In the People's Republic of China, minority nationality peoples have the same formal rights as Han Chinese. However, in Xinjiang, the modernisation project is taking precedence over ethnic harmony as recruitment practices are increasingly disadvantaging the Uyghurs, despite earlier affirmative action policies. Ethnographic and survey research among Urumqi's floating population indicates that Uyghurs are excluded from certain sectors, earn lower incomes and reside in poorer accommodation than Han Chinese, from whom they remain spatially and socially segregated. As the state increasingly relies on the invisible hand of the market, so the commodification of labour relations and property is amplifying social rifts between nationalities. Uneven regional development prompts Han people to migrate into Xinjiang and Uyghurs to migrate to the cities within Xinjiang, bringing these two ethnic groups into competition within a labour market. This has resulted in an ethnic division of labour that exacerbates inter- and intra-ethnic tensions.