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Xinjiang foreign trade hits record despite Western sanctions

Shipments in first 10 months of year jumped 40%, topping 2022 full-year results

PAK YIU, Nikkei staff writer

November 20, 2023

HONG KONG -- Overseas trade from China's northwestern Xinjiang region jumped 40% to a record $409.2 billion in the first 10 months of 2023, new local statistics show, calling into question the effectiveness of Western sanctions imposed over alleged abuses of Uyghur minorities in the region.

Shipments from January to October exceeded the total value of trade in 2022 despite the penalties imposed by Western governments in response to reports of forced labor and other human rights violations.

In October alone, shipments worth $48 billion made it in and out of the region, according to the data released by Urumqi Customs on Monday.

The U.S. and European Union have also imposed restrictions on private Chinese companies over their alleged role in supporting the Russian military in the Ukraine war.

The surge in trade was fueled in part by imports and exports to and from Central Asia. Kazakhstan, Kyrgyzstan and Tajikistan had the largest share of the transactions, with machinery and electronics, apparel and textiles the most frequently traded goods.

Adrian Zenz, a German expert known for studying Xinjiang internment camps, said trade with those countries, as well as Malaysia and Vietnam, allow China to cope with export controls imposed by Western countries. Trade with Malaysia, Belarus and Vietnam saw the greatest year-on-year increases in the 10-month period.

"Opaque supply chains are now a greater threat," he said, as tracing where products originate is becoming more difficult.

Washington passed the Uyghur Forced Labor Prevention Act, which took effect in June 2022, effectively halting all imports from Xinjiang. U.S. and Customs Border Protection has blocked $2 billion worth of goods, ranging from electronics to apparel to manufacturing materials. The ban is scheduled to run for eight years.

Human rights groups have accused Beijing of locking up around 10 million Uyghurs and other Muslim minorities in prison camps, allegations that Chinese officials deny.

Despite the roaring trade in the region, China's overall trade paints a gloomier picture for the country's economic outlook, as exports fell for the sixth consecutive month in October.

The data comes after Chinese officials laid out a blueprint last month to set up a free trade zone in Xinjiang, as they seek to turn it into an export gateway to neighboring countries. The program will be launched in Kashgar, Khorgos and the region's capital, Urumqi, and could take up to five years before the free trade zone opens in the whole region, according to the State Council. Xinjiang Production and Construction Corps, a U.S.-sanctioned company, will oversee the zone.

Kashgar's pilot free trade zone opened Nov. 12 with enterprises focused on agricultural goods, textiles and assembly of electronics, Chinese state media reported.

The government hopes the zone will attract foreign investors from nearby countries, who are all members of the Belt and Road Initiative, and increase the use of the yuan in cross-border trade settlement.

"Foreign direct investment tanked because of the internment camps," said Zenz. "But the main attraction of [the free trade zone] is for local companies, given the subsidies from the government."

The free trade zone, Zenz said, will allow Chinese companies to set up in the area and move up the value chain from low-end manufacturing at a time when the government is emphasizing "high quality development."

The free trade zone is "economically and politically incentivized," he said.

The move is seen as a way to link economies that share a border with Xinjiang, including Kazakhstan, Tajikistan, Pakistan, Mongolia and Russia, and to strengthen the trading network that runs through the region, which is a crucial node in the Belt and Road Inititative. Khorgos already provides a 24-hour freight customs clearance port, which opened in August.


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