Region still faces difficulties and challenges

Because farmers and herdsmen make up an overwhelming proportion of Tibet's total population, and because their income level is an important index to measure their quality of life and the degree of economic development in rural areas, scholars from the China Tibetology Research Center have conducted three successive research projects in three villages[24] in Tibet in 1996. In 2008, the latest research findings showed that the proportion of farmers at the medium-income level was on the rise, while that of those at the high- and low-income levels had decreased. This kind of income structure is widely considered to be rational. The function of the market in optimizing farmers' income structure should not be neglected. In the early days of the reform and opening-up, there were no other means to increase farmers' incomes except traditional agriculture, animal husbandry and the small handicrafts industry. At present, one of three sources of income of over half of Tibet's farmers and herdsmen comes from the market; two of three sources of income of the top ten percent farmers and herdsmen come from the market. So, the market and market economy have indeed boosted the development of the farming and pastoral areas. This also shows that the socialist market economy with Chinese characteristics and in line with the Tibetan situation advocated by the central government well suits Tibet's development, and fuels its economic growth (see Figures 21 and 22).

2. Government and development

This report studies government's acts and functions in the development of Tibet not only because the government should shoulder many responsibilities and obligations, but also because in recent years one important driving force behind Tibet's rapid economic growth is investment. Especially in the past five years, the amount of investment in fixed assets has accounted for over 75% of the region's GDP. Of this, financial transfers and investment in the construction of major projects from the central government account for a very large proportion. Take 2008 as an example. The investment under the state budget accounted for 75.9% of the investment in fixed assets. Thus, investment from the government plays a significant role in Tibet's economic development. In other words, investment in Tibet is largely decided by the central government.