The Land & Climate Podcast

Chinese forced labour and renewable supply chains: how big is the problem?

May 12, 2023 Land and Climate Review
Chinese forced labour and renewable supply chains: how big is the problem?
The Land & Climate Podcast
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The Land & Climate Podcast
Chinese forced labour and renewable supply chains: how big is the problem?
May 12, 2023
Land and Climate Review

Bertie speaks to Professor Laura Murphy about international supply chains and forced labour in China's Xinjiang Autonomous Region, where more than a million Uyghur people have been detained in concentration camps.

The solar panel industry has been disentangling itself from the Uyghur genocide for several years, since researchers publicised how much polysilicon was produced by Uyghur forced labour. Professor Murphy's work has now found that the electric vehicle industry is risking a similar path, and that China uses Xinjiang as a production zone exempt from climatic or environmental regulation.

Podcast edited by Vasko Kostovski.

Read Professor Murphy's reports: 

Click here to read our investigation into the UK biomass supply chain, or watch a clip from the BBC Newsnight documentary.

Show Notes Transcript

Bertie speaks to Professor Laura Murphy about international supply chains and forced labour in China's Xinjiang Autonomous Region, where more than a million Uyghur people have been detained in concentration camps.

The solar panel industry has been disentangling itself from the Uyghur genocide for several years, since researchers publicised how much polysilicon was produced by Uyghur forced labour. Professor Murphy's work has now found that the electric vehicle industry is risking a similar path, and that China uses Xinjiang as a production zone exempt from climatic or environmental regulation.

Podcast edited by Vasko Kostovski.

Read Professor Murphy's reports: 

Click here to read our investigation into the UK biomass supply chain, or watch a clip from the BBC Newsnight documentary.

Bertie:

Hello and welcome to the Land and Climate Podcast. My name is Bertie Harrison-Broninski, and today I'm talking to Laura Murphy, Professor of Human Rights and Contemporary Slavery at Sheffield Hallam University. We are going to be discussing the mass programmes of forced labour in Xinjiang, China. Professor Murphy's work with the Helena Kennedy Centre's Forced Labour Lab has documented in numerous reports how important it is for the climate sector to understand this human rights crisis. Otherwise there's a real risk of the electrification mission not being a just transition.

Laura:

We looked at, like, the top companies in each one of those individual minerals or materials, and the top companies were participating in forced labour in the Uyghur region. And some of them are massive state owned corporations that are not only participating in the forced labour programmes, they're basically architects of the programmes.

Bertie:

I began by asking Professor Murphy to give listeners some contextual background into the Xinjiang Autonomous Region and to the oppression of the Uyghur peoples.

Laura:

For over 100 years, the Uyghur region has been a colonial settlement of the Chinese government. And the situation there has always been one of domination and of differing levels of exclusion of Uyghur people from government and from power within the region. Those things wax and wane. Those oppressive projects wax and wane in the region. But since about 2016, the Xi Jinping government has been extremely and explicitly and deliberately putting a stranglehold on the region to maintain control there, in part because of racist beliefs about who the Uyghurs are and about their religious practice and about their backwardness. It's the usual colonial racist tropes that you see being used all the time. Since about 2016 or so, 2014, really, there's been a system of internment camps and forced labour that has become really deeply entrenched. In the Uyghur region, there are about 380 internment camps. It's unclear how many of those are still functioning, but the camp system is still functioning. There's a real problem with hundreds of thousands of people in arbitrary detention, either in detention centres or in prisons. This is all outside of the general constitutional law or judicial system that operates in China. On top of that internment camp system, there's also a system of regional, state sponsored forced labour that meets basically every definition we have internationally of forced labour, of human trafficking, and of slavery. The Chinese government puts out statistics every year of how many people they have put through this labour transfer programme. Over the last three years, every single year, the numbers increase. So what we know is that this programme is increasing in scale, not decreasing in scale. The last numbers were something like 3.2 million person units. It's the number of times people have been transferred. Maybe a few people in there have been transferred more than once. It's over 3 million people who have been transferred out of a full population of 12 million people. That 12 million includes children. It includes the elderly. Right? So, of the working age population, it is an extraordinarily significant number of people, perhaps as much as 50% of the minoritised people in that region being forced to work. The reason we consider it forced labour, I should just say, is that while some people may want to transfer to factory work from farming, nobody is allowed to say no to this programme. That's the thing that makes it tantamount to forced labour.

