Human Rights in Chinese Overseas Business Operations
China, Geopolitics, and the Global South
Guest post by BHRRC, February 2022
In the late 1990s, the growing exposure of corporate misconduct—such as the use of sweatshop factories by global clothing and footwear brands, as well as environmental destruction and gross human rights violations linked to extractive companies—prompted global debates about and efforts to regulate corporate behaviour and to improve the human rights responsibilities of transnational corporations and other business enterprises.
As Chinese companies go global, allegations of social and environmental violations related to their activities overseas have surged in number alongside China’s expanding economic footprint and influence across continents and sectors. Our organisation, the Business & Human Rights Resource Centre (BHRRC), an international non-profit organisation that tracks the human rights impacts of more than 10,000 companies in more than 180 countries, recently published a report analysing 679 publicly recorded allegations of human rights abuses linked to overseas Chinese business operations between 2013 and 2020, including the outcome of 102 attempts to seek company responses to these allegations (BHRRC 2021c).
The report analysed the alleged social and environmental impacts of the operations of Chinese businesses overseas using publicly available information. It explored the countries and sectors that face the highest risk of adverse human rights impacts and grievances, the human rights issues that are of highest concern to civil society actors, the measures taken by Chinese actors (that is, government and industry associations) to address concerns about responsible business conduct overseas and in global value chains, and the extent to which these measures have been effective. Finally, it examined how Chinese companies (including banks) demonstrate transparency and accountability through their responses to the allegations of abuse.
The report provides a clear overview of the current achievements and challenges of addressing the impacts of Chinese overseas investment, and creates a foundation for further discussion of how to promote responsible business conduct.
Human Rights Implications of China’s Overseas Business Operations
Key findings of our report include the following.
- Higher rates of alleged abuses were recorded in countries with weaker governance and where Chinese investments are dominant—namely, Myanmar (97 allegations), Peru (60 allegations), Ecuador (39 allegations), Laos (39 allegations), Cambodia (34 allegations), and Indonesia (25 allegations).
- Human rights risks were particularly high in the following sectors: metals and mining (35 per cent or 236 allegations), construction (22 per cent or 152 allegations), and fossil fuel energy (17 per cent or 118 allegations). Meanwhile, the growth of Chinese overseas renewable energy investment was also accompanied by increasing human rights risks (13 per cent or 87 allegations).
- The lack of corporate transparency and accountability was pervasive. Chinese companies have a low response rate (24 per cent) when invited by our organisation to respond to human rights allegations related to their overseas operations. This is lower than the overall response rate from Asian companies (53 per cent), particularly those from other major economies in the region, such as Japan (68 per cent), India (47 per cent), and Indonesia (41 per cent). Chinese banks have a dismal 5 per cent response rate (one response from 20 invitations), which indicates potentially heightened risks within investment chains.
- The 679 recorded allegations involved 1,690 identified rights issues linked to China’s overseas business operations. Across all sectors, the most frequently identified issues were inadequate information disclosure, including inadequate environmental impact assessment (EIA) (31 per cent of allegations recorded), followed by violations of land rights (29 per cent), loss of livelihoods (28 per cent), labour rights abuses (19 per cent), and pollution and health threats (18 per cent). Other frequently reported issues included protests, Indigenous peoples’ rights, beatings and violence, security issues and conflict zones, and workplace health and safety. Environment-related issues such as access to water, damage to ecosystems and wildlife, climate change, and deforestation were also common.
In our work, we also identified additional, emerging issues that warrant further examination. These include an increasing number of allegations of mistreatment of seafaring workers aboard Chinese-owned vessels, including abysmal working conditions, physical abuse, forced labour, and other forms of exploitation. For instance, in 2020, incidents of egregious human rights abuses of Indonesian crews on Chinese ships generated significant media attention and triggered a ban on seafood imports from a Chinese fishing fleet by US Customs and Border Protection (BHRRC 2020). In the past few years, local fisherfolk in various countries in Asia, Africa, and Latin America have also raised concerns about overfishing by Chinese-owned distant-water fishing fleets, which threaten the livelihoods of local communities (BHRRC 2021a). Some of these trawlers reportedly used fishing methods that were particularly destructive to the seafloor and marine life, and further depleted fishing stocks.
