Stay West Young Han: State Response to Sons of the Soil Conflict
This paper studies state response to “sons of the soil” riots – riots by local inhabitants of a particular region against recent migrants to the region that typically belong to the politically dominant majority ethnic group. It argues that states respond to sons of the soil riots by extending fiscal and financial benefits to the region in order to incentivize the dominant group to stay. This is because a return migration of the dominant group may embolden minority insurgencies in the short run and undermine the state's ability to achieve its strategic goals in the region in the long run. Fiscal and financial benefits can increase the immediate and future economic returns for the migrants relative to their home localities. Using a difference-in-differences design and a provincial-level panel dataset, I show that after the 2009 minority riots in Xinjiang, average wage and fixed asset investment increased by 3.4% and 1.8% more in Xinjiang, respectively, comparing to other western provinces. Using fine-grained sector- and subregional-level panel datasets, I substantiate the policy rationales by showing that after the riots, wage and investment increased more in Xinjiang sectors and localities with a larger number of Han Chinese and Han engaging in occupations of strategic importance to China’s key interests in Xinjiang. Finally, I show that China’s fiscal and financial policies indeed mitigated Han's return migration and I explain their moderate effect on inducing greater Han inmigration with the state's other national policy priorities that were in conflict with investment in Xinjiang. The paper suggests that state responses to ethnic riots are not limited to redistribution in favor of the rioting population but include investment on the non-rioting ethnic group when the latter has high inter-regional mobility and serves a strategic role for the state.