Bertie:

Just how important is this problem to international supply chains and in particular, to the climate sector?

Laura:

The Chinese government has made deliberate efforts, which they announce in regional directives and central government directives, to move certain industries out to the Uyghur region. So those industries include steel and aluminium processing, a lot of critical mineral processing. So a lot of these kind of raw materials come from other places, but they get shipped to the Uyghur region for the dirtiest parts of the processing, chemicals production, agriculture. Of course, 20% of the world's cotton is grown in the Uyghur region, but also a huge amount of the tomatoes that go into tomato paste grown in the region, dates, et cetera. But then also renewable energy. The PRC government has made a deliberate effort to move renewable energy manufacturing out to the Uyghur region. So how is this affecting the decarbonisation ambitions of the rest of the world? So, one, there's almost no environmental regulation going on in the Uyghur region, it seems. When we look at their environmental reports, sometimes the numbers, like the lead poisoning around certain kinds of plants, the mercury leakage that's happening around certain PVC plants, for instance, is just through the roof, is unconscionable, and it's higher than what's allowed in China by Chinese law as well. There's almost no environmental regulation in that region. So it's polluting the region. It's spewing things into the environment that none of us want. Second, this processing is made so cheaply in part because it's all being made using coal as the energy source. So, for instance, the polysilicon, which is made in the Uyghur region, which is solar grade polysilicon, which constitutes 45% of the world's solar grade polysilicon, is made using 100% coal energy as its source of energy. And it's a highly energy requiring process. The folks I know who measure these kinds of things say that the carbon emissions of this are through the roof. It's far beyond any other solar panel manufacturing anywhere else, or polysilicon manufacturing anywhere else, even in other parts of China, where they use hydropower, for instance, to produce polysilicon. So that's a real problem. The other problem for our decarbonisation ambitions is that essentially supply chains are getting captured in that region. So if we want to say we oppose forced labour, we oppose genocide, we don't want to be complicit in that through our purchases, through our development projects, et cetera, then it is extremely hard to pull out because the supply chains are so mired in that region. The Chinese government's moves to move so much of this manufacturing and processing to China in general, but also to the Uyghur region, is because of the low cost of using coal, the lack of pay of the workers, basically no worker rights standards being upheld. The lack of environmental protections meant that the pricing for Chinese polysilicon and lots of other things were undercutting the production of companies around the world. Tons of companies have had to close. We would have a much more diverse supply chain today had we been able to stop China from doing this ten years ago.

Bertie:

So you've mentioned solar panels, and I do want to come back to that, but I'd like to flag up the other big report you've done in the past year, also on a topic related to electrification, the one about vehicles, 'Driving Force'. There are some quite shocking quotes in that about how pretty much every major traditional automotive and electric vehicle manufacturer has exposure to this force to labour, and that practically every part of the car would require heightened scrutiny to ensure it was free of it.

Laura:

