November 30, 2021
Welcome back to Axios China. I hope you enjoyed the holiday weekend! Today we have an exclusive investigation into Airbnb rentals in Xinjiang, plus a look at unrest in the Solomon Islands, China's civil service exam, and more.
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1 big thing: Exclusive... Airbnb hosts Xinjiang rentals on land owned by sanctioned group
Airbnb has more than a dozen homes available for rent in China's Xinjiang region on land owned by an organization sanctioned by the U.S. government for complicity in genocide and forced labor, an Axios investigation has found.
Why it matters: The listings expose Airbnb to regulatory risk under U.S. law. They also land yet another American tech company in the crossfire between the U.S. and China.
- Airbnb is one of 14 top-level sponsors of the 2022 Winter Olympics in Beijing. A growing number of governments, including the U.S. and U.K., have said they are considering a diplomatic boycott of the Games due to the ongoing genocide in Xinjiang.
Airbnb told Axios the company believes the sanction does not apply to these listings and that it implements guidance provided by the U.S. Department of Treasury to comply with sanctions.
Where it stands: Airbnb had not previously discussed the listings with the Treasury Department's Office of Foreign Assets Control (OFAC), which is in charge of sanctions compliance and enforcement.
- "We take our obligation to comply with U.S. Treasury rules incredibly seriously. OFAC rules require Airbnb to screen the parties we are transacting with, not the underlying landowners," Airbnb spokesperson Christopher Nulty said in a statement provided to Axios.
- "We screen all hosts and guests against global government watchlists, including OFAC’s Specially Designated Nationals and Blocked Persons list, including the hosts associated with the listings raised by Axios," Nulty said.
Yes, but: While OFAC sanctions are focused on financial transactions, full compliance is a complex undertaking.
- "Sanctions compliance is not a check-the-box exercise. There are other considerations within the compliance regime that go beyond pure transaction screening with the immediate counterparty," said Alex Zerden, a former Treasury official who worked on Global Magnitsky Act sanctions, and founder at Capitol Peak Strategies, a digital asset and risk advisory firm.
Axios' Shawna Chen contributed reporting and the Australian Strategic Policy Institute's International Cyber Policy Centre provided some of the data and research.
Part II: Airbnb listings on XPCC-owned land
Axios identified 14 Airbnb listings on land owned by the Xinjiang Production and Construction Corps (XPCC), a large paramilitary organization that has long controlled vast swaths of Xinjiang's land, natural resources and economy.
- The land holdings data comes from a publicly available XPCC 2018 annual report, the most recent data available. The XPCC has a decades-long history with much of this land, which is usually in rural areas or on the outskirts of cities. Some townships are named after the XPCC regiments that govern them.
- The Airbnb rental locations were determined through data from Airbnb's website. The 14 listings identified by Axios are all located well within the boundaries of land claimed by the XPCC.
- Five rentals are in rural areas, advertising pastoral views and convenience for those taking a road trip. Six rentals are in regional capital Urumqi's Saybag District. Three are in Khorgas, a border crossing between China and Kazakhstan.
Between the lines: Information connecting numerous Airbnb listings with XPCC-owned land is publicly available, in some cases on Airbnb's own website.
- One Airbnb listing states it is located at the XPCC Cavalry Regiment's Seventh Company, near the scenic Nalati Grassland in Yili Prefecture, and advertises that guests can experience "XPCC cavalry culture."
What they're saying: Airbnb told Axios these 14 listings had brought in a total of just over $6,500 in the last 12 months, and that five of them had zero reservations during that time.
- "Stays in China have accounted for approximately 1% of revenue for the last few years. While China has been a very minimal part of our financial success, we believe China is an important part of our purpose to connect people from around the world," Nulty said.
What to watch: Whether Airbnb can satisfy both U.S. and Chinese demands regarding its operations in Xinjiang.
- H&M and other international clothing retailers faced state-fanned consumer boycotts in the Chinese market after they publicly stated they would no longer use Xinjiang cotton. U.S. law prohibits the importation of products made through forced labor.
The bottom line: "Airbnb serves as a stark reminder for other U.S. businesses operating in Xinjiang: Better to close Xinjiang operations quietly, rather than risk a scandal in the United States or China," said Isaac Stone Fish, founder and CEO of Strategy Risks, a firm that specializes in assessing China and Xinjiang-related risk.
Go deeper: Read the full story
Part III: China promotes domestic tourism to Xinjiang, site of ongoing genocide
Why it matters: Xinjiang's tourism industry profits from a system that largely excludes Uyghur people while appropriating their culture for state purposes and the financial gain of China's majority ethnic group.
- International firms are trying to delink their supply chains from Xinjiang amid widespread forced Uyghur labor, which could potentially hamper the local economy. A growth in tourism could potentially offset this economic loss.
- The Xinjiang regional government announced earlier this year that it aims to boost annual tourism to Xinjiang from 158 million visitors in 2020 to 400 million by 2025.
Background: The Chinese Communist Party's tourism push in Xinjiang is aimed primarily at attracting Chinese (and some foreign) tourists who want to experience the "exotic" landscapes and cultures of the former frontier region.
