The US government just warned companies that even indirect ties to forced labor in China's Xinjiang province risks breaking the law

• The US warned that companies with investment or supply-chain ties to Xinjiang can face legal risks.
• China has been accused of committing genocide and crimes against humanity in Xinjiang.
• Major US companies have been accused of sourcing cotton and product components in the region.

The US on Tuesday cautioned that companies that invest, provide venture capital, or have supply-chain ties to the Xinjiang region of China "run a high risk of violating U.S. law," due to widespread reports of forced labor and other human rights violations against ethnic minorities in the region.

The US has accused China of committing genocide and crimes against humanity in Xinjiang, citing the arbitrary mass detention of mostly Muslim ethnic groups in the region in what the Chinese government calls "re-education camps." The government has also forcibly sterilized, tortured, and sexually abused ethnic minority prisoners in these camps, according to former detainees.

Companies who don't pull out of the region could violate statutes that criminalize benefitting from or importing goods that are the result of forced labor. The advisory also warned US companies against assisting in the development of surveillance tools for Xinjiang or supplying US-made goods to entities that use forced labor.

In 2020, activist groups accused some of the world's biggest fashion brands - including Nike and H&M - of sourcing cotton from factories that exploit the forced labor of Uyghurs and other ethnic minorities. Over a million ethnic minorities have been detained in Xinjiang, a region that produces a fifth of world's cotton, and activist groups have called for companies to exit the region to avoid profiting from human rights violations in the area.

Nike stated that it doesn't source products, textiles and yarn from Xinjiang, and H&M stated that it was concerned about the accusations of forced labor involved in Xinjiang cotton production.

In May, Apple suppliers were linked to forced labor in the Xinjiang region, with reports that thousands of detained Uyghurs were used to manufacture components for Apple devices. Apple previously denied exploiting forced labor in Xinjiang.

In 2020, Apple and Nike, among other companies, also lobbied to weaken the Uyghur Forced Labor Prevention Act that would ban US companies from importing goods made in Xinjiang unless they could prove they weren't made with forced labor.

According to Reuters, the US may impose additional sanctions on China and may extend a similar business advisory to Hong Kong.