Dying China oil town a warning to Beijing

YUMEN, China (Reuters) - Dying towns are rare in booming China, but the expanses of rubble and abandoned homes that ring the once-wealthy oil centre of Yumen mark it out as one of them.

A statue is seen near an abandoned apartment block on the outskirts of the oil-producing town of Yumen, Gansu province, February 26, 2008. REUTERS/Emma Graham-Harrison

And though it is home to just a few thousand people, in a nation of over 1.3 billion, Beijing’s stability obsessed bureaucrats are fretting about their fate.

They worry because Yumen’s poor, disgruntled inhabitants are the thin end of a wedge of discontent that could engulf hundreds of thousands of people within a decade unless the central government can tackle one of the more obscure but troubling legacies of past socialist policies.

The potential troublemakers live in dozens of “resource towns” scattered across China, which were built by Mao-era economic planners to exploit energy or mineral deposits regardless of how remote or inhospitable the location.

Now some seams of oil, coal and ores are starting to run out, pushing up unemployment and migration while leaving behind shells of towns that are impoverished tinderboxes of unrest.

Yumen is one of many resource towns that should probably never have existed, clinging to mountains in a high-altitude corner of poor northwestern Gansu province, with a single oilfield as its gushing but fragile economic base.

“It’s a general problem, Yumen is just an example,” said Phillips Andrews-Speed, Professor of Energy Policy at Dundee University. He has studied how China’s desperate hunt for energy has marginalized some of the people who produce it.

“You have groups of thousands or tens of thousands of people left in the middle of nowhere who will be poor and with nothing to is a growing problem for the government,” he added.

Built to service what was then a key oilfield, Yumen was populated by a fortunate elite with coveted state jobs.

But oil output peaked in 1959 and by the start of this century had become so insignificant compared to other finds that PetroChina moved its headquarters out of town.

When local officials followed suit, setting up a “new Yumen” in a more convenient location, it was a fatal blow to the town they were meant to nurture. Today just 2,000 yuan ($280) can buy a flat along the main street, pockmarked with boarded-up shops.

Food is expensive because it is mostly trucked in with too few buyers to push prices down, and there are no hopes of new employment for the men and women who used to pump oil.

“I can’t eat well, I can’t buy clothes, I can’t even think of traveling or having fun. All I can do is try to slowly pass my days,” said a laid-off worker who gave only his surname, Quan.

“We have all been out to protest.”


Resource towns everywhere shrivel up or suffer when their key source of income fades. Texas is dotted with ghost towns and industrial centers of northern England struggled for decades after coal and heavy industry slipped into decline.

But the future for remote Yumen, one of the first in China to face resource depletion, seems particularly grim.

In Maoist China there was little diversification and planners preferred to create whole settlements near mines and pumps rather than ship workers to sites far from their families.

The people who built the single-purpose cities relied entirely on a state that promised to provide cradle to grave support, making few plans or provisions for a bleaker future.

Now, the central government’s energy bureaucrats have moved out of micro-management, abandoning Yumen to local officials who never took steps to plan for a future without oil.

“When the old economy is gone you need to build a new one, but it takes at least a decade. So if you don’t start until after the old one is finished you are stuck,” said Andrews-Speed.

“The planned economy didn’t anticipate this.”

With stability a top concern as the gap between rich and poor widens, Beijing knows it has a serious problem on its hands -- its finance minister mentioned revamping resource towns at the annual session of parliament earlier this month.

“China has identified 118 cities that have developed around the mining of natural resources,” the Asian Development Bank said in a recent report on a project in one city that aims to retrain miners to work in agriculture, tourism or technology.

“Eighteen are classified as resource-exhausted cities, posing a special challenge,” the report added.

They range from coal producing Fuxin in the northeast, where mine closures cost 100,000 jobs in 2001 alone, to the copper, lead and zinc producing city of Baiyin in Gansu.


But Beijing’s concern has not translated into improvements on the ground in Yumen, where local officials apparently took government exhortations to build a new economy at face value.

With little consultation they moved the seat of government, around 80 kilometers (50 miles) to a newly built Yumen, taking with them all those who could afford pricier houses.

“I left for 6 years, and when I came back half the town I knew was gone,” said taxi driver Cai Xin, gesturing to an empty apartment block and an abandoned mosque in the old city.

Money that could have paid pensions and medical bills was poured into empty multi-lane roads, new government buildings and a vast square filled with decorations ranging from crudely carved statues of naked Caucasian women to a faux windmill.

Citizens of old Yumen said no cash was offered to compensate them for their plunging house values, or help them move.

Officials declined repeated requests for statistics on budgets, population, and the economy of the new town, and trailed a journalist who tried to interview residents of new Yumen.

And the provincial government seems equally oblivious to Beijing’s concerns about unrest, poverty and marginalization.

Asked about the impact of the move, Gansu provincial governor Yu Shoucheng said: “Today’s Yumen is glowing and in its prime.”

Editing by Megan Goldin