So the case of automotive sector is telling, I think, for the rest of the world's manufacturing. Honestly, when we thought, 'okay, let's look at automotives, because the Chinese government has put an emphasis on automotive manufacturing in the Uyghur region, and let's see what's going on,' it was a daunting task to undertake. The average car has, like, 30,000 parts, and we weren't sure quite where to start. So we just sort of started with the basic materials that go into a car - steel, aluminium, copper, lithium, what's in the batteries, lead, to look and see where these materials are coming from, whether or not they're being mined or processed in the Uyghur region. It turned out that all of these basic materials are being mined or processed in the Uyghur region. We looked at the top companies in each one of those individual minerals or materials, and the top companies were participating in forced labour in the Uyghur region. And some of them are massive state owned corporations that are not only participating in the forced labour programmes, they're basically architects of the programmes. They were there at the inauguration of these programmes, ran schools that were using vocational training, people from the internment camps. One of the companies actually took their Uyghur trainees to an internment camp so they could see what their life could be like if they didn't accept a labour transfer to work in their factory. Some of the most gruesome stories were ones that we read while doing research for this report. What we found, though, when it comes to electric vehicles, is that, yes, ultralow carbon steel, lightweight aluminium, the kinds of things that are being manufactured in particular to meet the needs of the electric vehicle industry, as well as lithium ion batteries, are all being made in the Uyghur region. We need to emphasise, though, when it comes to electric vehicles, and these products that are not very specific to electric vehicles, aside from aluminium. 10% of the world's aluminium comes from the Uyghur region. So that is a really critical issue, and companies are going to have to work really hard to exclude that aluminium from their supply chains. That's where I would start if I was an automotive company. But as of right now, the automotive industry is not quite in the same place, especially the electric vehicle industry, it's not quite in the same place as the solar industry is. None of these major materials, especially like lithium, for instance, are manufactured almost exclusively in the Uyghur region. There's a chance at this point to really have some leverage and to really ensure that they don't end up with whole sectors or industries that are held exclusively in the Uyghur region. So, for instance, in the last two or three years, we've seen the Xinjiang government create all of these incentives to move lithium ion battery manufacturing and also lithium mining and processing to the Uyghur region. It's really new to the point where we could only find the registry information for hundreds of lithium battery companies, and this would go into cars, but this is also for solar storage. It's also for phones and your cameras, whatever. We saw a massive increase in the number of companies, but we can only find their registry information. Many of these companies have no other footprint because they're just starting out. There are all kinds of companies registering new manufacturing in the Uyghur region, and just in the last year or so, new contracts for the major companies, CATL and Gongfang Lithium, to go out to the Uyghur region and start doing exploration and processing of lithium in that region. So this tells me, to my mind, the electric vehicle industry can really put pressure on those companies to say 'we don't want to source from the Uyghur region, we know what's happening, or we need to find some way that you can monitor what's going on in the Uyghur region', which to this point is just basically impossible. No one can really do worker voice interviews or get a legitimate audit out there. This is a place where they can really start putting pressure on companies to ensure that they don't end up in the same position the solar industry is.

Bertie:

How have some of the big car manufacturers responded to that report? You mention pretty much all the famous ones, like Honda, Ford, Mercedes-Benz, et cetera; have they shown a willingness to engage sincerely with this?

Laura:

What we do is we solicit letters from the companies. We ask them some very specific questions based on our findings, and then we ask them to respond. A few of the companies responded, but honestly, not that many. We post all those letters to our website so people can see, like, what are companies saying? I'll tell you that across the sectors that we've studied, from solar to apparel to PVC tomatoes, whatever we've studied, companies write. And they say, 'we at [insert company here] abhor forced labour.'. Right? That's always the first sentence, and they're always written by lawyers. And they say, 'we have a supplier code of conduct that everyone signs. They say that they're not using forced labour. We believe them. And if anything goes wrong, we'll correct it. Thank you for your report. Good luck to you'. What's happening is, with the Uyghur Forced Labor Prevention Act in the United States, new due diligence legislation in Germany in particular, where it comes to automotive, this has become really critical. Pending EU legislation for mandatory human rights, due diligence as well, these laws are making companies really pay attention. They don't do this kind of due diligence voluntarily, but because these new laws are coming into effect, there's a lot more interest on the part of companies. We've done some meetings with different sectoral groups, including one that was convened by the German government, where big players, automotive manufacturers come in, listen, mainly listen. Not a ton of pushback, honestly. And my sense is that they know they have to take it seriously because of the laws that are coming down, and they've had to do this for critical minerals from Congo, for instance. I think they're in a position where they can do this work. They do have some of this stuff mapped out, especially the mining pieces, because they have to know that they're not mining things from the DRC. What they don't really have in hand is a sense of what happens to those minerals and materials after they're mined. Where is the processing happening? Almost all of it is happening in China, and it just becomes a black box from there. There are all these metals traders and logistics firms that get in the way that obscure where things are going. What I do all day is trace these supply chains. And when I hit a metals trader, I know that's it, I can't know what it is that they're procuring to sell. I can see who they sell to. Often, I can see some of what they're procuring, but I can't see all of it. You can't know who gets what of the materials that they buy. And that's where companies are in trouble. And so there's going to have to be some real reckoning with what happens at that processing and trading stage so that we can be assured that we're not buying goods that are made with Uyghur forced labour.

Bertie:

It's interesting to hear you talk a minute ago about how new a lot of these companies were when you were doing the Driving Force report. That report was published at the end of 2022. That's a year after the US Uyghur Forced Labor Prevention Act was signed into law. I'd be interested to hear your analysis of how effective that law has actually been. Maybe what needs to change, if there's still a lot slipping through the cracks.

