Xinjiang firms blacklisted by US seen ‘shifting orders within China’ to minimise impact

Biden administration confirms ban on US imports of metallurgical-grade silicon products from one Xinjiang company, and adds additional companies in Xinjiang to Entity List

But one analyst says ‘Chinese companies have been preparing for any US sanctions since the trade war began’, and does not expect targeted businesses to be hard hit by latest US move

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Beijing has denied all allegations of forced labour in Xinjiang, including at facilities such as this one in the Kunshan Industrial Park in Artux, Xinjiang. Photo: AP

Published: 8:46pm, 24 Jun 2021Updated: 12:21am, 25 Jun 2021

The US ban on imports and restricted exports involving five Chinese companies will not have an outsized impact on them, because producers can simply change the production origin by shifting orders elsewhere in the country, according to a Chinese analyst.

The Biden administration confirmed on Thursday that it has banned US imports of metallurgical-grade silicon, as well as products made from it, from Hoshine Silicon Industry, over forced-labour allegations in China’s far-west Xinjiang Uygur autonomous region.

Additionally, the US Commerce Department added Hoshine, Xinjiang Daqo New Energy, Xinjiang East Hope Nonferrous Metals, Xinjiang GCL New Energy Material, and the paramilitary Xinjiang Production and Construction Corps to America’s Entity List, saying they were complicit in the use of forced labour involving Uygurs and other Muslim minority groups in Xinjiang.

Some of the companies on the Entity List are major manufacturers of monocrystalline silicon and polysilicon, which are used in solar-panel production. Metallurgical-grade silicon contains at least 98 per cent silicon, and most of it is used in industrial production. By comparison, it is not as pure as electronic-grade silicon, which is needed to make electronics such as computer chips.

I believe Chinese companies have been preparing for any US sanctions since the trade war began

Peng Peng, China New Energy Investment and Financing Alliance

Under such restrictions, US companies are required to get a licence to sell products or technology to blacklisted companies, but such exceptions are rarely granted.

Peng Peng, general secretary with the China New Energy Investment and Financing Alliance, said the US market for Chinese solar-panel production is not that big, but she said there are not many import alternatives outside China.

Peng added that China produces about 76 per cent of the world’s polysilicon, with production bases mainly in Xinjiang, the Inner Mongolia autonomous region, Sichuan province and Yunnan province.