The Uyghur Forced Labor Prevention Act (UFLPA) is the centerpiece of Washington’s response to the slew of repressive measures enacted by the Chinese state, sometimes in collaboration with private Chinese companies, against Uyghurs and other predominantly Muslim peoples in the Xinjiang Uyghur Autonomous Region—including forced labor, mass internment, family separation, and according to some reports, forced birth control and sterilization. Signed into law in December 2021 and in effect since June 2022, the act establishes a “rebuttable presumption” that all goods produced entirely or in part in Xinjiang are implicated in forced labor and bans their import unless importers can demonstrate otherwise.
According to the official UFLPA statistics dashboard, as of August 2023, more than 4,600 shipments valuing a total of $1.64 billion have been stopped for inspection under the UFLPA, which U.S. Customs and Border Protection claims has already produced an “observable shift in supply chain practices to avoid sourcing from the Xinjiang Uyghur Autonomous Region.”
However, the ban’s broad terms pose challenges for implementation, as described in multiple congressional investigations and hearings. Within China, it can be difficult and even dangerous for businesses to try to determine where products and parts come from and whether their supply chains are linked to forced labor or any sanctioned entities. Chinese government raids on the offices of multiple international consulting firms in recent months and a sweeping new anti-espionage law have heightened foreign companies’ fears about carrying out due diligence research.
At the same time, even the imports that are clearly linked to sanctioned entities can enter the United States undetected by passing through third countries or in packages valued below the de minimis threshold for reporting and inspection.
A new state-led campaign in China is poised to make enforcement of these sanctions even more difficult. Launched in January, the Private Enterprise Advances to the Frontier (PEAF) initiative aims to integrate China’s frontiers into the national market by promoting investment, trade, and exchange between coastal and central provinces and the relatively underdeveloped border regions. As a result, more Chinese firms, including ones that export to the United States or do business with U.S. companies, will have supply chains linked to Xinjiang and other peripheral provinces. Frustrating UFLPA implementation is not the point of the campaign—the goal of national economic integration is far older and more ambitious than that—but Beijing is likely to view it as a welcome, if unintended, outcome.
The campaign is a collaboration between the All-China Federation of Industry and Commerce, which helps the Chinese Communist Party (CCP) and government manage the private-sector economy, and the State Ethnic Affairs Commission, which implements policies targeting the country’s 55 officially recognized “minority nationalities.” Under President Xi Jinping, the CCP has tightened its grip over both entities, formally subordinating the State Ethnic Affairs Commission to the United Front Work Department—the section of the party responsible for controlling and managing relations with non-Communist groups and leaders, historically including many business owners and ethnic minority elites—in 2018, and highlighting the importance of the commerce federation for extending party control over private enterprise since 2020.
Chinese officials and researchers have linked PEAF to the country’s broader economic goals—specifically, promoting economic development beyond the relatively wealthy and urbanized eastern coast as well as its “dual circulation” strategy. Announced in May 2020, dual circulation aims to reduce Beijing’s dependence on cheap exports by boosting domestic consumption (internal circulation) while enhancing manufacturing capacity for more valuable exports (international circulation). China’s western region, including Xinjiang, is crucial for overland trade and rich in strategic resources, such as oil and rare earth minerals, making it integral to this policy.
But this isn’t just an economic program—it is also an instrument of ethnic policy. For the past decade, and especially since Xi’s second term, the CCP has aggressively restricted minority nationalities’ expression of their identities and attempted to shore up national unity by, in official rhetoric, forging “a sense of the community for the Chinese nation.”
Ethnic policy in China has historically shifted between relatively assimilationist and multiculturalist orientations, but the Xi era has marked a hard swing toward assimilationism and a drive to “stabilize and secure” the country’s resource-rich and ethnically diverse borderlands. Recent years have witnessed attacks on minority cultures by central and local governments, including restrictions on use of minority languages in schools and displays of symbols deemed foreign, such as mosque domes and Arabic signage on halal restaurants. China’s leaders now identify “ethnic fusion” or “blending” as an urgent goal, referring to the elimination of different nationalities’ particular characteristics, and see economic policy as an instrument for realizing it.
