Biden Climate Push Prompts Concerns About Investments in China

Lawmakers concerned taxpayers funding industry 'powered by Uyghur slave labor'

Senator Jim Risch, R-Idaho, questions Zalmay Khalilzad, special envoy for Afghanistan Reconciliation, at a Senate Foreign Relations Committee hearing on Capitol Hill in Washington, April 27, 2021, on the Biden administration's Afghanistan policy and plans to withdraw troops after two decades of war. (Photo by Susan Walsh / POOL / AFP) (Photo by SUSAN WALSH/POOL/AFP via Getty Images)
November 18, 2021

A U.S. agency formed to counter China's economic expansionism is facing pressure from the Biden administration to ramp up investments in solar energy projects, including ones that source materials from China, prompting concerns from Republican lawmakers that taxpayers may be funding an industry that is deeply embedded with slave labor.

The U.S. International Development Finance Corporation (DFC), which was established under the Trump administration to provide a "robust alternative" for countries that might otherwise seek funding from China and other autocratic governments, is currently invested in 18 solar energy projects deriving materials from Chinese companies, according to Sen. Jim Risch (R., Idaho), who has been leading inquiries into the DFC's China-related financing. That number accounts for 85 percent of the DFC's active solar projects.

"The entire U.S. government—including the DFC—has to make sure that U.S. assistance and development finance do not touch forced labor in any way, shape, or form," Risch, the ranking member of the Senate Foreign Relations Committee, told the Washington Free Beacon. "President Biden's climate agenda should not be powered by Uyghur slave labor."

Questions about the DFC's projects come as the agency has faced behind-the-scenes pressure from the White House to increase its financing of foreign solar projects, congressional sources told the Free Beacon. The funding also highlights a growing problem for the Biden administration, whose ambitious climate agenda—and prioritization of a solar industry dominated by China—has complicated U.S. efforts to crack down on human rights abuses by Beijing. Republicans claim that climate envoy John Kerry, who last week dismissed human rights abuses in China's solar industry as "not my lane," has been privately lobbying Congress against a bill that would ban goods made with Uyghur forced labor, the Free Beacon reported last week.

The Biden administration "let us know that there is a desire to use DFC to finance solar panel projects," one Republican congressional aide told the Free Beacon. "But that it's possible there's not safeguards in place to ensure solar panels aren't tied to forced labor."

China produces more than 80 percent of the world's polysilicon, the primary material in solar panels. Most of that supply is produced by manufacturers that use or benefit from forced labor of Uyghurs and other ethnic minorities in the Xinjiang region, according to a report released this year by Sheffield Hallam University's Helena Kennedy Center for Justice.

The report, which linked more than 100 companies to labor abuses using public records, concluded that "the vast majority of the [People's Republic of China's] solar supply chain is at very high risk of being tainted by forced labour in the Uyghur region."

In response to these concerns, the Biden administration in June placed trade restrictions on several Chinese solar manufacturers. But congressional sources say the DFC has yet to put forward a strategy to ensure the projects it funds have no labor abuse in their supply chains.

One congressional aide said the DFC should "not assume that just because companies are not on [federal trade restriction] lists or subject to U.S. sanctions that they don't have a forced labor problem," noting that details on the extent of the labor abuses are just starting to emerge.

"Because of all the uncertainty about this in the Chinese market, there needs to be more due diligence, more checks, more caution," the aide said.

In September, the DFC approved a $90 million direct loan to Avaada Sunrays Energy Private Limited, one of the largest green energy companies in India, to build a solar power plant in Rajasthan. While neither Avaada nor the project have been accused of using forced labor, Avaada's publicly reported business dealings illustrate the difficulty of avoiding contamination in the solar industry supply chain.

Last year, Avaada signed a supply deal with Sungrow, a Chinese company that has sourced materials from JinkoSolar. The Sheffield Hallam University report identified JinkoSolar as one of the major solar manufacturers suspected of using forced labor in the Uyghur region, and flagged Sungrow for having a potentially compromised supply chain.

Foreign policy experts said the China-related funding also undermines the intended purpose of the DFC.

"If this money is investing in Chinese companies, it's a foreign policy failure. It's doing the exact opposite of what it is purportedly intended to do," said Michael Sobolik, an Indo-Pacific fellow at the American Foreign Policy Council.

Risch, who has been asking the DFC to explain its vetting process for projects, said earlier this month that he would consider placing a hold on "any future DFC support for solar projects involving Chinese-sourced components or equipment" until the agency provides a clear strategy for ensuring there is no labor abuse in the supply chain.

"We cannot silo off human rights from any policy conversation the United States has—ending modern slavery is in everyone's 'lane,'" Risch told the Free Beacon.

Sen. Marco Rubio (R., Fla.), who sponsored a Senate bill to ban products made with forced labor, has also been pushing the DFC to establish safeguards and turn over additional information about its solar projects that source materials from China.

"The U.S. and its partners cannot be complicit in Beijing's international slave labor scheme," Rubio told the Free Beacon. "Whether it's shoes or solar panels, we need certainty that we do not buy products tainted with the forced labor of Uyghurs and other ethnic groups in Xinjiang."

While Republican lawmakers are urging the DFC to focus on supporting solar manufacturers outside of China, some experts say the Biden administration's haste to implement its climate agenda is forcing it to contend with the industry as it stands now.

"I think the Biden administration is facing the reality that if they want solar to be a meaningful part of their climate agenda, they can’t crack down on China, and they can't crack down on slave labor, because supply chains run so decisively on this issue through China, specifically through Xinjiang," Sobolik said.