Xinjiang solar industry launches charm offensive as sanctions loom

A Xinjiang supplier of the world’s leading solar cell manufacturers has rebuffed allegations of forced labour practices, as the US considers imposing sanctions that threaten the remote Chinese region’s dominance of solar supply chains.

Daqo New Energy, one of Xinjiang’s largest polysilicon makers, has mounted a public-relations campaign to combat the allegations, and last week hosted a media tour attended by the Financial Times. The campaign was the latest step in a sweeping propaganda effort by Beijing to counter foreign allegations of human rights abuses and genocide in the region.

Over the past decade, the Xinjiang government has used subsidies, preferential tax policies and cheap power to secure a central position in the global supply chain for solar panels. The north-western region produces about 45 per cent of the world’s polysilicon, a material refined from quartz that is used in the vast majority of photovoltaic cells, devices that convert sunlight into electricity.

But Xinjiang’s polysilicon manufactures are being scrutinised by human rights groups and foreign governments, which have alleged the industry benefits from a controversial state-run worker transfer scheme that they argue amounts to forced labour.

During the tour of the plant, which is located in an industrial park surrounded by wetlands about a 30-minute drive north of Shihezi city, Daqo executives said there was “no such thing” as forced labour at their plant. They intended to back up that claim with an independent third-party audit, the executives added.

These efforts, however, are unlikely to ease overseas pressure, analysts said. Even if individual producers such as Daqo were cleared by auditors, the region’s role in all stages of the integrated solar energy supply chain meant any company with operations in Xinjiang would struggle to avoid international examination.

China’s Communist party has been accused of arbitrarily interning more than 1m Uyghurs, Kazakhs, Uzbeks and other mostly Muslim people in the region. Many detainees are transferred to factory jobs, a practice human rights groups have alleged constitutes forced labour given that workers often have no choice but to take up the positions.

Days after Daqo’s tour, a report released by the Helena Kennedy Centre for International Justice at Sheffield Hallam University used official company documents and Chinese state media reports to show, in the most granular detail to date, numerous links to labour programmes throughout the solar power industry in Xinjiang, including for Daqo’s suppliers and customers.

“[Module] manufacturers that want to avoid producing goods that are potentially tainted by forced labour in Xinjiang will have to scrutinise their supply chains thoroughly, all the way to the raw quartz materials, to determine if they are produced with forced labour,” the report’s authors wrote.

Michael McCaul, the top Republican on the US House Foreign Affairs committee, told the FT that the growing evidence should put more pressure on President Joe Biden to act. 

“Report after report provides evidence of slave labour in the solar panel supply chain,” McCaul said. “John Kerry admitted the solar panel supply chain is tainted by slave labour in China. How much more evidence does the world — and the Biden administration — need before they finally act?”

Kerry, Biden’s international climate negotiator, said last week that the state department was assessing whether China’s solar industry should be “the target of sanctions”. It was the first time the Biden administration had raised the possibility of taking such action. 

The UK parliament voted unanimously last month to declare China’s treatment of Uyghurs “genocide”, following similar designations from the Canadian and Dutch parliaments and the US state department.

Asked about the report, John Smirnow, vice-president of market strategy at the US Solar Energy Industries Association, said it showed that “the risk to all companies in the solar supply chain associated with forced labour allegations are far too high”.

In Shihezi, a city 150km west of Urumqi, Xinjiang’s capital, Yang Ming, Daqo’s chief financial officer, told the FT that he hoped the guided tour would help to “clear up this misunderstanding” about forced labour. 

Daqo, Yang said, wanted to “demonstrate that there’s no such thing happening in our company”. 

In a tour of the refinery, Daqo stressed that the process of turning silicon metal powder into high purity polysilicon was a highly technical and largely automated process.

Aside from about 40 employees sitting in front of computer screens in a command centre, only a handful of workers were visible on the grounds of the sprawling chemicals plant. To minimise risk of contamination from human contact during the later stages of the process, journalists were asked to wear hazmat suits, hairnets and plastic shoe covers.

The company said it had a non-discriminatory hiring policy and employed more than 2,000 workers, none of whom were Uyghurs. 

Yang added that Daqo had received written assurance from its suppliers and customers that they did not use forced labour.

But Daqo’s efforts are unlikely to convince US buyers of Chinese solar modules that the broader supply chain in Xinjiang is free of forced labour.

Daqo is in a unique position compared with other polysilicon producers in the region, owing to its New York listing. A “clean bill of health on a single facility is not a passing score for the entire supply chain,” said Nathan Picarsic, a founder of Horizon Advisory, a US-based consultancy that has researched forced labour in Xinjiang.

Xinjiang Hoshine Silicon Industry, one of Daqo’s suppliers and the region’s largest producer of solar-grade silicon, has received thousands of labourers from the transfer programme in its facility near Turpan, a city 150km south-east of Urumqi, according to a Chinese state media article cited in the Sheffield Hallam report.

The proximity of Hoshine’s plants to detention facilities and its involvement in state-run labour schemes are enough to warrant concern, said Laura Murphy, professor of human rights and contemporary slavery at Sheffield Hallam University and one of the report’s authors.

The transfer programmes to combat poverty are inherently problematic because they happen “in an environment in which people who do not participate in poverty alleviation are deemed to be separatist and radical . . . [and] are sent to ‘re-education’ camps”, she added.