The Latest U.S. Sanctions Targeting the Chinese Communist Party Have Some Teeth

A farmer picks cotton on a farm on the outskirts of Hami, Xinjiang Uighur Autonomous Region, in 2010. (Stringer/Reuters)
The U.S. sanctions regime has hit a vulnerable point in a true CCP atrocity: its mass slave-labor scheme in Xinjiang.

NRPLUS MEMBER ARTICLE T he strategic competition between the United States and China has deepened over the past several weeks as the two countries have traded diplomatic blows over the South China Sea, China’s human-rights record, and technology. In this flurry of activity, the United States has pressed Beijing on its crackdowns in Hong Kong and the Xinjiang region of China. Many of the U.S.’s initial sanctions targeting officials involved in the Uighur concentration camps were largely symbolic, having little concrete effect. Most of the targets would never dream of stepping foot on American soil, or of moving money to institutions vulnerable to U.S. financial pressure. But the American sanctions regime got some bite late last month, when the Treasury Department unrolled new measures targeting an entity known as the Xinjiang Production and Construction Corps (XPCC).

The latest sanctions, announced July 31, apply to the XPCC and two officials associated with it: Peng Jiarui and Sun Jinlong. The move effectively blocks all of the XPCC’s activities and property at all tied up in the American financial system. The authority for the sanctions derives from the U.S. government’s previous designation of Chen Quanguo for human-rights abuses under the Global Magnitsky Act. Chen, who oversees the mass detention and political-reeducation program in Xinjiang, serves many roles in the messy, overlapping nexus of Chinese political institutions: First Political Commissar of the XPCC, Communist Party Secretary of the Xinjiang region, and a member of the Politburo. Here, the U.S. government has used his stewardship of the XPCC to target the organization, which plays a significant role in the repression of the Uighurs.

Nury Turkel, a commissioner on the U.S. Commission for International Religious Freedom and a prominent Uighur-American lawyer, says that these latest sanctions are huge. “On behalf of the Commission, I welcome this decision,” he tells National Review, describing it as a “long overdue recognition of this menace.” He also notes that the paramilitary group is responsible for many of the mass-detention facilities and forced-labor camps in Xinjiang. And it was not lost on him that the sanctions came during Eid, the Islamic holiday, giving the predominantly Muslim Uighurs a significant reason to celebrate.

The XPCC — also called the Bingtuan, which is Chinese for “the corps” — is a long-standing part of the Chinese Communist Party-State’s efforts to pacify and develop the Xinjiang region for settlement by Han Chinese individuals. The history of the organization stretches back to the end of the Chinese civil war, when trapped nationalist troops were assigned to participate in regiments to defend and develop the Chinese frontier. They formed a crucial buffer in the 1960s, when General Secretary Mao Zedong feared an invasion by the Soviet Union.

However, in subsequent decades, most of the XPCC’s work focused primarily on agricultural activities, says James Millward, a Georgetown University professor and historian of China. It remains a paramilitary group, organized into regiments, but the military aspect no longer plays as large a role in XPCC’s activities. Instead, these regiments own hundreds of thousands of acres of farmland — the basis of a vast agricultural enterprise — which they then contract to workers. When people left China’s cities, some came to Xinjiang, and the XPCC was the organization that would settle them. It also provided for them, operating essentially as a “state within a state,” with a governing structure parallel to the Xinjiang Uighur Autonomous Region government.

Today, it answers only to the central government and the Chinese Communist Party, but its leadership often holds roles in all of these organizations — just like Chen does. The XPCC runs schools, health-care services, and a large pension program that provides for older members of the militia. All of this contributes to the XPCC’s mission as a colonial enterprise. Millward points to the XPCC’s large pension system: “It’s taking money from the central government to support unproductive laborers . . . simply to have that Han population there.”

The corps’ cotton-growing activity supports this elaborate system. “Xinjiang is now the cotton bowl of China,” says Millward, noting that the country grows about 25 percent of the world’s cotton — and some 85 percent of that comes from the region. And the XPCC is responsible for a large portion of mechanized cotton harvesting concentrated in the north of the region, according to a report by the Center for Strategic and International Studies. Over the past ten years, the textile industry has changed significantly, as partnerships between public and private entities have brought production from the East of China to Xinjiang, where labor is cheaper.

So why did the United States government target the XPCC with sanctions? Adrian Zenz, a senior fellow at the Victims of Communism Memorial Foundation, says that the XPCC has historically “played a role in China’s human-rights atrocities.” The organization runs a network of prisons in China, including a much-criticized “reeducation through labor” system that was abolished in 2013. Those abuses targeted ethnic Han Chinese individuals in addition to Uighurs. However, the paramilitary group is also implicated in the mass detention of the Muslim minority, running some of the concentration camps, moving Uighur prisoners into forced labor, and transferring them to factories in east China. The XPCC also compels them to perform forced labor at the factories and industrial parks that it runs throughout the Xinjiang region.

Millward says that the latest sanctions show that the U.S. government understands the brutal nature of the militia’s relationship to Xinjiang’s economic development, facilitated both by partnerships with 19 cities and provinces across China — and by prison camps and the cotton and textile economy. The constellation of private and public entities involved also does business with some of the largest brands in the world. Most prominent among those commercial enterprises is Changji Esquel Textile Co. Ltd — a Hong Kong–based textile company and the largest shirt-maker in the world. Many well-known global brands source their products from the company, despite its murky supply chains. The company was previously involved in building what will be the largest yarn-production facility in the world when it is constructed in Xinjiang, but it has quietly unloaded its shares in the project. In June, the Trump administration added Esquel to the Entity List, a U.S. government blacklist, for its involvement in forced labor.

The U.S. sanctions regime has hit a vulnerable point in the CCP’s Xinjiang mass atrocities. In recent years, the militia has faced pressures on its ability to recruit new members and turn a profit, exacerbating its tense relations with the official government of the Xinjiang region. With the new measures, the Trump administration has exploited these difficulties by moving to dissuade foreign enterprises from doing business with XPCC-linked entities. Still, Zenz says that the measure’s ultimate impact will depend on uncovering the middlemen whom forced-labor-tainted products go through before they end up in the United States.

A recent analysis by Sayari Analytics, a financial-intelligence firm, found over 800,000 shell companies linked to the XPCC worldwide, including over 2,000 in the United States. The report said that the XPCC sanctions could be “one of the largest in [the Treasury Department’s] history.” As the American Foreign Policy Council’s Michael Sobolik puts it, “Any company needs to weigh the risk of that transaction passing through the U.S.,” since the sanctions make any transaction that’s converted into U.S. dollars through American banks “potentially a big, big liability.”

Companies have until the end of September to comply with the Treasury Department’s new sanctions designation. Assessing the impact of the latest component of the U.S. effort to disrupt the Xinjiang human-rights abuses must wait until then, but expect this latest attempt to have a more substantive effect than previous symbolic measures. Still, that alone won’t curtail what might be the gravest human-rights issue of our time, especially while much of the rest of the world remains silent.

Editor’s note: This piece has been updated since publication. 

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