I think in that particular case in Xinjiang the railway was built for strategic rather than economic reasons.
Very true, but for strategic and military reasons, you don't need 350 kph capable tracks. Those 350 kph capable tracks and associated systems are simply too expensive. The more affordable 160-200 kph capable dual passenger-freight heavy tracks (like the ones used for the Sichuan-Tibet, Chonqqing-Lanzhou, and the new Chengdu-Kunming lines) are the most fit for Western China, especially sparsely populated areas with significant strategic importance. For example, you can have temporary 200 kph semi high speed EMUs running on Chongqing-Lanzhou and the new Chengdu-Kunming lines during peak seasons like the Chinese New Year. Once the peak seasons end, all passenger trains return to 120-160 kph services, whilst 100-120 kph freight trains resume normal schedules.