The Trump administration slapped sanctions on a vast paramilitary Chinese colonial enterprise in Xinjiang and two Chinese officials on Friday, in a move likely to drive the U.S.-China relationship to new lows. The action may be an opening salvo of further sanctions against state-owned enterprises and other government bodies in China.
The move, announced Friday by the Treasury Department, blacklists the Xinjiang Production and Construction Corps (XPCC); Sun Jinlong, a former political commissar of the XPCC; and Peng Jiarui, the deputy party secretary and commander of the XPCC, over human rights violations linked to the sweeping crackdown on Uighurs and other ethnic minorities in China’s Xinjiang region.
The announcement is a significant escalation for the Trump administration, which has relied heavily on sanctions as a blunt instrument of foreign policy to punish adversaries in Iran, North Korea, and Venezuela. It also sheds light on a powerful and secretive organization that controls much of the regional economy in the western region of Xinjiang, where over a million Uighurs have been swept into so-called reeducation camps under the guise of counterterrorism operations or forced to labor for Chinese corporations.
The XPCC, more commonly known as the Bingtuan (“the Corps”), is the sharp edge of Chinese colonialism in Xinjiang. It was established as a way of transforming the many former soldiers—both Nationalist and Communist—left adrift at the end of the country’s decadeslong civil war into a force that would colonize and stabilize the border region, akin to the grants of land given to Roman soldiers in newly conquered territories. These soldier-farmers would both settle the land and defend it—against outside aggression and against an unruly local population.
The XPCC’s members are overwhelmingly from China’s Han ethnic majority; only about 7 percent of its 2.7 million members today are Uighur. Many of them are the children and grandchildren of the original settlers. The military presence has been diminished, although it still maintains a militia. Instead, it’s turned into a state within a state—running its own cities, health care, and even TV stations.
That’s not that unusual in China, where the sheer scale of state enterprises often transforms them into separate fiefdoms. Before it was dissolved in an extensive anti-corruption purge in 2013, for instance, the Ministry of Railways had its own police force, universities, and judges. Because of its massive agricultural presence and extensive factory ownership, the XPCC is a major player in the Xinjiang economy, controlling at least 20 percent of the region’s GDP.
Friday’s designations mark one of the first times that the United States has sanctioned top Chinese government officials or a large Chinese state entity with sanctions over human rights violations in China—past sanctions have targeted lower-ranking officials or intelligence staff, as well much smaller entities over sanctions violations on North Korea and Iran. The sanctions were carried out under the 2016 Global Magnitsky Act, which grants the U.S. government authorities to sanction foreign entities and personnel complicit in human rights violations.
“It’s notable because it’s one of the first times they’ve gone after a company in China with Global Magnitsky sanctions,” said Brian O’Toole, a former Treasury and CIA official and nonresident senior fellow at the Atlantic Council. “It suggests that maybe more companies might be in the crosshairs down the line. That would be the idea, if you’re doing this intelligently you start with one entity then progress to the next, essentially trying to discourage others from doing the same things,” he said.
The sanctions represent another sign of worsening relations between Washington and Beijing, following diplomatic battles over trade, the coronavirus pandemic, and U.S. accusations of Chinese industrial espionage. The United States this month ordered the closure of China’s consulate in Houston, and China responded by shuttering the U.S. Consulate in Chengdu, all while senior Chinese and Trump administration officials have ramped up a war of words that emulates the tensest days of the Cold War.
“We see the Chinese Communist Party for what it is: the central threat of our times,” U.S. Secretary of State Mike Pompeo said during a Senate hearing on Thursday.
“A number of new fronts have opened up in the competition between Washington and Beijing,” said Kristine Lee of the Center for a New American Security, a think tank. “But the growing focus on Xinjiang reflects growing bipartisan consensus around the need to take action against reprehensible human rights abuses that the CCP has perpetuated in with impunity—and it is also consistent with the Trump administration’s framing of the competition in ideological terms.”
It’s as yet unclear how China will respond to the sanctions, but Chinese officials have taken an increasingly aggressive stance toward the United States and its allies since Xi Jinping took power. Beijing has retaliated against U.S. sanctions with its own sanctions on some U.S. lawmakers in recent months, accusing Washington of “interfering in China’s international affairs.” However, the Chinese elite is far more tied into the United States—where many of the rich, including high-level officials, have financial interests or send their children for education—than vice versa.
There are also signs that China is looking to establish financial networks that wouldn’t be beholden to U.S. sanctions—though some experts question how feasible such measures would be. A new report from the Bank of China recommends the country wean itself off of the SWIFT financial messaging system that underpins virtually all transactions in the global financial markets today in anticipation of further U.S. sanctions.
The sanctions are likely to make it difficult for any U.S. business to operate with Xinjiang partners, because the XPCC is so influential in the region. As repression has intensified in Xinjiang over the last few years, the Corps has started to play an even more powerful role, taking over the responsibilities previously held by municipal governments. Lauren Hansen Restrepo, a professor specializing in Xinjiang governance, describes this as a “totalitarian politics of land,” in which previously more flexible policies are being replaced with a vision of powerful, Han-dominated central institutions. The XPCC runs its own courts and prison systems, which have played an important role in the crackdown on Uighur culture, religion, and family life. Enforcing the measures on smaller businesses may be hard, but larger corporations with their own compliance departments are likely to break off business connections. Some groups, such as the Better Cotton Initiative, have already severed ties with Corps producers.
Former U.S. government officials describe the sanctions against the XPCC and other Chinese officials as an important signal that Washington won’t allow the sweeping crackdowns in Xinjiang to continue without retaliation. It may also signal a willingness to target other large organizations, such as state-owned enterprises involved in China’s construction of bases in disputed waters in the South China Sea, which the United States deems illegal under international law. However, they concede that sanctions alone likely won’t prompt Beijing to alter course.
“They are an important part of a broader policy to tackle China’s human rights abuses,” said David Mortlock, a sanctions expert and former director of international economic affairs at the White House during the Obama administration. “The sanctions by themselves are certainly a positive step, but they’re not going to be enough by themselves to get China to change its behavior, and the administration needs to realize this is not the end of that effort.”