In the CCP’s view, economic integration complements cultural assimilation and is a crucial step on the path to its goal of fusion. As Xi articulated in September 2019: “The reason why all the nationalities unite and fuse … originates in the fact that the nationalities are culturally eclectic, economically interdependent, and emotionally intimate; it originates in the innate force of the Chinese nation’s pursuit of unification.”
Officials invoke similar language in speeches and documents about PEAF, most notably in the official implementation program, which describes the campaign as “creating a vehicle and platform for promoting contact, exchange, and blending of different nationalities.”
This work is already underway. Officials from the State Ethnic Affairs Commission and All-China Federation of Industry and Commerce celebrated the accomplishments of the first half-year of the campaign at a conference in Beijing in June. According to one report, the campaign has already resulted in more than $700 million of investment, with more than $2.6 billion allocated for future investment and a further $16.4 billion that has been agreed upon as intended investment. The scale of this investment has likely only increased since these numbers were calculated in June.
A new joint venture launched under the PEAF framework between the eastern city of Wuxi and Xinjiang’s capital, Urumqi, gives some indication of how this economic-cum-ethnic campaign will work—and how it will complicate U.S. sanctions implementation in the process. In April, representatives from the two cities announced a strategic partnership to establish a Xin-Hui International Trade and Industry Coordination Center (“Xin” refers to Xinjiang and “Hui” to Huishan, a special economic zone in Wuxi). Touted as a milestone in the “joint construction of the eastern and western regions” of the country and a contribution to the promotion of “contact, exchange, and blending of different nationalities,” the Xin-Hui Center is intended to serve as a high-tech hub where government, industry, education, research, and investment can support partnerships between companies from the two cities—in other words, linking more companies to Xinjiang supply chains.
To be clear, just because a company has connections to or operates in Xinjiang does not mean that it is complicit in forced labor. But according to the UFLPA, it does mean that anyone who wants to import that company’s products into the United States must prove the negative.
The Xin-Hui announcement suggests that the proposed hub will link companies to Xinjiang’s textiles industry, which is closely associated with two of the highest-priority areas for U.S. enforcement: cotton and apparel. For Chinese manufacturers, this overlap increases the exposure to sanctions-related risk for themselves and their partners. For U.S. officials, it means that imports from more companies—even ones that previously had no ties to Xinjiang’s cotton or apparel industries—may now require review in accordance with UFLPA protocols.
Indeed, several Wuxi-based firms have already signed agreements with counterparts in Urumqi in conjunction with the Xin-Hui hub announcement, including the appliance manufacturer Wuxi Little Swan Company, which exports to the United States, and the dye and chemicals manufacturer Jiangsu New Reba Technology Company, whose website advertises partnerships with U.S. companies DuPont and Huntsman, as well as the German companies BASF and Henkel, and the Swiss company Clariant.
Another PEAF venture that spells trouble for sanctions enforcement involves the Wuzheng Group. Headquartered in the eastern, industrial province of Shandong, Wuzheng manufactures trucks and agricultural machinery for domestic consumption, but its subsidiary Rizhao Wuzheng International Trade Company exports truck parts to the United States. Since 2011, Wuzheng has invested more than $50 million in Makit County, located in southern Xinjiang, for poverty alleviation, irrigation, and land reclamation programs. In late April, the Wuzheng Group further solidified this cooperation by signing a new framework agreement with Makit County to establish a 6,500-acre agricultural park for cotton and grain production.
Shandong’s government has identified the Wuzheng agreement as a model for local enterprises and reported several other joint ventures between Shandong-based companies and partners in Xinjiang and other frontier provinces. The more that Chinese manufacturers follow this model, the more difficult it is to ascertain whether imports to the United States are free of links to forced labor.
PEAF is still in its early days, and time will tell whether the campaign continues to deliver new interregional agreements in its second half-year. But in any case, increasing partnerships between companies in China’s core and frontier provinces will make an already challenging implementation task even tougher. U.S. lawmakers and officials have acknowledged the gaps and loopholes that diminish the UFLPA’s effectiveness and called for a “paradigm shift” in compliance.
The true difficulty of the situation, however, is not merely a function of the opportunities for sanctions evasion in the global shipping system or the limited resources available for shipment inspection. Rather, it arises from the CCP’s ironclad commitment to securing its control over Xinjiang and all of China’s territory through ethnic as well as economic fusion.
The post Chinese Sanctions Enforcement Just Got Even Harder appeared first on Foreign Policy.
