European Companies Get Rich in China’s ‘Open Air Prison’

Volkswagen, Siemens and more are making money in Xinjiang, where minorities are being herded into detention camps. 

By Benjamin Haas

Mr. Haas is a visiting academic fellow at the Mercator Institute for China Studies in Berlin.

Credit…Marta Monteiro

BERLIN — Many people around the world may just now be learning that around a million Uighur Muslims and other minorities have been locked up in extrajudicial internment camps in the region of Xinjiang, in western China. There is a reason for that: Xinjiang is remote and the Chinese government has expended considerable effort to keep the news hidden, from harassing foreign journalists to seizing family members of activists to censoring information within its own borders.

Herbert Diess, however, should have no excuse.

Mr. Diess is the chief executive of Volkswagen, which opened a plant in Xinjiang in 2013 that employs almost 700 local workers and can make up to 50,000 cars a year. In an interview with the BBC in April, Mr. Diess said he was not aware of the system of camps or the Muslim minorities subject to mass detention, even though his company’s factory is within a 90-minute drive from four such detention centers. (The company issueda new statement saying it did, in fact, know about the treatment of Uighurs in Xinjiang and was committed to human rights.)

What excuse do the other chief executives and board presidents use?

I have found that about half of the largest 150 European companies had some presence in Xinjiang, an area that Amnesty International has described as “an open-air prison.” Their investments merit far more scrutiny from both regulators and the public, and European governments need to form standards for companies dealing with Xinjiang.

At the top of the list of companies that deserve a thorough review is Siemens. This large German conglomerate collaborates on advanced technologies in automation, digitization and networking with China Electronics Technology GroupCorporation, a state-owned military contractor that has developed a policing app used in Xinjiang that, according to Human Rights Watch, has led some people to be sent to the camps.

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The Spanish telecommunications firm Telefónica has a joint venture with China Unicom that appears to use big data for tracking people. The company markets the software as a way to deliver location-based ads or monitor public transportation use, and while it says the data is anonymous, I reviewed an internal presentation that appears to have shown ID numbers unique to each cellphone user. It is easy to see how such software could be used by the authorities in Xinjiang to track minorities in real time, and it has already been deployed in the region, according to a presentation.

Other investments are less immediately tied to abuses of the Uighur population. KfW, a German state-owned bank, provided 100 million euros ($111 million) in funding for the construction of a subway line that opened in 2018 in the regional capital, Urumqi, built with components from ABB, a Swiss engineering firm, and Airbus Defense and Space, the European aircraft manufacturer. Unilever and Nestlé both buy tomato products from a state-owned company in Xinjiang that could end up in the ketchup in kitchens across Europe. Neither company responded to questions about how products from Xinjiang are used.

While this research did not uncover any direct relationship between European companies and the internment camps, conversations with executives in Germany showed that most headquarters have little understanding ofhow their businesses operate in Xinjiang.

The Chinese government has long pushed to develop its far-flung western regions, partly to shore up their links with the rest of the country and partly in the hopes that economic development will depress religious observance and quell the desire for basic freedoms. In some cases, European companies have been pressured to start operations in Xinjiang as conditions for expansion elsewhere in China. Carrefour, the French supermarket chain, is just one example. It opened stores in Xinjiang only after receiving “strong advice” from Chinese officials. Other European executives told me that they had received similar messages.

But China’s desire for investment gives foreign companies with ties in the region — and European governments — real power. Now they need to use it.

The European Union should enact laws that set standards for companies operating in Xinjiang and punish those that fail to live up to European ideals of human rights, with audits on whether camp labor was involved in any part of their supply chains, where profits end up in China and how products and technology are used. 

If all European Union members fail to agree on regulations, the charge should be taken up by national parliaments, especially in countries like Germany with extensive business in Xinjiang. These standards should apply to any European company, not just the large multinationals, and would have powerful ramifications beyond just Xinjiang.

Companies found to be flouting these standards could be barred from bidding for government contracts as an initial measure, with fines and government-appointed monitors as additional punishments. The European Union also needs to immediately impose export bans on technology that could be used in the repression of dissidents and religious minorities.

Business leaders and politicians frequently bristle at the idea of directly confronting China on its human rights abuses, worried that a firm stance could jeopardize future deals. But while China may issue statements condemning such actions and threaten to stop buying products from critics, it’s unlikely that Beijing is ready for another economic fight amid a slowing economy and a trade war with the United States.

European exports could take a hit or Chinese regulators may begin investigations into European companies as a punitive measure. But such actions would only further isolate China, a country that knows it needs all the stable economic relationships it has. While plenty of diplomatic protests and bombastic editorials in state-run newspapers are sure to follow such a move, President Xi Jinping cannot afford to further destabilize the economy over a political spat with the European Union, which is China’s largest trading partner.

This confluence of circumstances is exactly why the European Union must act now to stand up for its values and leverage its economic relationship with China to pressure it to end one of the most egregious human rights violations in the world today. Feigning ignorance is no longer an option.

Benjamin Haas is a visiting academic fellow at the Mercator Institute for China Studies in Berlin.

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