June 25, 2021 – Stealth War 43: Serbian Lithium Discovery; Beijing Hosts 2021 BRI Conference; Chinese Port COVID-19 Containment Measures Hurt Global Trade

On Thursday, the Biden administration announced a ban on the importation of solar panels and other goods from China linked to forced labor in Xinjiang. Recent reports have emerged indicating that Hoshine Silicon, also known as Hesheng, recruits and employs ethnic Uyghurs through state labor programs, which researchers have argued are a form of forced labor that contravenes international labor standards. Chinese companies in Xinjiang produce nearly half the world’s polysilicon, a critical material in the construction of solar panels. Unlike previous blanket bans on cotton and tomato products, the solar product import blocks are much more targeted, balancing green development concerns with human rights. According to Homeland Security Secretary Alejandro Mayorkas, the blocks are “not necessarily calibrated to geography, but calibrated to conduct.” U.S. efforts to decouple supply chains from human rights abuses in Xinjiang face an uphill battle, and some worry that recent actions will be mostly symbolic. A recent investigation by the South China Morning Post found that major U.S.-based mutual funds including Vanguard, State Street and BlackRock all hold significant investments in Xinjiang-based companies, many of which are directly controlled by the government and likely involved in labor rights violations.

Beijing on Friday criticized the move, stating that the United States uses “human rights as a disguise” to hamper “the industrial development of Xinjiang.” According to China’s Foreign Ministry Spokesperson Zhao Lijian, the ban’s real purpose is “to create ‘forced unemployment’ and ‘forced poverty’ to mess up Xinjiang and contain China’s development.” China has resolutely denied that it is perpetrating human rights abuses in Xinjiang, with spokesperson Hua Chunying saying “there is no ‘forced labor’ in Xinjiang,” last month.

China’s exports of lithium-nickel-cobalt-manganese-oxide (NCM) battery material rose to 27,434t during the first half of 2021 amid increased global demand, especially from automakers. As a result, lithium prices this year are also expected to reach a record high. Lithium is a critical material used to produce batteries for electric vehicles and renewable energy storage. Recent campaigns and investments for green energy technology development have caused a spike in demand for lithium. China is the world’s leading producer in lithium-ion batteries with 93 factories compared to the United States’ four. Chinese firm Ganfeng has sought to capitalize on the heating-up lithium industry in an aggressive expansion campaign in 2021. In addition to newly acquired sites in Mexico and Mali, Ganfeng also operates mines in Australia, Argentina and China. Separately, debt-ridden Chinese company Tianqi Lithium has announced that it would sell a stake in its Australian operations to IGO Ltd.

Given China’s dominance in the lithium industry, firms have been looking to other suppliers for the critical resource to compete with Beijing and secure supply chains. Australian-British mining company Rio Tinto has sought to build a mining operation in Serbia, which could hold up to one tenth of the world’s supply of lithium. Serbian President Aleksandar Vucic has expressed his support for the development as an enrichment opportunity for the country. The fate of the mine will be decided in an upcoming referendum. If approved, it could be a significant alternative to Chinese-produced lithium as countries around the world look to green development opportunities. Separately, Xi and Vucic reaffirmed their two countries’ “iron-clad friendship” by phone on Thursday and promised “participate in the joint construction of the Belt and Road and expand pragmatic cooperation in various fields,” according to a Chinese foreign ministry readout.

On June 21, Chinese President Xi Jinping and President of the Republic of the Congo Denis Sassou Nguesso called for enhanced cooperation and bilateral ties during a phone conversation. During the conversation, Sassou Nguesso requested a rescheduling of his country’s debt to China, to which Xi agreed in principle. The two countries had already agreed to a restructuring in 2019, but the debt again became unsustainable due to effects from the COVID-19 pandemic. Brazzaville owes $2.4 billion to Beijing and $1.7 billion to international oil companies. Xi’s agreement to a new rescheduling of the debt could also result in the release of $449 million in lending from the International Monetary Fund (IMF), which was holding the money until the Congo demonstrates the long-term sustainability of its debt.

