The fight that never ends: Why are China and the West now fighting over Xinjiang cotton?

Amid intensifying conflicts between China, the US, and other Western countries over human rights issues in Xinjiang, European consumer brands have recently become involved in the controversy as well. This week, Swedish fashion brand H&M and American sports brand Nike were accused of "humiliating China" over human rights issues in Xinjiang, incurring the wrath of Chinese public opinion and eliciting pledges to boycott them.

H&M is unlucky. It is facing backlash in China over a statement on due diligence involving Xinjiang cotton that it had released in March last year. In the statement, H&M expressed that it was "deeply concerned by reports from civil society organisations and media that include accusations of forced labour and discrimination of ethnoreligious minorities in Xinjiang Uyghur Autonomous Region (XUAR)". A year later, H&M is being attacked by Chinese state media and social media. It was even reported that a physical H&M store in Xinjiang was forced to close for a day. 　

With the indignation aired by Chinese top diplomat Yang Jiechi at the recent Alaska talks that "this is not the way to deal with the Chinese people", some Chinese we-media have said that they would boycott member enterprises of Switzerland-based cotton organisation Better Cotton Initiative (BCI) as the BCI announced in March last year that it would suspend licensing of cotton in Xinjiang and in October that it would be ceasing all field-level activities. Dozens of international apparel, sports and furniture giants have made it onto this "boycott list".

While the proposed boycott of BCI members has not yet taken place, it still gave the brands involved quite a scare. Meanwhile, Chinese domestic sports equipment company Anta Sports swiftly announced that it would be withdrawing from the BCI on Wednesday, while sportswear company Li Ning openly expressed its support for Xinjiang cotton. Because of their politically correct stance, their shares on the Hong Kong Stock Exchange skyrocketed.

What is going on? After high-level Chinese and American diplomats had their spat in Alaska last week, US Secretary of State Antony Blinken released a statement on Monday ahead of meetings with the EU and NATO ministers, announcing that it would be joining forces with the UK, Canada, and the EU in response to China's violation of human rights against members of ethnic and religious minority groups in Xinjiang, and imposing sanctions on Xinjiang officials related to these violations.　　

That same day, Canada, the UK and the US released another joint statement, while the EU released a separate one announcing sanctions against four senior Xinjiang officials. China swiftly retaliated by imposing sanctions on "ten individuals and four entities on the EU side" which includes European lawmakers and academics. In response, France, Germany and other European countries summoned Chinese ambassadors in their capitals over the sanctions; the European Parliament, in a show of protest, also cancelled a meeting to discuss the EU-China Comprehensive Agreement on Investment.

A day later, Australia and New Zealand, two countries that rely heavily on trade with China, followed suit and released a joint statement on Tuesday expressing "their grave concerns about the growing number of credible reports of severe human rights abuses against ethnic Uighurs and other Muslim minorities in Xinjiang" and that they "welcome the measures announced overnight by Canada, the European Union, the United Kingdom and the United States". However, Australia and New Zealand did not impose sanctions themselves. Following this, the H&M incident occurred.

Happening right after the acrimonious China-US Alaska meeting, this round of disputes over human rights issues in Xinjiang and the outbreak of a "Xinjiang cotton war" is akin to an "Alaska Season 2" - a sequel to the China-US face-off last week, and a rematch to thrash out their leftover disputes and grievances. The US, through practical actions, has shown that it is intent on coordinating with its allies and executing value-oriented diplomacy against China and that it has the will and power to maintain the US-led international order that has been in place since World War II. On the other hand, as China cannot allow such a blatant alliance aimed at containing China to succeed, it is only expected that it would retaliate strongly.

Apart from serious strategic considerations, both parties are intent on putting up and maintaining an outward show of strength. The US has to assert its position as the world's top power and the veneer of unity in the alliance system because these are also its core interests. On the other hand, since China has already declared that "this is not the way to deal with the Chinese people", it certainly has to defend its hard-won stance. Thus, following mutual sanctions in a tit-for-tat retaliatory fashion on the diplomatic front, China further picked out Western brands that had talked about Xinjiang cotton in the past, which also possess a huge market in China, as the targets of attack in a display of strength, and also to prevent its diplomatic disputes with the US and Europe from getting out of control.

The relationship between the Swedish government and Beijing has been very tense since Swedish bookseller Gui Minhai was arrested in China around 2016. Coupled with the fact that China is Swedish brand H&M's fourth-largest market, H&M naturally became the target in this round of attack. As it was also discovered that American brand Nike had released a statement saying that it was "concerned about reports of forced labor in, and connected to, the Xinjiang Uyghur Autonomous Region (XUAR)", it has also become a target of reprisals.

When will this round of mutual sanctions revolving around human rights issues in Xinjiang end?　　

The main intention of various countries in sanctioning Xinjiang officials is to humiliate them, which does not lead to any substantial harm. Over the past few days, China and the US have also displayed their strength to their respective domestic audiences. Having achieved this goal, this current round of the "Xinjiang cotton war" will eventually share the fate of the Alaska meeting, that is, be fodder for the next round of dispute following an intense war of words. However, as the human rights issue in Xinjiang has escalated to become a prominent matter of contention in China-US and China-Europe relations, it would become a difficult challenge to solve. The so-called "genocide" theory hardly holds water and numerous Western countries do not agree with it either. But many people are certainly concerned about the human rights of Uighurs in Xinjiang and hope to see greater transparency in the matter. And China indeed has a difficult task at hand managing this complex internal affair while persuading sceptics with vastly dissimilar values and mindsets.

While it is difficult for massive multinational enterprises to break away from the Chinese market, following worsening relations between China and the West, these companies are running greater risks of stepping on political landmines in the Chinese market. However, even though major powers are imposing mutual sanctions on one another, it is worth noting that incumbent US politicians are free from them.

As we stand at the crucial phase of China-US competition in the 2020s, small- and medium-sized enterprises must remain highly vigilant and diversify their risks in the hope of surviving this "decade of living dangerously".

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