annenberg media ♪ captioning sponsored by annenberg/cpb narrator: following the attacks of september 11, china drew at least temporarily closer to the u.s. the reason: beijing fears separatist forces

in their islamic western provinces. china has a delicate relationship with its ethnic and religious minorities. to understand the interactions between two asian cultures, we travel to the frontiers of han and muslim china with its ethnic and religious minorities. in the city of lanzhou. but lanzhou's location-- and its future-- on this frontier have much to do with the region's physical geography and naral resources. ( blowing heavily ) narrator: for centuries in this part of china, rafts like this were an important means of transportation. made of sheepskin, inflated and tied together, these rafts, called yangpi fazi, navigated the huang he, or yellow river. by looking only at the huang he, you might think lanzhou is a wet place.

in fact it only receives about 12 inches of rain a year. geographer chai yangwei, in the green, follows these farmers to see how they cope with such low rainfall. peculiar to agriculture in this area, these are called "stone fields." a thin layer of stones is spread over the surface of the field to hold in moisture. stone fields can be used for about eight years. constant upkeep is necessary, however. this plot is two years old. the farmers are adding fertilizer. if the soil becomes mixed with the stones, the efficiency of a stone field decreases, so stones must be carefully swept aside. the next step is to dign cow manure.

finally the stones will be spread back. melons will be grown here for the modern city nearby. lanzhou is home to 2.6 million people. its historical geography holds clues to the future of western china. today lanzhou is the second-largest city in china's northwest and the capital of gansu province. sowhis this city here? its growth is largelthe result of 20th-centurycentral. buwhat ipired e communists its to develop lanzhou? result imagine the chalngefor mal trying to link core areas in t east with the western frontier provinces. vast areas of deserts, high plateaus and mountains block many routes to the west. rivers like the huang he were one means of transport,

but they were not navigable in many places. they were also not easily crossed. ( speaking japanese ) translator: this is the huang he. lanzhou was built on this site because of its geographical features. the river above lanzhou is swift as it cascades down from the mountains. when it reaches the lanzhou basin, it spreads out and sandbars like these form in the middle. you have to ford the huang he to get to western china, so people have been fording the river here for centuries. that's why lanzhou was built here and has prospered. the famous silk road passed through here on its way through northwest china. narrator: it was the silk road that led the way for modern planners looking to link the east and the west. so now the major roads and railroads all pass near lanzhou.

add the principal western oil fields, and you can see why pipelines, too, were laid through this strategic location. professor dru gladney. china is trying to develop its entire west, and this great western development campaign includes gansu, uh, as a very important focus for that-- a kind of staging zone. there's no way that lanzhou would ever be bypassed in this developmental scenario. because of the topography, because of the rail lines, because of the, u.. uh, centers of..of educaon and factor lanzhou will continue to maintain its position as the premiere western city. uh, and its, uh, population has been growing at a dramatic rate in the last few years and nobody expects that to... to stop. narrator: so the modern city has enormous economic importance.

but the silk road and its modern replacements moved more than goods from east and west. lanzhou is also a cultural crossroads between the han peoples in the east and other ethnic groups from the west. the distinct profile of mosques can be seen all over the city. northwest china is home to many muslims. with a population of 80,000, the largest ethnic minority in lanzhou are called hui. throughout china today, there are 55 official ethnic minorities. of these, ten are muslim. the largest of these are hui. ( man delivering sermon ) narrator: although the hui have their own autonomous region in ningxia, other autonomous regions like xizang, or tibet, speak distinct languages. many in xinjiang, like the uighurs, speak turkic languages.

many of these muslims feel oppressed by china for cultural and economic reasons. some seek a breakaway state of east turkistan. some have used violence, and the chinese government tries to crush their movement. hui are loyal chinese and are found throughout china. they sak the dominantanguages of thelaces where they live. now we getnto the issue of race and ethnicity. many people, uh, believe that, uh, these are... this is a group of people that is really of han chinese race but islamic religion. the hui themselves don't see it that way. they see themselves as the descendants of the earliest muslims in china, who were arabs, persians, turks, some mongolian muslims and others. narrator: geographer chai yangwei grew up near here. he returned to china to attend beijinuniversity.

