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 in human 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.