‘Tainted’ Xinjiang goods entering global supply chains

BEIJING – Efforts by China to turn its far-western Xinjiang region into a manufacturing powerhouse could force more Uyghurs to work against their will and make it harder to track whether the country’s exports are made with forced labour. This is according to a new report by the Center for Advanced Defense Studies (C4ADS), which studies global conflict and transnational security issues.

C4ADS says China is establishing industrial parks, providing more financial assistance from state-owned enterprises, and connecting manufacturers within its borders as part of a long-term objective to bolster supply chains.

It analysed Chinese corporate data of tens of thousands of companies based in Xinjiang, publicly available trade data, and government and media reporting to show how manufacturers there are linked to local governments and companies in eastern China.

The group said that subsidiaries and partner companies in China make it hard to track whether goods originated from Xinjiang and were produced by forced labour.

This is implications for due diligence efforts in global fashion supply chains. For instance, the US brought in the Uyghur Forced Labor Prevention Act in December 2021 to strengthen an existing ban on the importation of goods made wholly or in part with forced labour into the country and end the use of forced labour in Xinjiang.

The act, which took effect on June 21, creates a, “rebuttable presumption” that assumes goods made in Xinjiang are produced with forced labour and thus banned under the U.S. 1930 Tariff Act.

But the report by C4ADS said the structure of Chinese industrial policy, where goods are shipped and reshipped within its borders, will make enforcing forced labour laws difficult.

“[A]s long as the flow of goods produced in the region to exporters elsewhere in China is left unaddressed, tainted goods will continue to enter global supply chains,” the report warns. “Global stakeholders must improve due diligence and enforcement efforts to ensure they are not enabling forced labour and oppression in the Uyghur region.”

The report notes how the Chinese government is undertaking a concerted drive to industrialize Xinjiang which has led an increasing number of corporations to establish manufacturing operations there.

It states: “This centrally-controlled industrial policy is a key tool in the government’s efforts to forcibly assimilate Uyghurs and other Turkic peoples through the institution of a coerced labor regime. The Chinese government drives this industrialization by mobilizing state-owned and private corporations via the Xinjiang pairing assistance program. This initiative links provinces and cities on the east coast to prefectures and localities within the Uyghur region, creating a mechanism to impose political, economic, and cultural change. As part of this program, Chinese companies outside of XUAR are incentivized by the government to move their manufacturing operations into the region. This means that the international response to abuses in XUAR cannot be limited to addressing companies based in the Uyghur region. Instead, it must actively incorporate an understanding of the role that non-XUAR companies—which may be part of global supply chains—play in supporting repression in the region.

“While the number of manufacturing companies in the region has skyrocketed in recent years, Uyghurs and other Turkic peoples have a disproportionately low share in the ownership and management of these companies, despite a geographic concentration of new manufacturing companies in Uyghur-majority prefectures.”

Link: Shifting Gears (squarespace.com)