day in lanzhou, he's back exploring hui culture in a wholesale market. spichas alwa been on of theost important prodts tradedt the maet. chaiangw meetseen on wi ma zhenan, a hui muslim. ma is a spice trader. manyf these spices were brought over the silk road from the west from as far away as the uighur autonomous region,r qingi. a han chinese couple come to purchase tea. it is of high quality, so they buy a whole box. ( gro(pspeaking chineseh)nese ) translator: i used to be a laborer, but i steeled myself to make the move and become a trader. at first i sold fur and wool--

very traditional for a muslim trader. now, though, i buy spice from the west. sometimes i go to tibet to buy my spices. the furs i get from as far away as russia. narrator: ma lives with his fami in a muslim residential district. there are many of these districts in lanzhou. he has de well for himself and has built a beautiful two-story concrete house that is very unlike traditional muslim dwellings. ( conversing casually ) narrator: he lives with his wife and three daughters. his son lives elsewhere. four is a large number of children for a chinese family. gladney: now, these minority groups in china receive certain kinds of special privileges, preferential treatments. for example they're allowed to have more than one child,

and in the rural areas, many of them have two to three, four, five and many more if it's a very poor area. ( class reading in arabic ) narrator: the government also allows muslim children to take additional classes, like this one in arabic. they need arabic to read the koran. ma's daughter, wen di, studies here. she hopes to become an interpreter for china's muslims, who go on pilgrimages to mecca and other holy places. wen di visits her grandparents, who still keep to the old ways. they live in a traditional house built around a courtyard. anatenshengme to lanzho in ts youth from qinghai province. ( reading quietly in arabic ) narrator: now he prays in the mosque five times a day,

plus much of the time at home, where he also reads the koran. wen who has been a devoteera wisince his youth. ( reading in arabic ) ( reading in arabic ) narrator: in lanzhou, hui muslims today speak the same language and have lifestyles similar to their han chinese neighbors. the biggest difference is that the hui don't eat pork-- a barrier that keeps the two groups from socializing. despite their differences, hui muslims and han chinese live in relative harmony in lanzhou. this school is in a heavily muslim area. of the 600 students, 80% are muslims. teacher: "he shui qing qing." class: "he shui qing qing."

teacher: "he shui qing qing." narrator: he shui qing qing-- "the water of the he flows clear." ( instructing in chinese ) narrator: this ithe first year of chinese-language class for rui, ma's youngest daughter. the course of study is determined by the central government and is standardized throughout china. ( speaking chinese ) narrator: in general the government seeks good relations with the hui muslims and other ethnic and religious minorities. one reason is diplomatic. china must import much of its new energy from the oil-rich islamistates to their west-- a key fact of physical geography and resource distributio so relations along e han-muslim frontie are mostly peaceful. what's not as cleais e future of uighur muslims in far western xinjiang. a small minority promotes separatism,

and it's caused the state to treat many as terrorists. as with taiwan, tibet and tiananmen, the chinese government is in no mood for dissent. east asia is undergoing tremendous economic development. but some places struggle to integrate with the global economy. we continue our exploration of this region in china's fifth-largest city, shenyang. once a center of heavy industry, today its aging and outdated factories confront pressure to modernize and turn a profit in a market economy. here we explore the restructuring of state-run enterprises, the contrast between development in china's southeast and northeast regions and the human geography of a labor force facing massive layoffs with nowhere to go. ( train chugging )

steam locomotives like this one were once a common sight. today they have all but disappeared-- vanishing symbols of an earlier industrial era, an era that built the city of shenyang. once a commanding industrial center, this sprawling city, much like the steam locomotive, saw itself left behind by a modern world. shenyang is the nucleus of china's northeast region, called manchuria. abundant natural resources have long made this place attractive for industry: wood, coal and iron to fuel factories, plentiful rice production to feed workers. it has been the center of china's heavy industrial activities for the past 75 years. located in liaoning province, shenyang has a population of 6.8 million.