- But local authorities sometimes use destructive methods to develop the tourism industry, including demolishing traditional villages and rebuilding them as "model villages" with daily scheduled dances, comfortable boutique hotels, and space for restaurants.
What's happening: In Xinjiang, this trend has become a direct state tool to stamp out the entire culture, the Economist wrote earlier this year.
- The Chinese government leveled traditional Uyghur neighborhoods and demolished mosques, cemeteries, religious shrines, and important Uyghur historical sites across Xinjiang — while rebuilding or renovating some select sites with tourists in mind, including the famous neighborhood of Kashgar's Old City, once a fabled oasis on the Silk Road.
- Tourists from the majority Han ethnic group are permitted to travel relatively freely in the heavily restricted region — even as 10% or more of the Uyghur population is being held in roughly 380 internment facilities in the region, sometimes just blocks away from tourist-friendly sites. Many other Uyghurs are confined to their cities or neighborhoods.
- Some Uyghurs are hired to perform traditional dances, staff restaurants or work in hotels, but they have largely been shut out of economic development by widespread discriminatory hiring practices. And Chinese authorities have seized assets belonging to Uyghur business owners now locked away amid the region's mass internment and incarceration drive.
The big picture: The Chinese Communist Party has a long history of publicly parading performative aspects of ethnic minority cultures, particularly traditional dances with colorful costumes, while suppressing the meaningful practice of cultural traditions among those same groups.
4. Catch up quick
1. Xi Jinping promised to send another 1 billion COVID-19 vaccine doses to Africa, Reuters reports.
2. U.S. lawmakers visited Taiwan and met with President Tsai Ing-wen, despite China's calls to cancel the trip. Go deeper.
3. China's cyberspace regulator has asked ride-hailing giant Didi to delist from the New York Stock Exchange, Bloomberg reports.
4. China's Henan province is planning a new surveillance system to target journalists and international students, Reuters reports.
5. Another 27 Chinese aircraft entered Taiwan's air defense identification zone over the weekend. Go deeper.
5. Tug of war in the South Pacific
Three days of rioting in the Solomon Islands may have been sparked by local grievances, but tensions over the country's relationship with China also come into play, Axios' Dave Lawler reports.
The big picture: The South Pacific island country rescinded diplomatic recognition of Taiwan in favor of China in 2019, leaving just 15 countries still recognizing Taiwan and generating domestic backlash against Prime Minister Manasseh Sogavare.
- The opposition was particularly intense on the country’s most populous island, Malaita, where the provincial government defied the prime minister and maintained links with Taipei.
- Sogavare has leaned into the relationship with Beijing, touting opportunities for Chinese investment.
- The diplomatic dispute has become another dimension of long-running tensions between the national government and Malaita over access to public resources and services.
Driving the news: Protesters from Malaita gathered last Wednesday in the national capital, Honiara, on the island of Guadalcanal, demanding that Sogavare meet with them and calling for his resignation.
- The protesters attempted to storm parliament and were met with tear gas and rubber-coated bullets.
- That triggered three days of violence. Much of the looting and destruction came in Chinatown, and three charred bodies were recovered from a store there.
State of play: Sogavare has rebuffed calls to resign and said the riots were due to “deliberate lies” about the diplomatic switch and meddling from “outside powers.”
- China’s party-run Global Times tabloid pointed the finger at both countries as well as Australia, despite the fact that Australian forces were invited in to keep the peace (the editorial cites speculation that Australia was wary of Chinese forces stepping in).
Reality check: “While geopolitics may have been a spark, the true drivers of this week’s unrest go much deeper than foreign policy,” writes Jonathan Pryke, director of the Lowy Institute’s Pacific Islands Program. They include inter-island grievances, high youth unemployment and poor government services.
6. What I'm reading
Island hopping: How China has overtaken the South Pacific one island at a time (Politico)
- This is an interesting dispatch from the island nation of Tonga, where the author, Politico reporter Susannah Luthi, lived for several years.
- "No country is too small, and no small country’s affairs too trivial for China to concern itself with in its march for new global order, a 'community of common destiny' — defined by cooperation with Beijing," Luthi writes.
Rule by law: Xi is bending Chinese law to his will (Foreign Affairs)
- "Xi’s crackdown on law enforcement and the judiciary is solidifying China’s turn away from liberal legal principles," writes Human Rights Watch's Maya Wang.
- "The most influential legal scholars in China are now antiliberal. Some have even been influenced by the Nazi philosopher Carl Schmitt."
7. 1 test thing: China's civil service exam is popular again
Amid rising job insecurity and slowing economic growth, a record number of young people are seeking Chinese government jobs by taking the civil service exam, the South China Morning Post reports.
- More than 2.1 million people took this year's exam on Nov. 28 — the first time the number of test-takers has passed 2 million. In 2020, 1.57 million people took the test.
- Only 31,200 positions are open, meaning there's steep competition to snag a government job.
The big picture: The civil service exam's popularity waned in recent years as private-sector opportunities expanded.
- This year's jump in the number of test-takers indicates decreased confidence in private-sector success and the relative appeal of stable government jobs.