As concerns about forced labor in China intensify, the U.S. warns that the global auto industry—dominated by Chinese manufacturers—must scrutinize its supply chains to avoid complicity in government repression.
An investigation by Kharon revealed that several companies in the auto sector are sourcing car parts linked to forced labor in Xinjiang. This includes components such as tires, electronics, glass, and EV batteries, some of which were shipped to Western auto firms as recently as August.
In some of these instances, the Chinese supplier posing a forced labor risk owns entities based in Xinjiang that have either participated in labor transfers or are located in industrial parks where forced labor practices are prevalent.
According to the U.S.’ Xinjiang Supply Chain Business Advisory, companies operating in industrial parks receiving government-sponsored labor transfers or poverty alleviation subsidies may pose forced labor risk.
The diagrams below show the interconnections of Chinese suppliers, including their ties to Xinjiang and their vendor relationships with Western auto companies.
An investigation by Kharon revealed that several companies in the auto sector are sourcing car parts linked to forced labor in Xinjiang. This includes components such as tires, electronics, glass, and EV batteries, some of which were shipped to Western auto firms as recently as August.
In some of these instances, the Chinese supplier posing a forced labor risk owns entities based in Xinjiang that have either participated in labor transfers or are located in industrial parks where forced labor practices are prevalent.
According to the U.S.’ Xinjiang Supply Chain Business Advisory, companies operating in industrial parks receiving government-sponsored labor transfers or poverty alleviation subsidies may pose forced labor risk.
The diagrams below show the interconnections of Chinese suppliers, including their ties to Xinjiang and their vendor relationships with Western auto companies.
Sector in Focus: EV Batteries
The EV battery sector has been under increased scrutiny due to concerns over forced labor.
Currently, China dominates the industry, producing 77 percent of the world’s lithium-ion batteries, which are used in electric vehicles. According to a New York Times report, China also manufactures 54 percent of the world’s electric cars.
Chinese exports of EVs have surged in recent years. In 2023, the country exported nearly 1.6 million EVs, making it the largest exporter in the industry, according to the U.S. International Trade Commission.
In 2022, the top importers of EV batteries included the U.S., Germany, South Korea, the Netherlands, and Vietnam, according to the Observatory of Economic Complexity.
In June, Republican members of the U.S. House Select Committee on the Chinese Communist Party urged the Biden administration to add two Chinese lithium-ion battery manufacturers to the UFLPA Entity List due to their supply chain connections to companies in Xinjiang.
In letters to the Department of Homeland Security (DHS), the committee requested that Contemporary Amperex Technology (CATL) and Gotion High Tech be added to the list following an investigation.
“The Select Committee has uncovered indisputable evidence that Gotion High Tech and CATL have supply chains that are deeply connected to forced labor,” said committee chairman John Moolenaar (R-Mich.) in a statement.
If added to the UFLPA Entity List, all products manufactured by the two companies would be prohibited from import into the U.S.
The diagram below highlights four examples of EV battery manufacturers identified by Kharon as having a risk of forced labor, including CATL.
The EV battery sector has been under increased scrutiny due to concerns over forced labor.
Currently, China dominates the industry, producing 77 percent of the world’s lithium-ion batteries, which are used in electric vehicles. According to a New York Times report, China also manufactures 54 percent of the world’s electric cars.
Chinese exports of EVs have surged in recent years. In 2023, the country exported nearly 1.6 million EVs, making it the largest exporter in the industry, according to the U.S. International Trade Commission.
In 2022, the top importers of EV batteries included the U.S., Germany, South Korea, the Netherlands, and Vietnam, according to the Observatory of Economic Complexity.
In June, Republican members of the U.S. House Select Committee on the Chinese Communist Party urged the Biden administration to add two Chinese lithium-ion battery manufacturers to the UFLPA Entity List due to their supply chain connections to companies in Xinjiang.
In letters to the Department of Homeland Security (DHS), the committee requested that Contemporary Amperex Technology (CATL) and Gotion High Tech be added to the list following an investigation.
“The Select Committee has uncovered indisputable evidence that Gotion High Tech and CATL have supply chains that are deeply connected to forced labor,” said committee chairman John Moolenaar (R-Mich.) in a statement.
If added to the UFLPA Entity List, all products manufactured by the two companies would be prohibited from import into the U.S.
The diagram below highlights four examples of EV battery manufacturers identified by Kharon as having a risk of forced labor, including CATL.
State of Play
Since the U.S. passed the Uyghur Forced Labor Prevention Act (UFLPA), which went into effect in 2022, government agencies have intensified efforts to crack down on entities involved in forced labor, blacklisting them from conducting business in the U.S. The UFLPA prohibits goods produced in Xinjiang from entering the U.S. and imposes sanctions on entities benefiting from forced labor in China.
U.S. lawmakers have urged companies across various sectors, including the auto industry, to monitor their supply chains to eliminate forced labor exposure to Xinjiang.
In May, the U.S. Senate Committee on Finance published a report highlighting significant deficiencies in how automakers oversee forced labor in their supply chains. The committee found that major Western automakers imported cars and auto parts from a Chinese entity added to the UFLPA Entity List in December 2023 for manufacturing products presumed to be made with forced labor.
Lawmakers noted that despite laws intended to prevent such activities, “automakers have been slow to adequately watchdog their supply chains to ensure parts originating in Xinjiang and other identified entities are not used in cars and trucks imported to the United States.”
Since the U.S. passed the Uyghur Forced Labor Prevention Act (UFLPA), which went into effect in 2022, government agencies have intensified efforts to crack down on entities involved in forced labor, blacklisting them from conducting business in the U.S. The UFLPA prohibits goods produced in Xinjiang from entering the U.S. and imposes sanctions on entities benefiting from forced labor in China.
U.S. lawmakers have urged companies across various sectors, including the auto industry, to monitor their supply chains to eliminate forced labor exposure to Xinjiang.
In May, the U.S. Senate Committee on Finance published a report highlighting significant deficiencies in how automakers oversee forced labor in their supply chains. The committee found that major Western automakers imported cars and auto parts from a Chinese entity added to the UFLPA Entity List in December 2023 for manufacturing products presumed to be made with forced labor.
Lawmakers noted that despite laws intended to prevent such activities, “automakers have been slow to adequately watchdog their supply chains to ensure parts originating in Xinjiang and other identified entities are not used in cars and trucks imported to the United States.”
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More on Forced Labor
Kharon has published several stories in the past two years identifying forced labor exposure through supply chains in different industries. Some of those stories include insights on solar panels, Chinese sportswear companies, footwear manufacturing, and beer imports, amongst others.
More on Forced Labor
Kharon has published several stories in the past two years identifying forced labor exposure through supply chains in different industries. Some of those stories include insights on solar panels, Chinese sportswear companies, footwear manufacturing, and beer imports, amongst others.
