Lawmakers urge German companies to review their supply chains as new report reveals evidence of Xinjiang’s forced labor affecting the solar energy supply chain

A study released by a British university showed that the global solar energy industry has been seriously affected by the forced labor programs in Xinjiang after many major solar energy suppliers in the region participated in the forced labor program spearheaded by the local government. Lawmakers in Germany warned that if German companies don’t suspend their cooperation with Chinese suppliers that have participated in the forced labor program, they could potentially face criminal consequences.

While the US government continues to focus on developing the solar energy and renewable energy sector to reduce its carbon emission rate, a recent study published by the Sheffield Hallam University shows that several polysilicon manufacturers in Xinjiang have participated in the forced labor transfer scheme initiated by the local government and it has further tainted the supply chain of many Chinese and international companies.

The report was released by the Helena Kennedy Center at the university on May 14, and the finding shows that 11 companies in Xinjiang that manufactures polysilicon have engaged in forced labor transfer, and four additional companies located within industrial parks have accepted labor transfers.

According to the statistics in the report, the supply chains of at least 90 companies in China and outside of China have been affected, including German company Wacker Chemie. Laura Murphy, Professor of Human Rights and Contemporary Slavery at the Sheffield Hallam University, and Nyrola Elima, an Uyghur supply chain analyst in Sweden, wrote that 95% of solar modules rely on solar-grade polysilicon, and manufacturers in Xinjiang produce approximately 45% of the world’s solar-grade polysilicon.

“In 2020, China produced an additional 30% of the world’s polysilicon on top of that produced in the Uyghur Region, a significant proportion of which may be affected by forced labor in the Uyghur Region as well,” they wrote in the report.

Murphy and Elima predict that based on the extent to which Xinjiang metallurgical-grade silicon and polysilicon pervades the market, it means that module manufacturers want to avoid producing goods that are potentially tainted by forced labor in Xinjiang need to scrutinize their supply chain thoroughly.

“While continuing to hold indigenous citizens of the region in internment camps without trial, regional and local governments shifted their focus to the creation of an enormous forced labor regime,” they wrote. “This system had the explicit goal of employing practically every adult citizen and was accompanied by the justification that the program would increase both the economic productivity and the ‘stability of the region.”

Chinese Foreign Ministry spokesperson Hua Chunying called the allegations that Xinjiang’s forced labor has tainted the global solar supply chain an outrageous lie. “A few Western countries and anti-China forces went all out to hype up the so-called ‘forced labor’ in Xinjiang’s cotton-growing industry. Now they are turning to the solar energy industry,” she said during a daily press conference on May 12.

“Xinjiang cotton is speckless and solar energy is clean, but those in the US and the West who are hyping up the issue have a dark and sinister intention. They are trying to fabricate lies like ‘forced labor’ to create ‘forced industrial decoupling’ and ‘forced unemployment’ in Xinjiang to suppress Chinese companies and industries to serve their malicious agenda to mess up Xinjiang and contain China.”

How does Xinjiang’s forced labor impact the global solar energy supply chain?

Murphy said one finding that was not previously reported on is the extent to which Xinjiang Hoshine Silicon Industry, one of the major manufacturers of metallurgical-grade silicon in the world, was engaged in Xinjiang’s forced labor transfers.

“That company sells not only to the major companies producing Polysilicon in Xinjiang, they also sell to companies outside of Xinjiang and Wacker Chemie, which is a German company that has an extensive reach and is a major Polysilicon company in the world,” Murphy said. “That was previously unknown and not understood and that really changes the story.”

The report cited a report from China’s state media in 2017, mentioning that the Chinese government placed “surplus” rural workers at Hoshine’s factories. The report suggested that the local government used coercive strategies to recruit workers for Hoshine and manual laborers at Hoshine are paid to crush silicon manually at a rate of 42 RMB per ton.

