Forced labor: China's solar panel industry becomes more opaque to dodge sanctions

According to a recent study, the Chinese government skirted sanctions on products from Xinjiang, which was accused of using slave labor.

Concerns are growing about the solar panel industry, which is largely dominated by China. The country is one of the major producers of the components needed to harness solar energy and, for years, has been facing accusations of human rights violations.

In particular, both the United States and international organizations have accused China of the use of forced labor in the production of solar panels. The Chinese region of Xinjiang is at the center of these suspicions, with the Uyghur Muslim minority being the main victim. After carrying out its investigations, the Senate approved to sanction China and place a block on products coming from the Xinjiang region, which affected to some extent the market rate of solar panels under Chinese control.

China dominates the solar energy market

Despite this, a recent report by Sheffield Hallam University indicates that China continues to export products for solar energy, the result of the use of slave labor, mostly of Uyghur origin. According to the study, China is striving to make its supply chain increasingly more opaque in order to disguise the origin of the products sanctioned by the Senate. These changes by the Chinese government in many cases prevent consumers or manufacturers from knowing whether the components they use for their solar power installations come from Xinjiang and whether slave labor was involved in their production.

According to the study, signed in part by anonymous researchers who fear reprisals from the Chinese government, there are a number of solar panel companies that have a production chain about which very little information is known. The study reviews the production chains of several of these companies, and through its methodology, gives a score for each company's risk of using Xinjiang or sweatshop components. Of the 16 firms analyzed, nine are rated as high risk. Only three are supposedly without suspicion.

The main problem for these companies lies in the fact that polycrystalline silicon, an essential component for the manufacturing of solar panels, comes almost exclusively from China. In 2020, 45% of the global share of polycrystalline silicon came from China's Uyghur regions and another 30% from inland China. By 2022, the market share of the Uyghur regions dropped to 35%, but that of inland China increased to 54%. Only 11% of polycrystalline silicon was made in the rest of the world.

Companies review their standards

According to the New York Times, a number of the companies evaluated by the study promised to revise their production chain standards in response to the Sheffield Hallam University publication. Prior to this, 340 companies in the solar energy sector signed an agreement to relocate their production sites and cease business with the Uyghur region of Xinjiang.

However, China's large market share in this sector hinders the efforts of companies seeking to "clean up" their production chains. According to the report, even companies that serve the United States and Europe are affected by this problem and end up incorporating products that originate in Xinjiang into their processes. Outside of components, China has around 80% control over the entire solar panel production chain, according to data from the International Energy Agency (IEA).

In May, the Department of Homeland Security (DHS) conducted a raid on the JinkoSolar facility in Florida, one of the companies examined in the report, which is Chinese-owned but located to the United States. The DHS investigation believes the company imported materials from the sanctioned Xinjiang region into the United States and improperly classified the products, according to sources close to the investigation cited by the New York Post.

There are some U.S. initiatives that intend to establish several solar panel manufacturing companies in Mexico. However, these facilities run the same risk as the others. Any production of solar infrastructure will have to go through China at some step in its production chain and therefore expose itself to products that are the fruit of exploitation.