China to Develop Xinjiang Free Trade Zone Despite Western Sanctions, According to Reuters

China Plans to Establish Free Trade Zone in Xinjiang

By Joe Cash

BEIJING – On Tuesday, China announced its intentions to create a free trade zone in the northwestern region of Xinjiang, integrating this initiative with President Xi Jinping’s Belt and Road Initiative aimed at connecting the nation to Europe through economic corridors.

Various rights organizations have accused Beijing of human rights violations against the Uyghurs, a predominantly Muslim ethnic minority in Xinjiang, which has a population of around 10 million. These allegations include the extensive use of forced labor within internment camps. The Chinese government, however, rejects claims of human rights abuses.

The establishment of a free trade zone in Xinjiang fits into the broader objectives of the Chinese government to enhance cross-border trade and improve infrastructure connectivity across northern China, including Inner Mongolia and the provinces of Heilongjiang, Jilin, and Liaoning.

The proposed plan suggests granting local officials in Xinjiang more autonomy to implement policies that would attract foreign investors from neighboring countries, with all but Afghanistan being participants in China’s initiative to revive the ancient Silk Road.

Authorities from the regional government and the Xinjiang Production and Construction Corps have been designated to manage the establishment of the Xinjiang Pilot Free Trade Zone. Notably, the Xinjiang Production and Construction Corps faced sanctions from the U.S. in 2020, later joined by Canada and the European Union, due to alleged human rights violations.

In December 2021, the U.S. implemented the Uyghur Forced Labour Prevention Act, which prevents the import of goods produced in Xinjiang or by companies on the Uyghur Forced Labour Prevention Act Entity List unless the importer can demonstrate that the products were not made using forced labor.

At a shareholder meeting in May, investors in Volkswagen expressed their demand for the car manufacturer to seek cooperation with its joint venture partner for an independent audit of labor conditions at a facility in Xinjiang.

The official plan from China’s cabinet emphasized the importance of firmly establishing a comprehensive national security concept and effectively enhancing the systems for risk prevention and control.

Chinese officials believe that transforming Xinjiang into a free trade zone could also support their goal of encouraging more countries to conduct payments in the Chinese yuan instead of U.S. dollars, particularly for commodity transactions.