Two Chinese solar companies listed in the U.S. saw their share values skyrocket Tuesday after the Department of Homeland Security released its list of companies that will be carefully watched as the new Uyghur Forced Labor Prevention law goes into force starting this week. Both Daqo New Energy and JinkoSolar, which has a factory in Florida, were not on the list of companies believed to be using prison labor in Xinjiang. Their shares rose by more than 10% on Tuesday, the first day of trading this week.
Homeland released its report to Congress as required by the new law on June 17. The report, titled “Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China” outlines resources needed, and a strategy plan for dealing with imports from Xinjiang.
China’s two solar stocks listed in the U.S. were never mentioned in the report.
JinkoSolar has contracted with Daqo in the past, signing two-year agreements for polysilicon as recent as 2019. In that press release, Daqo New Energy is described as making polysilicon in Xinjiang.
Daqo New Energy put itself in the spotlight last year when it took journalists on tours of its Xinjiang facilities to prove it was clean.
Oddly enough, Homeland lists Daqo’s parent, Xinjiang Daqo New Energy as using forced labor. But this is the same exact business and shares senior staff and board members. They both manufacture high-purity polysilicon for solar cells, with Daqo New Energy also using that polysilicon to manufacture solar cells.
Daqo New Energy is listed on the NYSE and has its offices in Shanghai. While Xinjiang Daqo New Energy is listed on the Shanghai stock exchange and is based in Xinjiang, the far Western providence that is the heart of China’s war on terrorism and human rights abuses. The parent company on the Homeland list today is part of the Vanguard Emerging Markets Stocks Index, a mutual fund with $71 billion in assets under management. Wall Street is investing client money in companies Homeland has reiterated again on Friday to be suspected of using Uyghur prison labor.
It is highly probable to assume that the NYSE-listed Daqo uses polysilicon from its Xinjiang parent.
Guang Fu Xu is the board chairman of both entities.
Xiang Xu is a member of both boards, as is Da Feng Shi.
Roughly 17 Xinjiang-based companies were put on a list of companies to be screened by the Forced Labor Enforcement Task Force. The Uyghur Forced Labor Prevent Act required this task force to make such a list. The companies were also listed on Commerce’s Entity List or were subject to Withhold Release Orders by Customs and Border Protection (CBP).
The launch of the enforcement strategy last Friday precedes the June 21 launch date in which CBP will begin to enforce the Uyghur Forced Labor law. Pursuant to Section 307 of the Tariff Act of 1930, the importation of any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of China, or produced by certain entities, will be subject to investigation and possible confiscation at the ports.
CBP has not returned requests for comments regarding China solar panels made with inputs from Hoshine Silicon — on the receiving end of a WRO last year and in Homeland’s report to Congress — ended up making it to its final buyer or was returned to sender.
“The Uyghur Forced Labor Prevention Act’s enforcement strategy demonstrates the Biden Administration’s unwavering commitment to fully enforce our laws prohibiting the import of goods made by forced labor into the United States,” U.S. Trade Representative Katherine Tai said in a statement last week. “It highlights our resolve to fight against the economic exploitation and human rights abuses committed against Uyghurs and other ethnic and religious minorities in the People’s Republic of China. This enforcement strategy will help us in our work to eliminate this practice from our global supply chains.”
Judging by Tuesday’s Daqo gains, the market believes the Shanghai company listed in New York is a whole other operation, unaffiliated, and not reliant on its Xinjiang parent, one of the largest producers of solar-grade polysilicon in the world. And one in which Homeland and Customs is supposed to be on the lookout for products made from there due to human rights abuses.