Chinese Solar Firm Plans Tours to Rebut Forced Labor Claims

Source: By Bloomberg News • Posted: Sunday, May 2, 2021

U.S.-listed Daqo New Energy Corp. has fired back at allegations that forced labor is used at factories in the western Chinese region of Xinjiang, saying it will soon let investors see for themselves.

The company will invite as many as 50 analysts and investors to visit the plant in mid-May, said He Ning, director of investor relations at the polysilicon manufacturer, which has a facility outside Urumqi that Bloomberg reporters visited in March without being allowed inside.

“There’s no so-called forced labor,” He said Friday during a press conference in Beijing organized by the Chinese Foreign Ministry. “So-called surveillance on ethnic minorities and oppression against their customs and religious beliefs are all fictitious.”

Daqo shares have soared as prices for a key solar material have risen

All of the company’s workers in Xinjiang are compensated for their work, said He, adding the average salary was about 6,000 yuan ($930) a month.

China has detained “upwards of 1 million” ethnic minorities including Muslim Uyghurs in Xinjiang, according to a United Nations assessment, while the U.S. and other Western nations say China is committing genocide there. China denies the allegations, saying it is countering terrorism while building infrastructure in the impoverished region that will ensure prosperity. China has traded retaliatory sanctions with the U.S., U.K. and European Union over the dispute.

Foreign companies such as Hennes & Mauritz AB and Nike Inc. have become entangled in the Xinjiang controversy for indicating they won’t use cotton grown in the region. H&M became the target of a consumer boycott in China that had the backing of organizations such as the People’s Liberation Army and Communist Youth League, the ruling Communist Party’s organization for recruiting young people.

Daqo’s factory and three others in Xinjiang produce about half the world’s supply of polysilicon, the metal used in the production of solar panels. Demand for the material has surged amid the global effort to speed up the clean energy revolution and stave off the worst impacts of climate change.

China has accused foreign governments of using forced labor claims as a way to help their own companies compete against China’s. On Friday, He said such efforts would fail because China has such a large presence in the global solar market.

Polysilicon prices have tripled in the past year, according to PVInsights, and producers like Daqo have been key beneficiaries. Shares of the company have risen 46% this year after surging 460% in 2020.

China has proclaimed the Xinjiang region “open” to anyone who wishes to visit, but Bloomberg reporters who went there in March were met on the plane by armed police and then shadowed as they tried to visit factories. They were also shooed away from the Daqo plant in the city of Shihezi by guards wearing brown camouflage.

Daqo’s He said the invitation to visit was open to members of the U.S. Solar Energy Industries Association, third party auditors and journalists. “China’s solar industry does not serve one particular party or market. We provide services to the world,” He said. “That said, China will not flinch against any unfair treatment.”

However, the U.S. solar trade group said it has no plans to participate in such a tour, and wasn’t previously aware of the potential event.

“Going into that region isn’t something we would be interested in,” John Smirnow, SEIA’s general counsel, said Friday.

The key issue, Smirnow said, is that China isn’t allowing independent, third-party audits in the region that could verify the supply chain for solar panels and components. That raises the risk that imported shipments of Chinese panels could be stopped at the U.S. border.

“It’s all about transparency,” Smirnow said. “It’s all about the independent, third-party audit.”

— With assistance by Colum Murphy, and Dan Murtaugh

(Updates with comment from U.S. trade group in 12th paragraph.)