That's Kunming. That's not Urumqi, or Lhasa. It's the capital of Yunnan province last weekend. Rumors circulated that the police had killed a street vendor. The rumor was false, but believable, because apparently it's happening all over. Apparently, several police were captured by rioters in Guangdong back in June, and had to be rescued.
The last paragraph from the Economist article gets at it very well:
In recent weeks, a speech on social unrest by a prominent Chinese scholar, Yu Jianrong, has been widely circulated on the internet in China. In it Mr Yu describes the emergence in recent years of a new type of social unrest, which he calls “venting incidents”: brief, unorganised outbursts of public rage against the authorities or the wealthy. China’s efforts to enforce “rigid stability”, he argues, were not sustainable and could result in “massive social catastrophe”. Even government officials, he notes, are giving warning in private of worse to come.
At the same time, China is making things worse with extensive forced evictions (many of which aren't even legal by Chinese standards.)
I'm deeply afraid of any future in which China is unstable. The current situation is occasionally tense enough, and the vast ability of China to spend money helped get us out of the recession. While I would love a more democratic, more rights-focused, all around better China, the events of Xinjiang show that to be unlikely in the near term.