Development Leaves China’s Interior Behind : Government: In a conflict that blocked the 1991-95 economic plan, authorities in the hinterland have demanded a bigger share of the national budget.

Eastern provinces sent men and machines to open farms and mines in this remote northwestern region 30 years ago, but have sent little since, and the east-west development gap is bigger than ever.

The result is one of the most serious interregional arguments since the Communists united China’s many warlord fiefdoms in 1949.

Over the last decade, the central government focused on developing coastal provinces, which have less than an eighth of China’s territory but nearly half the 1.1 billion people.

It built ports, airports and highways to attract foreign companies, and allowed eastern provinces to experiment more freely with market mechanisms and reinvest their own tax revenues.

The strategy worked. Of about 12,000 joint ventures with foreigners, more than three-fourths are in or near coastal provinces, where they contribute taxes, jobs and technology.

Skyscrapers and luxury hotels built with foreign capital altered the skylines of eastern cities. Western fashion and fast-food outlets brought a cosmopolitan air.

Local authorities in the vast hinterland watched the coastal boom with growing discontent, which broke into the open when they demanded a bigger share of central investment funds in the 1991-95 economic plan. The conflict helped stall work on the plan, a staple of any centrally planned economy, for months.

A Communist Party document issued in December, designed to clear up disputes over the plan, made it clear that the regional tussle was unresolved.

Western provinces want more investment, higher prices for their raw materials and more freedom to experiment with a market-based economy--in short, a share in the coast’s prosperity.

In northwestern China’s Gansu province the per capita rural income is less than half that of coastal Zhejiang province. Gansu’s illiteracy rate is 28%, nearly double the national average.

Next to Gansu is the Ningxia Hui Autonomous Region, which has only one hospital bed for every 400 people. Liaoning province in the northeast has one for every 24.

The fact that most of China’s ethnic minorities live in the western provinces has sharpened the argument. Some minorities suspect that prejudice by the majority Han ethnic group is one reason the west has been allowed to lag.

Ningxia, one of China’s poorest areas, is a homeland for the Hui, a Muslim minority. During a recent visit, many people spoke jealously of the coast’s prosperity and saw little hope of improving their own lot.

“People here have little money to spend, not like those in the south,” a store clerk complained, referring to the booming southeast coast.

His shop in Yinchuan, the regional capital, was filled with people who stared at expensive trinkets from the coast, like musical birthday cards, but seldom bought them.

Yinchuan has the dusty, shabby look of a frontier town. The tallest buildings are only half a dozen stories and its leading hotel, built 30 years ago, needs a paint job. Cars are so rare that bicyclists ride in the middle of the roads, which quickly lead to farmland.

A government official said Ningxia got help from the coastal provinces soon after the region was established in 1958.

“The coastal areas sent technology, skills and manpower starting from the late 1950s, and the enterprises they set up became the core and backbone of our industries,” Fang Kechen, vice director of the Ningxia Economic Restructuring Commission, said in an interview.

Most of the west’s wealth is in natural resources and heavy industry. Ningxia is the nation’s fifth-largest producer of coal, much of it high quality, is rich in other minerals and produces machine tools and building materials.

To develop the east, the central government has kept the prices that eastern factories pay for coal and machinery artificially low. This helps foster prosperity and political stability in such coastal cities as Shanghai and Canton, but reduces the interior’s income.

Interior regions also have been given less freedom than the coast to carry out market-style reforms, and a nationwide turning away from reform in the last two years has them worried.

“Under the planning and guidance of the government, it’s still useful to have reform policies,” Fang said, choosing his words carefully. “Ningxia especially needs this because, to develop Ningxia, money and technology are needed, and that requires reform and opening to the outside world.”

He acknowledged that even if Beijing gave the same concessions to Ningxia, it could not match the coast’s achievements.

Ningxia, about the size of Panama, has less than 280 miles of railway, and most of its 5,000 miles of roads are poorly paved or unpaved.

“If the transportation is not there, you can’t get your products out,” Fang said.

That makes foreign investment hard to come by.