Laura:

I think it's working. I think that it can't be 100% right. We don't catch all the murderers in the world either. We do the investigations, we try to figure out what's going on and we try to stop it. Right? I think that's what's happening, first of all, just foundationally. I think it's necessary. I think the Uyghur Force Labor Prevention Act and for your listeners who maybe don't know what it does, it presumes that all goods made in whole or in part in the Uyghur region are made with forced labour because there's no way to audit your products to know. And it's a system that's ubiquitous. Everywhere we look, we find this forced labour. And let me also say I'm using an extremely conservative definition of forced labour. I'm using international standards, international law. We're really talking about real forced labour here. So the UFLPA presumes that goods made in the region are made with forced labour. And they have to, because we can't go item by item, product by product, to see is this one made with forced labour or is this one not? It puts it on the companies to determine, to do the work, to figure out what their supply chains look like and where they're sourcing their goods from. What's happened since the UFLPA went to effect in June of 2022 is that a lot of things have been stopped in the United States from being imported, in particular in areas that the government deemed to be priority sectors. So polysilicon, apparel and cotton and tomatoes, and then a bunch of other electronics, some aluminium, it seems, some PVC, it seems. The thing that I think is troubling about UFLPA compliance is that companies seem to be waiting to hear if Sheffield Hallam or some other group reports on their materials. And I'm here to say steel, aluminium, copper, lithium, plastics, chemicals, wires, cables, spices, garlic, whatever you're making, there's a really high chance that some part of it is being made in the Uyghur region right now. I don't think companies should be waiting until a report comes out, because we're not the end all, be all. CBP, Customs and Border Protection in the United States has hired hundreds of new investigators to investigate, to ensure that they're capturing everything. They're doing investigations that have nothing to do with the reports that have come out through the media or through academic reports. A company does not know when they might get dinged, right, when they might be caught. It's on them to proactively know what their supply chains look like. Also, I think that the German due diligence law is quite interesting. That law essentially says you need to know the workers situation for your first tier. Beyond that, if you have any risk, you need to know to be looking. If you have reason to believe that there is actually forced labour at any tier, you have a responsibility to go investigate, mitigate, or pull out. That law really forces the hands of companies. Once information like this gets out, they then have to go and act. So we're seeing that, as far as I know, like, there's no goods being stopped on import, and that even the forced labour imports directive that is coming through the EU won't stop things at port. And I think that is important. Once it gets to the shelves, it's hard to get it off. Consumers don't know what they're buying.

Bertie:

If we return to solar, how is solar doing now on this issue? Am I right in saying that there was a bit of a crisis in the industry a couple of years ago when a lot of these revelations really came to the public sphere?

Laura:

Yeah. The truth is, the solar industry was the first to announce we've got a Xinjiang problem. This is in part because of what I was saying earlier about how the industry had been taken captive by China. Many players in the industry were still angry that the Chinese government and Chinese corporations had undercut the industry to such an extent that many companies had to close globally. They were pretty quick to say, we've got this problem. But I think they didn't understand. In fact, I know they didn't understand how deep it was and just how much of their products were being made in the Uyghur region. So there was a really quick backtracking once our report came out, and we showed that metallurgical grade silicon, which is a primary ingredient of polysilicon, is the step before polysilicon purification. When they found out that was being made in the Uyghur region, it freaked them out, and they realised, oh, wait, but that goes way beyond the Uyghur region. Tonnes of companies are using that metallurgical grade silicon. So what are we going to do? I think that they have, due to the pressures of compliance with the UFLPA, they have managed to expand their production capacity in other parts of China. Expand production capacity, build new production capacity in Mongolia, for instance, create more in Cambodia and Vietnam. And India is becoming a real player. Companies in the US are reopening. I think that it has spurred an increased pace of production capacity expansion that we wouldn't have seen. The industry overall was angry, and they were claiming that this was pitting human rights against state of the planet. And that was such a rhetorical lie.

Bertie:

We've been mostly talking about America and Europe when it comes to who's importing from Xinjiang. Even if America and Europe did completely cut off that region, how reliant is China on exporting to those places? Are there other parts of the world -. I don't want to speculate - but are there other parts of the world where they might just kind of take out the difference?