the factory district covers a full third of the total area of the city. li guoping is a geographer on the staff of the china science academy's research center. his area of study is the northeast industrial region. there are over 1,000 factories in the tiexi industrial ne, which spreads along the west side of shenyang. many state-owned enterprises have factories here. they are typical of those that made up the backbone of the sialist economy. ( speaking chinese ) translator: one of the problems facing the tiexi industrial zone at the present time is the aging of its plants and uipment. quite a lot of it is old and is still in use after more than 20 years. actually, some of this equipment has been used for more than 30 years. the second problem ithat most of the factories in the region

make everything they need in-house. this inefficient use of resources has resulted in many factories operating in the red. narrator: the shenyang number one machine tool works in tiexi is one such operation. its long history goes back to 1935, when manchuria was occupied by japan. the japanese established the region as a base of manufacturing for export to japan. they built a railroad and factories. the shenyang number one machine tool works began as the mitsubishi machines company. after the 1949 communist revolution, the infrastructure here secured shenyang's continuing role as a base of industry. capital, equipment and technical assistance flowed

from the chinese central government and the soviet union. it was the era of the iron rice bowl. under the planned economy, state-owned enterprises were assigned workers, whether they needed them or not, and workers were assured lifetime employment and pensions, regardless of factory output. but factories were often poorly run, sometimes by people with strong party controls and contacts, but who lacked technical or managerial skills. ultimately, central investment dried up. the factories went into debt, and today many state-owned enterprises limp along with a redundant work force, outmoded equipment, poor management, and an outdated production system. man: this is really what we refer to as china's rust belt, and it's the equivalent of cities like pittsburgh or cleveland, say, 20 years ago in the united states. in fact, the northeast, we could argue, has been receiving huge subsidies from the central state all these years

and has mismanaged those subsidies. so they had it coming to them, just as in a sense, one could argue, the u.s. automobile industry in the 1970s had gotten too fat and too lazy. and that's really what's going on here. they were not efficient and could not compete, and as the global economy changed and then indeed as the domestic economy, once it began to be open, began to change, what's going on in this part of china is anachronistic. but because of its rather privileged position within the domestic economy and the fact that it employed so many people, it's a very, very difficult thing to turn around without far-reaching social as well as political consequences. narrator: the situation came to a head in 1998. chinese premier zhu rongji announced that large and medium state-owned enterprises had three years to become modern profitable corporations. pannell: so, how do they do that?

they need a lot of new capital to bring in new technology and new equipment. they also need to restructure these places in terms of the amount of employees that they need to operate so they can achieve greater productivity and greater efficiencies, and they certainly need to improve the management of many of them. narrator: an immediate result of the new policy of "reform and opening" was the acceleration of factories shedding themselves of redundant labor. pannell: from, say, the mid-'90s until about now, th'vst aboutmillio people in termof people that have literally been thrown out of work out of these state-owneenterprise and they are distributed all over the country, but many of them are up in the noheast. the place is really being hit very, very hard. narrator: in shenyang, out of a population of 6.8 million, approximately 1.3 million people are out of work. at one time, the shenyang number one tool works employed more than 8,000 people.

today it employs just over 3,000. one of the lucky ones is shao jianwei. his father worked at the tool works until his retirement, among the last beneficiaries of the iron rice bowl. shao's situation is much different. he is a contractual employee, and his contract must be renewed every five years. pannell: they're trying to salvage as much as they can to make the transition to a more efficient process of manufacturing; at the same time, to keep as many people as they can on the payroll, but people that are going to be productive. the problem here is, though, when you restructure these things, you put a lot of people out of work. and that leads to social and political unhappiness-- the kind of thing that the chinese refer to as "impending chaos," or luan, which is a chinese term. that's something that they very, very much do not want. narrator: people like shao face the challenge

of staying employed during the reforms. but he also has the opportunity to play a major role in improving the management of state-run enterprises. in addition to restructuring their labor force, the large state-run busisses face the challenge of acquing new equipment and improving the efficiency ofheir operations. the shenyang machine tool works began moving in this direction in the mid-'90s. in an attempt to modernize, the number one machine tool works built a new factory. in 1995, it received a loan from the world bk. whilrt of this money went to recate workers, like these numerically tcontrolled lathes from japan. unke the lathes in the old building, which operate under the control of seasoned workers, this computer selects which tools it will use and operations proceed automatically.