Another issue that has been consistently underreported are the living conditions and plight of Chinese migrant workers overseas, particularly during the pandemic (BHRRC 2021b). As a recent report from China Labor Watch (2021) reveals, rights infringements of Chinese migrant workers in Chinese business projects across Asia, Europe, the Middle East, and Africa are widespread and longstanding. Furthermore, China’s strict travel restrictions during the Covid-19 pandemic worsened the already vulnerable situation of thousands of Chinese workers stranded overseas. Some crosscutting issues relevant to development and the fulfilment of all human rights obligations also warrant further exploration. For instance, there has been little analysis to date of the gender impacts of China’s overseas investment and business operations (Yeophantong 2020). Moreover, human rights risks linked to renewable energy and ‘transition minerals’ essential to the transition to a low-carbon economy—such as lithium, nickel, copper, and manganese—are yet to draw the attention of Chinese policymakers despite progressive initiatives launched by Chinese industry associations (BHRRC 2021c, 2021d).
Gaps in International Human Rights Mechanisms
In 2018, China accepted the recommendations made during the third cycle of the Universal Periodic Review, a mechanism for the regular review of the human rights records of all UN member states established under the Human Rights Council. The recommendations include promoting legal and regulatory measures to prevent human rights harm caused by overseas infrastructure and extractive projects invested in or operated by Chinese businesses (CICDHA 2019).
While this is a welcome gesture, the translation of these recommendations into domestic policies has been slow. For instance, it took 10 years for the UNGPs, which were endorsed by the Chinese Government in 2011, to be explicitly referenced in its policy documents. The newly released Human Rights Action Plan of China (2021–25), for the first time, mentions them in the following terms:
Promoting responsible business conduct in global supply chains. It will encourage Chinese businesses to abide by the UN Guiding Principles on Business and Human Rights in their foreign trade and investment, to conduct due diligence on human rights, and to fulfil their social responsibility to respect and promote human rights. It will participate and play a constructive role in negotiations on the UN business and human rights treaty. (SCIO 2021b)
Elsewhere, the document also pledges to ‘formulate regulatory measures for and promote the reform of law-based disclosure of environmental information and clarify the responsibility for and content of mandatory disclosure’.
Compared with China’s previous human rights action plans, which largely overlooked the role of business (Liang 2016), the wording of the latest document shows progress and is a welcome first step. However, the success of these pledges will very much depend on how the commitments are integrated into national policies. And as an integral part of implementing the UNGPs, it is important for the government to clarify its plans to fulfil the first pillar of the guiding principles—namely, the state’s duty to protect human rights, including from violations perpetrated by businesses.
At the global level, 30 governments—including those of Asian countries such as Japan, South Korea, Pakistan, and Thailand—have already adopted National Action Plans (NAPs) on business and human rights (DIHR 2017–21). In addition, two dozen countries are in the process of developing NAPs or similar non-state initiatives. Some countries, such as France and the Netherlands, have developed mandatory human rights due-diligence legislation and taken steps to strengthen access to remediation for victims of corporate human rights abuses (BHRRC 2019).
There remains much room for improvement when it comes to including human rights protections in Chinese policy and regulatory frameworks. A more integrated approach with emphasis on the indivisibility of rights—including the right to development, environmental rights, and other fundamental human rights—is also needed. Unlike other international initiatives such as the Sustainable Development Goals (SDGs) and the Paris Agreement, which have been integrated into many of China’s domestic and foreign policies, human rights language remains elusive in Chinese policy documents. The White Paper on China’s International Development Cooperation in the New Era, published in January 2021 and considered by one observer to be ‘China’s manifesto for leadership in global development’, is one document that would have benefited from stronger emphasis on human rights protection (SCIO 2021a; Zhang 2021).
As Chinese Confucian philosopher Mencius said: ‘Virtue alone is not sufficient for governing; laws alone cannot carry themselves into practice.’ It is insufficient to merely show bona fides in China’s new human rights policy. To realise the goals envisioned in the Human Rights Action Plan as ‘a responsible major power’, China must take bolder steps to integrate a human rights–based approach into its economic and international development policies and take practical action to achieve its commitments.