Laura:

No, it's a really good question. The thing that the Chinese government often says and promises to these companies is that there's enough domestic demand for everything. And when I say everything, I mean for clothes, for cotton, for polysilicon, whatever it may be. '. We've got enough domestic demand. Don't worry. We have the world's biggest population. We will consume all this stuff'. The Chinese government has essentially made it a region that's too big to fail, and every individual company too big to fail. They'll give companies incentives and massive subsidies if they get targeted, or if they seem to be a target of the UFLPA or of other due diligence situations or reporting, et cetera. So that is part of China's answer. But I have to think that despite the fact that China seems to be willing to - the Chinese government seems to be willing to - pump tons of money into this region, building that internment camp system was not cheap. Sending all these companies out to that region, which is way out in the middle of Central Asia and far from all the ports that they're accustomed to using, et cetera, all the money they had to spend on that. And to spend on getting companies to be willing to work with Uyghurs because so many executives are just downright racist and don't think Uighurs can work. All that money, t. hey seem to be willing to spend a tonne of money, but there has to be some limit to how much they can save these companies in the region. The flip side of it, though, too, is that Chinese companies want international business. They don't want to just be domestic companies. I think there's some friction there, too. That's an interesting leverage point, but I think that companies want to sell internationally, and what they're saying, too, is, 'okay, well, fine, we won't sell to the United States. We can sell everywhere else'. And the thing that I think we need to be most concerned about is countries in Africa, for instance, that can't pony up the extra cash to pay for goods that are made with fair labour standards or outside of the realm of a genocide. What we're seeing for a small sampling of companies that do announce their profits that are publicly listed, et cetera, some of them are actually losing money as a result of this. Mainly I've seen apparel companies announce, and yarn and cotton companies announce that they have taken huge losses. I've also seen them start to create supply chains that are Xinjiang and China free, even if they're China corporations, because they're still trying to stay in that international game. So I do think it has an effect. Sadly, I don't think we've reached a point where it's had necessarily a positive effect on Uyghur workers' lives just yet, but these costs are adding up, and companies do want to stay in international markets. And so this pressure is critical to get them to be the actors that shift the way labour recruitment works and how they engage with the state, et cetera.

Bertie:

You've talked about a lot of the recommendations that you have. There are loads more, I know, but one that I found interesting, I think it was in the Driving Force report, is a point about how, though there isn't much that can be done in China internally at the moment, companies should still be trying to work out some way to pay reparations. Could you elaborate a bit more on that and whether you've seen any kind of example of that happening? It would be really interesting to hear about it.

Laura:

Yeah, I think that there needs to be some really serious consideration about what reparations can look like. Right now, there is no legitimate, active civil society within China or within the Uyghur region to assist people on the ground there, but Uyghur people who are in exile, who have escaped, and there aren't many who've escaped, honestly, since 2019. Very, very few people are. This is the thing that people need to remember. No one is able to leave that region. There's no refugee crisis exactly, because people can't leave. But there are tonnes of people who are refugees and who left maybe before 2019 and who are in dire straits, really struggling all over the world. There's pockets of weaker communities in different places, in Turkey and Germany and the US. But the community is really struggling. I think there needs to be some real attention paid to Uyghur people who are in exile, people who are struggling. Also there needs to be funding for the advocacy groups, the people who are trying to do whatever they can to get their families out or to even be able to call their families to address transnational repression of the people living abroad who are constantly haunted by the PRC government, even no matter where they're living outside of China. These kinds of things are things that companies can do. They can start funds to assist this. They can also ensure that the companies outside the Uyghur region are not accepting these forced labour transfers. That's a place where they have real leverage. They need to start thinking about what they really, truly owe to the Uyghur population now. Start that work now, but also be preparing for the day, we hope, when Uyghur people see their freedom and are able to come and go, because there's going to be a lot of needs, and companies owe it to them because they're profiting from the suffering of the Uyghur people.

Bertie:

My thanks to Laura for coming on the show. Some of the forced labour labs reports are linked below in the podcast blurb, and we will soon publish a comment piece on this issue too, on landclimate.org so do check back for that. If you enjoyed this episode, please subscribe or follow us on your preferred platform and we'll be back in a fortnight. Thanks for listening.