taking form at the moment is the body of a machine tool. ( speaking chinese ) translator: i am well aware that at large-scale factories like ours, equipment has not been upgraded. old machines are a major problem. with a market economy, there is greater demand for better products, so we are moving forward in our efforts to upgrade our facilities. another goal is to break away from the completely in-house production system of a planned market economy. this will allow us to concentrate more efficiently on the specialized manufacturing that we do best. narrator: the northeast region is also looking outside china for further assistance with restructuring. it sees the examples of shanghai and the utheastern province guangdong, whe money from taiwan, hong kong and southeasasia,

and the utheastern province guangdong, as well western multinationals, has developed a booming economy. the same is hoped for china's northeast. a number of foreign enterprises are moving into the economic and technical zone that the national government has declared here. this machinery manufacturing plant has been fanced by a chinese enterprise and a large japanese automaker. it will manufacture spinning mhines. here a japanese manufacturer andand a singapore companyaker. have combined in this precision equipment plant to manufacture machinery that is used in making floppy disks. but despite these promising beginnings, the attraction of foreign investment in liaoning province has lagged. part of the problem the nature of ry there.

pannell: the problem is, if you've got iron and steel works, machine tool works, refineries, coal gasification plants-- sort of the dinosaurs of the industrial structure-- the real action is more in the light industrial side, the consumer goods and those kinds of things. if you can produce sporting equipment, for example-- shoes, garments, consumer appliances, electric fans, rice cookers, those kinds of things-- d you can doinexpeively, that's what happening down in south china. narrator: other factors inhibit foreign investment as well. the southeast benefits from its relative location to the strong economies of hong kong and taiwan, as well as closer cultural ties among businesspeople there. it also has a reputation for creative and dynamic entrepreneurial energies, something the northeast so far has lacked. differences in the labor forces also contribute to slow growth in the northeast.

in the south, workers are pro-market economy. many are temporary migrants from rural areas and small cities. by contrast, the work force in and around shenyang tend to be well-organized permanent workers used to low productivity. and a large factor is the continuing managerial structure of the state-owned enterprises themselves. pannell: china is a leninist state still. people don't think of it that way, but it indeed is. virtually all of these people that are running... people that are making the decisions are done by communist party officials. narrator: companies like the shenyang number one machine tool works are run by communist party members. many factories have been plagued with corruption among top management. and all too often, entrenched local interests see foreign firms as unwanted competition that will upset the status quo. among state-owned enterprises, the shenyang machine tool works is doing better than most.

today it is 60% state-owned and 40% privately owned. it recently provided equipment for the maglev railroad extension for e w shanai airport and it has begun repaying its world bank loan. while the tool works still struggles with the effects of restructuring, its example holds promise for the northeast's future. and geographer li remains hopeful. ( li speaking chinese ) translator: in recent years, shenyang has been working on product development, on upgrading its plants and equipment, adopting new technologies and attracting overseas investment. it has achieved significant results with the establishment of the shenyang economic and technical development zone and the revitalization of the tiexi industrial zone. these efforts are paying off in the renewal of shenyang's industrial base. i believe that the region will grow

to play a more important role in northeast asia. narrator: in shenyang, the restructuring of state-owned enterprises brought enormous change. millions of people have been laid off from secure positions at state-owned enterprises, leaving them few options. structures in china, although loosening, still make it difficult for people to legally move to areas of high employment like those in the southeast. although great strides have been made toward becoming profitable in a global market economy, the innovation and transformation of factories in china's rust belt will continue in the years, and perhaps decades, to come.

captioned by media access group at wgbh access.wgbh.org