In China's Wild West

"Silk road gem and jade shop," the sign proudly states. Centrally located just down the street from the main mosque in Khotan, a dusty oasis town located in the vast Taklamakan Desert in China's far southwest, the shop is a focal point for the Muslim Uighurs who make up the majority of the local population. But though it is mid-morning, its gates are secured with heavy steel padlocks. Warning notices from the Public Security Bureau are pasted across the doors announcing that the business has been closed indefinitely. Until last month, this was one of the biggest private companies in the city, residents say; its owner was a popular philanthropist. But now pedestrians keep their distance, some averting their eyes when passing. The shop belonged to Mutallip Hajim, a successful Uighur jade trader well known for sponsoring religious-education classes. He was arrested in January for unspecified crimes. On March 3, police announced that the 38-year old had died of a heart attack in prison.

Mutallip was killed by police "because he was too powerful, too influential," claims an Uighur man in his 30s. "Any Uighur who gets to that kind of position will always be arrested." Like many residents of Khotan — the Xinjiang province city is called Hetian in Chinese — the man was clearly anxious not to be seen talking with foreign journalists. He says he knows Mutallip's family, who had told him that several hundred people tried to enter the hospital where Mutallip died but were blocked by police, sparking a melee.

Police and other local authorities declined to talk about Mutallip, but his death marked the beginning of troubled times for a town that has become a locus of the problems plaguing the Chinese administration of Xinjiang. While repression in neighboring Tibet has generated global headlines recently after weeks of violent protests, activist groups and rights advocates have long accused Beijing of carrying out a similar campaign of discrimination and human-rights abuse in Xinjiang. Whether or not that is true, what may be worrying to Beijing is that its policies could well engender the same sort of eruption of frustration and bitterness that has left scores dead in Tibet in recent weeks.

The authorities evidently believe there is cause for concern. In recent weeks Beijing announced it had foiled a separatist plot by Uighurs to kidnap athletes at the Olympics, and made scores of other arrests. But increased pressure may have already backfired. Residents and activist groups outside China say that since Mutallip's death, Khotan and surrounding areas have been roiled by protests involving a few dozen to nearly a thousand demonstrators. "The demonstrations are indicative of the widespread dissent in Xinjiang's Uighur community and how quickly that dissent can become explosive with only a little agitation," Elizabeth Van Wie Davis, co-editor of the 2007 book Islam, Oil & Geopolitics: Central Asia Since September 11, wrote in a recent academic paper.

In a visit to the region this month, TIME talked to Khotan farmers, impoverished jade hunters, shopkeepers, students and professionals. Many of the Uighurs' stories are similar. They say that the government discriminates against them in areas ranging from job opportunities to issues such as the teaching of the Uighur language, which has been heavily curtailed, and the issuance of international passports, which Uighurs now say has been halted until after the Olympic Games in August. (An official surnamed Wu at the Foreign Affairs Department in Khotan said he wasn't aware of such a policy.) Some Uighurs, who are a central Asian people ethnically much closer to Turks than Chinese, expressed fears that their culture and way of life could be threatened by a steady influx of Han Chinese. The wave of immigration has seen the Han share of the province's population — estimated at about 6% in 1949 — rise to an official 40%, a figure that is much higher if millions of undocumented migrant workers are included. That massive immigration has transformed the north of the province, effectively establishing a Han majority and helping to turn what might have been a base for a festering separatist problem into a race-relations issue. Just as Inner Mongolia, now 70% Han, has been Sinicized, so too are Xinjiang and Tibet being flooded with Chinese arrivals. In Tibet, the migration has been assisted by a $4.1 billion railway completed in mid-2006 that connects Beijing to Lhasa.

Olympics Terrorist Threat?
The problem, according to Nicholas Bequelin, a China researcher with New York City-based Human Rights Watch, is that the twin forces of repressive policies and rising Han immigration can create a fear in minority populations "that can lead people to do almost anything." It is precisely that kind of fear and bitterness that led to the ugly racial violence in Lhasa by Tibetans against Han Chinese that left more than a dozen Chinese immigrants dead and scores wounded.

