US ban on imports of Chinese products from Xinjiang upsets Xi’s hegemony dreams: POREG

President Joe Biden’s ban on import of Chinese products made with forced labour in Xinjiang province has come into force from June 21 upsetting the plans of President Xi Jinping to breathe life into the pandemic hit manufacturing sector of his country.

The ban is a sequel to the Uyghur Forced Labour Prevention Act (UFLPA) enacted by the United States six months ago amidst reports of repression and forced labour in the minority Muslim dominated Uyghur region.  

Henceforth the U.S Customs and Border Protection will not allow any goods of Xinjiang origin unless the importer provides “clear and convincing evidence” that the product is “not made either wholly or in part” by forced labour.

The Chinese foreign ministry has since made a valiant attempt to wriggle out of the forced labour charge.

‘Forced labor exists in US, not China’, declared Zhao Lijian, the ministry’s spokesperson, and tried to turn the tables on the US, saying that forced labor is ‘a chronic problem that has existed in the US since the birth of the country’. 

The claim has few takers as the US is still the Eldorado of the world. Also because of the ‘evidence from the ground’ presented this week to International Criminal Court (ICC) by a group of lawyers, who have been representing the Uyghurs in exile. It was their third dossier to the ICC in the past two years

China is known to play not only ping-pong but also hard ball.

“They use what you might call legal means, they abuse legal means and they use extra-legal means in terms of economic coercion or retaliation, often times linked to non-economic issues”, says Marcus Noland, Director of Studies at the Washington-based Peterson Institute for International Economics (PIIE).

In the past, Beijing used “anti-dumping” measures to retaliate for what it has seen as political affronts. It slapped, for example, sanctions on Australian barley, beef and wine in a reprisal manner to an Australian call to probe the origin of Covid-19 in the central Chinese city of Wuhan. 

China also restricted imports of Norwegian salmon after the Nobel Committee awarded the Peace Prize to dissident Liu Xiao Bao.  

So much so, Beijing may resort to something trickier and more troublesome to blunt the American edge. 

The American firms that do business in China are a worried lot, says Dough Barry, a vice president of the US-China Business Council.

As pointed out at the outset, an importer has to prove to the satisfaction of American Customs and Border Protection officials that the goods are not made with forced labour. Otherwise the goods would be liable to seizure, forfeiture, fines and cognate penalties.

Fresh trouble brewing at the ILO will force the Bamboo capitalist to hurriedly return to the strategy board.

The U.S together with Canada, the U.K, Australia and the European Union (EU) has taken the Uyghur forced labour issue to the International Labour Organization.

And asked the ILO to initiate a probe into whether China is abiding by its commitments to global labour conventions.

For China, this development comes as a big jolt just when its high growth economic miracle has been losing mojo.

Structural headwinds were rising before this year’s GDP-sapping fall-out of the lockdowns and curbs related to President Xi Jinping’s zero-Covid policy.

The headwinds range from growth-retarding factors, including the high burden of debt and debt-service costs, rampant misallocation of capital, a declining labour force, low educational attainment and halting headway in productivity.

All these factors, according to Prof Easwar Prasad of Cornell University, have the potential to constrain China’s growth, even if President Xi succeeds in steering the economy through murky waters. 

Writing on the wall is clear, therefore.

China’s ambitious bid to be the hegemon and Hercules of the universe before long is going to be a pipe dream for now.

Chinese problems are not Biden’s Uyghur law centric, though it has exposed the Chinese flanks. 

The Chinese problems are self-inflicted. And these range from unfavourable demographics to inept financial system, and above all the very governance regime anchored in Xi’s “common prosperity” campaign.  Only a miracle can offer a good epitaph! (POREG)

-By G Srinivasan, Delhi – based economic journalist