U.S. Bans Chinese Imports of Solar Panel Materials Tied to Forced Labor

The White House announced steps on Thursday to crack down on forced labor in the supply chain for solar panels in the Chinese region of Xinjiang, including a ban on imports from a silicon producer there.

A significant portion of the world’s polysilicon, which is used to make solar panels, comes from Xinjiang, where the United States has accused China of committing genocide through its repression of Uyghurs and other Muslim minorities.

In one of the newly announced actions, U.S. Customs and Border Protection banned imports of silica-based products made by Hoshine Silicon Industry Company as well as goods made using those products. The agency “has information reasonably indicating that Hoshine uses forced labor to produce its silica-based products,” Alejandro N. Mayorkas, the homeland security secretary, said at a news conference.

The action was notable given the Biden administration’s push to expand the use of solar power in the United States to help achieve its climate goals. China dominates the global supply chain for solar power, producing a significant amount of the materials and parts needed for solar panels. Cutting off access to some imports could make it harder or more costly for the United States to expand solar use domestically.

Mr. Mayorkas addressed that tension at the news conference, saying, “Our environmental goals will not be achieved on the backs of human beings in a forced-labor environment.”

The Commerce Department also added Hoshine Silicon Industry (Shanshan) Company and four other Chinese entities to a trade blacklist, a move that restricts American companies from exporting products and technology to them.

The other entities are Xinjiang Daqo New Energy Company, Xinjiang East Hope Nonferrous Metals Company, Xinjiang GCL New Energy Material Technology Company, and the Xinjiang Production and Construction Corps. The X.P.C.C. is a farming and industrial administration that helps protect Chinese control of the region, and the Trump administration imposed sanctions on it last year.

Those entities, the Commerce Department said, “have been implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, forced labor and high-technology surveillance against Uyghurs, Kazakhs and other members of Muslim minority groups” in Xinjiang.

In addition, the Labor Department added Chinese polysilicon to a list of goods believed to be produced by child labor or forced labor. The list, which already contained a number of other Chinese goods, is intended to increase awareness about exploitative labor practices.

Calls to Hoshine were not answered late on Thursday in China. Xinjiang companies, including makers of polysilicon products, have repeatedly denied that the region’s labor transfer programs amount to forced labor.

Allegations of forced labor in the solar panel supply chain have created a dilemma for U.S. officials. The Biden administration wants to press China over human rights abuses, but it also wants to expand the use of clean energy sources like solar power in the United States as it seeks to reduce carbon emissions.

The administration has set a goal of generating 100 percent of the nation’s electricity from carbon-free sources such as solar, wind or nuclear power by 2035, up from just 40 percent last year. To help meet that target, it is aiming to more than double the annual pace of solar installations nationwide and cut the price of solar power by more than half.

“We’re going to root out forced labor wherever it exists,” Mr. Mayorkas said at the news conference, “and we’ll look for alternative products to achieve the environmental impacts that are a critical goal of this administration.”

Shortly before President Biden took office, the Trump administration banned imports of cotton and tomato products from Xinjiang. The Biden administration had faced pressure to take action regarding products containing polysilicon produced in the region.

In a letter this month to the acting head of Customs and Border Protection, a group of House Democrats wrote that there was “overwhelming evidence of the use of forced labor in polysilicon production,” adding, “Our government cannot sit idly by.”

The actions announced on Thursday could create diplomatic and economic ripples.

China is the dominant global producer of polysilicon, a raw material that most solar panels use to absorb energy from sunlight, and Xinjiang has over the past decade risen as the country’s main production base for the material. Xinjiang makes about 45 percent of the world’s polysilicon, according to InfoLink, a renewable energy research company.

The import ban focuses on one company and not all polysilicon products from Xinjiang, but it could roil the market for solar panels in the United States. Hoshine and its subsidiaries supply at least some metallurgical-grade silicon to the world’s eight largest polysilicon producers, which together account for 90 percent of the global market, according to Johannes Bernreuter, a polysilicon market analyst at Bernreuter Research.

Some U.S. solar companies had begun tracking and reshuffling their supply chains in anticipation of the administration’s move, but they may need to take additional steps to prove to customs officials that any imported panels do not contain material from Hoshine.

Customs and Border Protection estimates that the United States had about $6 million in direct imports from Hoshine over the past two and a half years and also imported more than $150 million in goods containing Hoshine products over that period, a small figure compared with the nation’s overall solar imports. U.S. imports of solar cells and modules totaled $8.2 billion last year, according to BloombergNEF, a research group.

Some analysts said the move on Thursday could be a prelude to further restrictions. “In our view, today’s action may only be the first step toward broader limits” on solar products from Xinjiang, Kevin Book, an analyst at ClearView Energy Partners, wrote in a research note.

The move could prove a boon to domestic solar manufacturers like First Solar, which does not use polysilicon in its panels and recently said it would double production in the United States by opening a third plant in Ohio by the middle of 2023. But U.S. manufacturers still account for only a small fraction of the solar market.

John Smirnow, general counsel and vice president for market strategy at the Solar Energy Industries Association, said the group supported the administration’s efforts on the issue of forced labor and was encouraging solar companies to shift away from materials produced in Xinjiang.

“The fact is, we do not have transparency into supply chains in the Xinjiang region, and there is too much risk in operating there,” he said. “For that reason, in October, we began calling on solar companies to leave the region, and we provided them a traceability protocol to help ensure there is not forced labor in the supply chain.”

The Biden administration has pursued a strategy of pressing the Chinese government on areas of contention, such as Xinjiang, while seeking to cooperate on global priorities like climate change. The ban on importing some solar energy products — important for reducing fossil fuel use — will test how far Beijing is willing to go along with that bifurcated approach, and the Chinese government may hit back through its growing arsenal of retaliatory powers.

A spokesman for China’s Ministry of Foreign Affairs, Zhao Lijian, suggested earlier this week that Beijing could retaliate against a possible ban on polysilicon imports from Xinjiang, though he did not specify what form that could take. Asked again on Thursday before the Biden administration’s actions were announced in Washington, Mr. Zhao said the United States wanted “turmoil in Xinjiang to contain China’s development.”

“The U.S. is using lies as its basis,” he said at a regular news conference in Beijing. “This act not only violates the rules of international trade rules and market economies, it is also damaging global industry and supply chains.”