Why U.S. Investors In Chinese Companies Need To Consider The Human Rights Risks
— July 14, 2021
By Michael Posner
Though U.S. investment firms like Sequoia and Silver Lake continue to bet on the tech sector, the future of these investments is increasingly uncertain. The growing risk for investors reflects increased U.S. sanctions against Chinese firms linked to human rights violations in Xinjiang, and financial uncertainty that accompanies those sanctions. They also face reputational risks if they invest in Chinese companies that are contributing to gross abuses in Xinjiang.
At the same time the Chinese government is imposing escalating restrictions on Chinese firms seeking to enter U.S. capital markets. Both governments took actions last week that reflect this changing landscape. On Friday, the U.S. Commerce Department added 14 Chinese companies to its Entity List, a designation that prohibits U.S. companies from doing business with the listed firms unless they obtain a specific U.S. government license. The sanctions are based on a determination that the Chinese firms are acting “against the foreign policy interests of the United States,” because they are aiding the Chinese government’s mass surveillance program in Xinjiang. The Chinese government has installed more than 200 million surveillance cameras across the country and applied their most draconian monitoring efforts against the Uyghurs in Xinjiang. The Chinese government has detained more than one million Uyghurs in re-education camps. The government defends it actions as being necessary to combat separatists and religious extremists among the mostly Muslim ethnic Uyghurs. In announcing the new U.S. sanctions, Commerce Secretary Gina Raimondo said, “The Department of Commerce remains firmly committed to taking strong, decisive action to target entities that are enabling human rights abuses in Xinjiang.”
Read the full Forbes article.
Michael Posner is a Professor of Business and Society and Director of the NYU Stern Center for Business and Human Rights.