America’s rivalry with China will remain a top issue heading into 2022.
U.S. lawmakers have ramped up attention on Xinjiang with a new bill, taking effect June 21, banning imports from the cotton-rich region unless companies can prove products linked to the area weren’t made with forced labor. What’s more, fashion is hoping the government will eliminate burdensome tariffs on goods made in China, whose “zero Covid strategy” has created a world of supply chain problems.
The Uyghur issue took center stage on Friday when China’s anti-graft agency accused Walmart and subsidiary Sam’s Club of “short-sightedness” following reports that the popular warehouse membership retailer had removed Xinjiang-sourced products products from its stores.
China continues to deny that human-rights abuses are occurring in Xinjiang. And Walmart for its part isn’t the only brand or retailer that has now found itself at the center of forced labor matters connected to its supply chain. This past March, Western brands including Nike, H&M and Adidas found themselves at the center of a consumer boycott in China for having voiced concerns over reports of forced labor in Xinjiang. In October, Boston Celtics center Enes Kanter criticized Nike over allegations of using “slave labor.” He even invited Nike co-founder and owner Phil Knight and basketball icons LeBron James and Michael Jordan on a trip to China to see the alleged sweatshop conditions linked to Nike’s supply chain. And last month, the Berlin-based European Center for Constitutional and Human Rights (ECCHR), a human rights group, targeted brands-including Nike, C&A and State of Art Patagonia—for alleged complicity in “human rights violations that could amount to crimes against humanity” in the Xinjiang region. The ECCHR filed its criminal complaint in the Netherlands.
For now, the industry is still dealing with the tariff and trade issues that former President Trump’s administration left behind. Much to China’s consternation, the Biden administration has kept to its priorities, focusing on immediate concerns such as fighting the Covid pandemic and seemingly putting trade issues on the backburner. If anything, the Biden administration could use tariffs policies to exert human-rights pressure on China.
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Ongoing supply chain disruption will continue keeping executives up at night well into 2022. Cowen & Co. analysts believe ocean spot rates and freight transportation fees will continue costing a pretty penny at least through late January’s Lunar New Year.
And with the global surge in Covid cases, China’s strict zero-tolerance policy could once again stymie port operations, hamper factories and further snarl supply chains.