Jul 13, 2021 - Economy

U.S. warns firms operating in Xinjiang at "high risk" of violating law

Tony Blinken

Photo: Chen Mengtong/China News Service via Getty Images

The State Department and five other federal agencies issued an updated advisory on Tuesday warning that businesses with supply chains and investments in the Chinese region of Xinjiang run a "high risk" of violating U.S. laws on forced labor.

Why it matters: The Biden administration is moving aggressively to ensure that American businesses, many of which use supply chains deeply intertwined with the Chinese economy, are not complicit in the genocide of Uyghurs and other Muslim minorities.

Driving the news: The State Department, Treasury Department, Commerce Department, Department of Homeland Security, U.S. Trade Representative and Labor Department are calling on businesses to engage in "heightened due diligence" with respect to four primary categories of dealings in Xinjiang.

  1. Assisting or investing in the development of surveillance tools, including tools related to genetic collection and analysis.
  2. Sourcing labor or goods from Xinjiang or other regions connected to the use of forced labor in Xinjiang.
  3. Supplying U.S.-origin commodities, software and technology to entities involved in surveillance or forced labor.
  4. Aiding in the construction and operation of internment camps or manufacturing facilities that subject minority groups to forced labor.

Zoom in: Elements of at least 20 industries have been identified as using forced labor in Xinjiang, including agriculture, cell phones, cleaning supplies, construction, cotton, electronics, extractives, hair accessories and wigs, food processing factories, footwear, gloves, hospitality services, metallurgical grade silicon, noodles, printing products, renewable energy, stevia, sugar, textiles and toys.

Between the lines: The advisory warns that companies doing business in China are likely to face "obstacles" when attempting to conduct due diligence, including government controls, lack of government and corporate transparency, threats against auditors, and a "police state" atmosphere in Xinjiang.

  • Axios has previously reported on the State Department's concerns that auditors have been "detained, threatened, harassed and subjected to constant surveillance" while tracking supply chains in China.
  • The Chinese government has condemned U.S. efforts to raise awareness of the abuses in Xinjiang as "interference in internal affairs," and has denied all allegations of genocide, forced labor or repression.

What they're saying: "Given the severity and extent of these abuses, including widespread, state-sponsored forced labor and intrusive surveillance taking place amid ongoing genocide and crimes against humanity in Xinjiang, businesses and individuals that do not exit supply chains, ventures, and/or investments connected to Xinjiang could run a high risk of violating U.S. law," the advisory says.

Go deeper: Read the full advisory

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