Police forces raided the offices of Apple Daily, Hong Kong’s largest pro-democracy newspaper, twice in the past two weeks, arresting journalists, seizing computers and other materials, and freezing millions of dollars in assets. Five of the newspaper’s top editors and executives were charged with colluding with foreign forces to endanger national security–marking the first time that Hong Kong’s national security law has been directly used to target media entities. Following these pressures, the paper announced that it would publish its last issue on Thursday and close its business in Hong Kong, making it the first major media outlet to be shuttered by the new national security regime. A sister news outlet, Apple Online, will continue its operation in Taiwan.

Also this week, the first national security law trial went to court on Wednesday. Tong Ying-kit drove his motorcycle into several riot police officers last July, just hours after the implementation of the NSL. His case represents a test of how the city’s judicial protections for human rights and rule of law–based on a mini-constitution derived from British common law principles of fairness and independence–will function under the new NSL. If convicted, Tong could be sentenced to life in prison. Like many of the more than 50 other people who have been charged under the law, Tong has been denied bail and held in police custody for months. He is also being denied trial by jury, previously standard practice for defendants facing serious punishments. In combination with the rapid crackdown on press freedoms, Tong’s case demonstrates the vast and all-encompassing erosion of liberal freedoms in Hong Kong over the past year.

Chinese Port COVID-19 Containment Measures Hurt Global Trade

Although China’s track record with containing outbreaks of the ongoing COVID-19 pandemic has been better than the rest of the world, it has achieved this success through harsh measures, including targeted lockdowns, mass testing, and centralized quarantines. This in turn has affected cross-border trade, placing a ceiling on economic recovery. Chinese measures to contain the spread of COVID-19 have been in effect across many of its southwestern ports since late May. Yantian Port, the region’s largest port responsible for processing 10.5 percent of its foreign containers, has been notably affected. Supply chain disruptions arising from delays at Yantian could be worse than those caused by the March Ever Given incident in the Suez Canal. 298 container vessels, holding three million 20-foot containers, or a 300 percent monthly increase in blank sailings, have now skipped the port, rather than wait to be processed. Although the port reopened for normal operations on June 24, the backlog will take weeks to sort out, continuing supply shortages and increasing shipping costs as high as 1,000 percent year-on-year from Asian ocean carriers.

Since the number of carrier voyage cancellations is expected to stay elevated into July and the Chinese State Council to keep pandemic border restrictions for another year, the shipping delays will likely persist, contributing to rising global commodities prices and inflation.

China and its Opponents Spar on Human Rights at the UN

This week saw the now-familiar exchange of dueling letters at the United Nations Human Rights Council on Chinese policies in Xinjiang for the third year in a row. A coalition of 44 states led by Canada submitted a statement to the 47th meeting of the UNHRC on June 22, indicating their “grave concerns” about the growing body of evidence for China’s unlawful detainment of Uyghurs and other Muslim minorities in Xinjiang, in addition to growing reports other human rights abuses. The mostly European grouping of states urged China to allow “immediate, meaningful and unfettered access to Xinjiang for independent observers” and also noted concern about the ongoing deterioration of human rights in Hong Kong and Tibet. In response, a 65-member grouping led by Belarus submitted a statement supporting China. A Chinese spokesperson also took the opportunity to engage in a round of whataboutism, pushing back on the human rights records of Western nations and noting that Beijing was “seriously concerned by the violations of the rights of refugees and migrants by…the United States, the UK, Australia and Canada.”

Following the June 22 meeting, China said that it had gathered support for its policies from more than 90 countries, including six states from the Gulf Cooperation Council, and complained that opponents were “using human rights as an excuse to interfere in China’s domestic affairs.” In related news, China’s State Council Information Office has also released a white paper on the Chinese Communist Party’s (CCP) history of “respecting and protecting human rights” ahead of centennial celebrations on July 1. Pushing a development-driven notion of human rights that prioritizes “peaceful development and common progress” over more traditional individual freedoms, the white paper also noted that China’s model of human rights could serve as a good model for other developing countries.

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