And based on a project of locating existing re-education camps in Xinjiang launched by the Australian Strategic Policy Institute, Hoshine’s factory is within an industrial park that also houses two internment facilities. However, the report by Murphy and Elima emphasized that there is no evidence to prove whether the forced laborers at Hoshine’s factories were transferred from the two nearby internment camps.

One of Hoshine’s partners is Wacker Chemie in Germany. When asked whether they would consider severing ties with Hoshine based on the finding of Murphy and Elima’s report, the company said in a statement that they have issued specifications and regulations that govern our collaboration with our suppliers and it is guided by the OECD guidelines for multinational enterprises, the ILO’s core labor standards and the UN Guiding Principles on Business and Human Rights.

“We have adopted a variety of measures to ensure that our suppliers comply with the standards we have set,” wrote Wacker Chemie in the statement. “WACKER has been a member of the “Together for Sustainability” (TfS) initiative since 2015. TFS has set itself the aim of protecting human rights along the supply chain. Auditing is based on tried and tested practices such as the United Nations Global Compact (GC) and the Responsible Care Global Charter.”

Wacker said “due to reasons of confidentiality on grounds relating to competition law,” they can’t disclose information about individual suppliers. However, they said their procurement strategy gives them confidence that the products used in their supply chain and procured from their suppliers “are made in a manner that respects human rights.”

German companies involved with forced labor in Xinjiang could face criminal consequences

The German Bundestag released a report on May 17 that said once the country’s supply chain act is implemented, German companies may have the obligation to consider suspending business ties with Chinese suppliers who are involved with the forced labor scheme in Xinjiang. Otherwise, German businesses could face fines.

According to the German Green Party’s human rights policy spokeswoman Margarete Bause, German companies operating in Xinjiang need to understand that even if they don’t employ Uyghur forced laborers by themselves, they might still benefit from favorable market conditions created by China’s policy of oppression.

“If forced labor is used in Chinese factories, that are part of German supply chains, it seems ‘almost inevitable’, that business relationships must be terminated, the expert opinion concludes,” Bause said. “Under certain circumstances, German company employees could even be criminally prosecuted for aiding and abetting. Now every German company must seriously ask itself whether it really wants to maintain business relations with Xinjiang under these conditions.”

Engin Eroglu, a German MEP in the European Parliament said that regardless of industry or sector, banning Uyghur forced labor in the supply chain is essential for the European Union and Germany. He thinks the German Bundestag has the responsibility to unilaterally ban the import of products produced through forced labor or any form of modern-day slavery.

“Legislative initiatives on mandatory human rights and environmental due diligence by the EU are a key element to foster responsible business conducts, as we need to provide legal clarity and certainty for companies of all sizes,” Eroglu said.

“It is the EU’s responsibility as a global economic actor, to lead the way in creating a European Due Diligence Law and set an example for our partners worldwide. With its legislative proposal, the Parliament has taken an important first step, now the Commission needs to follow, which it will likely do next month.”

One of the report’s authors Nyrola Elima suggested that governments should hold hearings to ask companies in their countries whether they have been involved in the forced labor scheme in Xinjiang or not.

“I think governments should look at this and press their own countries’ companies to investigate it and ask whether their supply chains have been tainted by forced labor,” she said. “Companies or governments shouldn’t sit there and wait for researchers to do the report. Companies should look at themselves instead of looking at the published report and realize that they have a problem there.”

Dr. Murphy from the Sheffield Hallam University said every country needs to have a law that says that they will not import goods that are made from forced labor. “It’s surprising to me how few countries have a law that prohibits the importation of forced labor-made goods,” she said.

“ I think this is a really important step and I think that it’s a shame that it took a system of state-sponsored forced labor so extensive as the one we are seeing in Xinjiang to get countries to realize how critical such legislation is. I hope that they will use this new legislation to stop forced labor from all over the world, and not just in China.”

This piece was first published in Mandarin on DW’s Chinese website.