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Private sector development has been sluggish in China's west, where ethnic minorities make up a sizeable part of the population. In the northwest Xinjiang Uyghur Autonomous Region, the state maintains a steady presence in the small but growing private sector, largely populated by Han-owned firms and entrepreneurs. The Uyghurs, one of fourteen recognised ethnic minorities in Xinjiang, primarily reside in the poorer agricultural south where the private sector has made few inroads. Not surprisingly, Uyghurs have little presence in the private sector beyond informal trade. This has considerable implications for ethnic relations in a region already threatened by rising Uyghur-Han tensions. Massive ethnic riots in Urumqi in July 2009, sparked by protests by urban Uyghurs, exemplify the significant economic gap between ethnic groups. This paper addresses this disparity in the private sector by investigating two related issues: private sector concentration in Xinjiang's urban north and levels of participation between Han and Uyghur. It concludes that growth and integration of Uyghur entrepreneurs into the urban private sector forms a crucial step in maintaining ethnic stability in the region.