Many companies with a manufacturing presence in China use audits to check for rights violations. But China’s government is adept at disguising its bad practices — and if all else fails, is willing to intimidate auditors.
The Congressional-Executive Commission on China (CECC) held a hearing on Tuesday to address the use of social audits in the People’s Republic of China (PRC) and the complicity of China-based corporations in the use of forced labor.
The Uyghur Forced Labor Prevention Act (UFLPA) bans any imports from the Xinjiang region in China due to the widespread use of forced labor there. One of the main goals of the 2021 law was to ensure that supply chains are free of forced labor, but experts testified that companies have been using social audits and certifications to disguise human rights abuses rather than expose this state terrorism.
The hearing highlighted the egregious behavior in China while seeking a solution to uncover human rights violations and labor abuses in China’s supply chains. The communist PRC is proficient at cheating, and witnesses before the Commission were able to describe the connection between social audits and global brands and retailers in China.
Thea Lee, deputy undersecretary of labor for international affairs at the Department of Labor, testified about the risks of using social compliance auditing alone as a definitive assessment of labor rights.
“Social auditing can be a useful tool to assess compliance at a particular point in time,” Lee said. “But, it cannot be the only mechanism for detecting labor rights violations and abuses.
“Audits are often announced in advance, giving managers time to prepare a facility. Managers can easily fake timesheets to skirt pay and overtime laws. And workers may be pressured to provide inaccurate information.”
China has shown that its repressive ways cover all types of oversight, which makes it impossible to know the full extent of which the PRC hides its human rights abuses.
“Any audit occurring in Xinjiang cannot be conducted without government oversight, making objective worker interviews free from reprisal an impossibility,” Lee said. “Auditors have reportedly been detained, harassed, threatened, or stopped at the airport.
“That is why dozens of major audit firms have not operated in Xinjiang for years; the fear of reprisal for both workers and auditors remains high. Social audits in China should not be seen as an authoritative source for companies reflecting on-the-ground human rights conditions.”
Jim Wormington, senior researcher and advocate on corporate accountability for Human Rights Watch testified about the documented links between forced labor programs in Xinjiang and global supply chains, from the cotton in clothes and textiles, the polysilicon in solar panels to the minerals and metals in both electric and gas-powered cars.
“The car industry provides a compelling example of the links between global supply chains and the Chinese government’s abuses in Xinjiang,” Wormington said. “Domestic and foreign manufacturers in China produced and exported more cars than any other country in the world in 2023.
“Volkswagen, for example, which holds 50% of the equity in its joint venture with SAIC, a Chinese state-owned carmaker, has sought to downplay its responsibility for human rights impacts in its joint venture’s supply chain. Volkswagen contends that, under German law, the company is only legally required to address human rights impacts in the supply chains of its subsidiaries in which it has ‘decisive influence,’ which it says excludes SAIC-VW.”
Rep. Chris Smith (R-N.J.), who is chairman of the commission, said that what is happening in China now between the Chinese government and many corporations reminds him of how corporations like IBM aided the Nazi regime, “placing bottom-line greed over concern for humanity.”
“Surely if there was evidence today of an evil regime’s abuse of human rights – for example, the mass-scale detention of a despised ethnic and religious minority in concentration camps, forcing them to toil as practical slaves to produce goods for export – American corporations would shudder and shun any complicity with that,” Smith said. “Fast forward to today, however, and that is precisely what we see — corporate complicity in the grossest of human rights violations.”
The commission has an arduous task ahead before it provides its suggested course of action to the President.
Senator Jeff Merkley (D-Ore.), who is co-chair of the commission, summed up this complicated and deceptive issue: “If a company cannot say with precise certainty, to our government, to its shareholder and… to American consumers, that its products do not contain forced labor, then it needs to stop doing business there.”
Watch the full hearing here or below.