Editor’s Note: In Katrina Northrop’s June 27 cover story, “Hemmed In,” she profiled Marjorie Yang and her company, Esquel Group, a Hong Kong-based textile giant that was placed on the U.S. government’s trade restriction ‘Entity List’ for its links to forced labor in China’s western Xinjiang region. (Esquel is now seeking to be removed from the list.) In response to Northrop’s article, William H. Overholt, a senior research fellow at Harvard’s Kennedy School, wrote a letter to the editor, looking back at his experience meeting Yang and visiting her factories. In the letter, he took issue with the U.S. decision to sanction Esquel, arguing that the company was “the world’s most socially responsible company.” Overholt also appeared on a recent Sinica podcast to discuss the issue. Now, Georgetown University Professor James Millward, an authority on China and Xinjiang, has written his own letter to the editor to further examine this important topic.
I write to address a question raised at the start of Northrop’s article, namely, “Has the U.S. government gone too far by sanctioning Esquel Group?” An Esquel subsidiary, Changji Esquel Textile Co. Ltd., was placed on the U.S. Entity List by the U.S. Commerce Department in July 2020, after a Wall Street Journal article and an Australian Strategic Policy Institute (ASPI) report offered evidence that Changji Esquel had hired Uyghur workers from state-run labor fairs in Xinjiang, which are known to be a mechanism whereby Uyghurs are coercively driven into factory labor. In early August 2021, following a lawsuit and public relations campaign by Esquel, a U.S. inter-agency body voted to remove Esquel from that list under certain conditions.
In his letter and Sinica conversation, Overholt claims that Esquel, whose CEO, Marjorie Yang, is his friend and ballroom dancing partner, may be “the world’s most socially responsible company.” Other commentators, including Christopher Marquis of Cornell’s Johnson Graduate School of Management and China historian William Kirby, now at Harvard Business School, share Overholt’s assessment of Esquel’s noteworthy record of corporate social responsibility (CSR) in its China operations. I am not especially knowledgeable about Esquel, though I note that the company invested in Xinjiang in the 1990s, at a time when the prevailing (largely false) narrative described the Uyghur region as aflame with terrorism or soon to explode, and I give them credit for that. I said as much to the representative from the Brunswick Group, the crisis management firm that Esquel hired, when he approached my editor and me to try to get me to remove a reference to Esquel from a 2020 article I co-wrote and published in the Brookings Global China series.
Scholars of the Xinjiang region believe the jury is still out regarding whether Esquel did or did not avail itself of non-voluntary Uyghur labor. But I want to address a broader issue: what exactly is the measure of social responsibility for corporations operating in a place where all around them, the main business of local administration and many other companies is a carceral and assimilationist program characterized as crimes against humanity, ethnocide and, by many, as genocide? (Raffi Khatchadourian’s April 2021 New Yorker article is the best recent summary of what has been happening since 2017 in Xinjiang.)
On Sinica, Overholt says that U.S. sanctions regarding the Uyghur region are too broad. He is wrong. Unlike the counter-productive, across-the-board Trump tariffs on hundreds of billions of dollars worth of Chinese trade with the U.S., the sanctions over atrocities in the Uyghur region have been laser-focused on complicit individuals and companies: Besides placing specific tech companies and Esquel on the Entity List, U.S. sanctions, later matched by UK and EU, employed the Global Magnitsky law to single out individual government units and individual Xinjiang officials implementing the camps system. The U.S. Customs and Border Protection placed withhold release orders specifically on cotton and tomato products from Xinjiang; Xinjiang produces a large percentage of global supply of both, and their agricultural production and processing pervades the Xinjiang economy. In particular, the Xinjiang Production Construction Corps (XPCC or Bingtuan) is inextricably involved with purchasing, production, processing and sale of cotton and tomatoes through its network of Han state farms, factories and shell companies. Since the PRC occupied Xinjiang in 1949, the XPCC’s main job has been to spearhead efforts to settle Han Chinese in the Uyghur region. It answers directly to the Party in Beijing, not to the so-called “Autonomous Region” government in Xinjiang; it builds and runs prisons and internment camps and actively pursues settler colonialism, offering rich incentives to Han from eastern China to migrate into the Uyghur Region, even as the state coercively displaces Uyghurs to factories in eastern China, and channeling development funding into Han-dominated Bingtuan enclaves.
When Esquel first began Xinjiang operations, it did so in partnership with the XPCC, buying a cotton farm in Kashgar to supply a spinning mill, and then sourcing still more cotton from other XPCC units. