks of life, striving to solve the problem of basic food and clothing of 80 million rural residents in poverty in seven years by the end of 2000.

    [20] Guarantee of food, clothing, housing, medical care, and burial expenses for the elderly people who have no one to support them, the handicapped who have lost the ability to work and minors who have no source of income.

    [21] http://news.xinhuanet.com/zhengfu/.

    [22] Refer to www.china.com.cn for "facts and figures of 2008: Tibet, China."

    [23] Data in Figs. 19 and 20 are taken from the book Tibet Statistical Yearbook 2008. Refer to Tables 10-9 and 10-11 in that book.

    [24] They are Lunbugang Village in Medrogungkar County, Lhasa, Tsongdu Village in Lhundrup County, and Tashiling Village in Dranang County, Shannan Prefecture.

    [25] Wang Weiguang (vice-president of the Chinese Academy of Social Sciences), "China Is Transforming from a Country with a Large Population to One with Strong Human Capital," Reform and Opening-up and Population Development Forum, Beijing, October 23, 2008.