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China Business
ANDERS CORR is a principal at Corr Analytics Inc., publisher of the Journal of Political Risk. He is an expert in political science and government. Anders Corr
Big Business Still in China
Dell, Tesla, Microsoft do business in China after Xinjiang sanctions
Despite a growing outcry in democracies over the threat to human rights and international stability from China, and the Beijing regime’s genocide against Uyghurs and other religious groups, major Western corporations continue to do business in the country, including with the military and police.
Some of that business could be in violation of a new U.S. law against supply chains that reach into the Xinjiang region, where the genocide is taking place. All of it is ethically questionable.
On Feb. 2, The Wall Street Journal covered a new report by the Victims of Communism (VOC) Foundation and Horizon Advisory. The report rightly condemns as morally “wrong” the support that Western companies give to “Beijing’s military modernization, surveillance state, and human rights abuses.”
“The report finds that Dell has an office in Urumqi, Xinjiang’s capital,” according to the Journal. “Dell recently advertised a retail account manager job opening in Urumqi, promising that the successful applicant would join a ‘diverse and inclusive team’ and ‘make a profound social impact.’”
In 2018, Dell’s subsidiary in China co-authored a report with the Chinese regime on digital industrialization, including big data, cloud computing, and artificial intelligence (AI), all of which have military and intelligence applications.
Dell is far from alone.
On New Year’s Eve, Tesla announced the opening of a showroom in Xinjiang. The electric vehicle (EV) company has a factory in Shanghai, which is increasing production for the Chinese and European markets. In 2021, Tesla sold approximately 480,000 luxury EVs in China.
Germany’s Volkswagen, which announced on Feb. 3 its plans for 1 million EV sales in China by 2023, has a car factory in Xinjiang. China is its largest market globally at approximately 40 percent of total sales. Volkswagen stores in China will increase to 200 this year from 115 in 2021.
Volkswagen is expanding development and manufacturing in China, which will likely mean the transfer of dual-use military technologies such as internet (likely 5G) connections and self-driving capabilities.
In 2023, a new China–Volkswagen joint venture EV plant will operate at full capacity in Anhui Province. More than 500 engineers will be based at the plant, bringing total Volkswagen engineers in China to over 5,000.
“In the past, our approach was to develop in Germany and localize in China,” a Volkswagen executive told Nikkei in a Feb. 3 interview. “But this approach will be changed significantly by setting up more local resources for R&D, especially for software, to be faster, to be more independent in China.”
With the Anhui factory’s capacity of 300,000 vehicles annually, Volkswagen’s total production will rise to 1 million. Volkswagen produces approximately another 4 million gas-powered vehicles annually in China.
General Electric and Intel also have questionable business deals in China. General Electric’s joint venture with a Chinese state-owned enterprise reportedly has an agreement with the Xinjiang government.
China’s surveillance systems, according to a 2019 Journal report, use Intel chips. VOC reports that public security organizations in Xinjiang purchased Intel hard disks and servers until at least 2021.
Microsoft has apparently partnered with Chinese companies that provide surveillance products and other services to China’s police and detention centers, including in Xinjiang. Some of these products include “social face” and “vehicle verification” platforms, according to the Journal. A 2018 partnership with a Chinese company included machine learning and advanced AI capabilities to automate imagery analysis for drones into “actionable insights.”
The company, DJI, was highlighted by the Pentagon last year for posing “potential threats to national security.”
Microsoft also persisted in partnerships and sales to Huawei, even after U.S. accusations in 2012 of the company’s possible legal violations.
As usual, U.S. and European businesses are selling as much as they possibly can to China within the law, and possibly beyond. Certainly, their collaboration with a genocidal and totalitarian regime, which under Xi Jinping appears to be approaching new historical lows of fascism, raises serious ethical issues.
Do the extra profits really justify empowering a regime that could subject your great-grandchildren to forced labor, or worse?
Western governments previously welcomed business with China on the theory that it would liberalize the Beijing regime. They now realize that engagement failed.
Even in Germany, which is one of the most resistant to any ethical constraints on business in China, the precepts of “Wandel durch Verflechtung” (change through interconnection) and “Wandel durch Handel” (change through trade) are being discredited.
On Feb. 3, the co-head of Germany’s ruling Social Democrats, Lars Klingbeil, rightly noted: “We haven’t found a convincing way to deal with authoritarian states. I wonder if the decades-old concept of trying to bring about change in a country through closer ties and economic relations is still relevant.”
I wonder, too.