There's one big difference between Tibet and Xinjiang, though: Islam. China's critics say the Uighur's faith has allowed them to be demonized by Beijing since 9/11 in a way that is dangerous both to race relations at home and to their image abroad. "It's a systematic Chinese policy to portray Uighurs as splittists and terrorists," says Rebiya Kadeer, a businesswoman who now heads the Uyghur American Association and is the leader of an exile movement seeking greater rights for her roughly 9 million compatriots who live in Xinjiang. Kadeer was once a rich businesswoman in Xinjiang but fell afoul of the authorities and served a six-year jail sentence for revealing state secrets to foreigners. Two of her sons are still in prison in China. "It's a Chinese tool to have the Han feel a sense of animosity toward Uighurs," Kadeer says. "Look at it now! They have extracted all the natural resources and the oil. We're left in the darkness."

The anger evident in Kadeer's comments has been exacerbated in recent months. On three occasions — most recently on April 10 — officials in the Chinese capital have announced that security forces foiled planned attacks by what they called Muslim separatist groups from the province. Details were scant but the most recent announcement alleged that some 45 Uighurs in the provincial capital of Urümqi had been arrested in raids that uncovered plans to kidnap athletes and others attending the 2008 Beijing Olympics. An earlier report alleged that a young Uighur woman had tried to smuggle a bomb aboard a commercial aircraft in an attempt to bring it down.

Xinjiang separatists have carried out small bombings in the region and in Beijing in the 1990s, but analysts say the groups responsible appeared to have been wiped out, making it hard to know what to make of Beijing's current claims, which single out two groups in particular: the East Turkestan Islamic Movement and the Hizb ut-Tahrir al-Islami, which are also blamed by authorities for the trouble in Khotan. "It's very hard to know what to believe," says Dru Gladney, a Xinjiang specialist at Pomona College in California. "It's been very noticeable that Uighur leaders have been very careful not to call for attacks and to express their support for the Olympics. I'm sure they don't want to disrupt their cause by being labeled as terrorists."

Fear on the Silk Road
Whatever the truth about the alleged planned attacks, resentment is growing in Uighur-dominated areas like Khotan. After March 14 protests in Lhasa, Tibet's capital, turned bloody, the police arrested large numbers of Uighur men, apparently hoping to prevent an escalation of unrest, according to Khotan residents and activists outside China. But the detentions had the opposite effect and on March 23, an estimated 500-700 women in black dresses, headscarves and veils demonstrated during the weekly bazaar, a market that authorities say draws some 100,000 attendees. "They pulled placards calling for independence from under their robes," recounts one Uighur teacher who wasn't at the bazaar that day but spoke to many witnesses. "Every time the police arrested one group, another protest would start in a different part of the market. In the end they had to arrest hundreds." Residents in Khotan say there have been smaller demonstrations since then, mostly in the countryside.

To the casual visitor, the streets of Khotan now seem back to normal. The bazaar is open every morning, selling everything from roast lamb and athletic shoes to handwoven local carpets and the famous local white jade. But the almost exclusively Chinese traders whose small shops line the streets between the large People's Liberation Army base and Unity Square are evasive when asked about relations between the races and the events of March 23, after which many of these shops stayed closed for days. One young woman from Sichuan province says it is getting dark outside and she must close her store because "we don't go out on the streets at night."

Some 300 meters down the street is the Wenzhou Hotel, bankrolled by entrepreneurs from that famously commercial city on China's coast. In the karaoke lounge, 27-year-old businessman Wang Jianliang is giving a lengthy diatribe condemning the splittists. They are "just a small minority" he says, dismissively. Wang, who says he has been in Khotan for five years, adds that residents should be grateful for the economic development of recent years. "When I came out here it was nothing. Now it's a big city." He turns to belt out a ballad in his native Fujian dialect. A fellow reveler, a 21-year-old who says he has only been in town a year, asks a visitor if he is frightened by the rising racial tension. "No," comes the reply. "What's to be scared of?" "They hate us," the 21-year-old says. "The Uighurs hate us Han." Uighur or Chinese, one emotion is constant in almost every conversation in Khotan these days: fear.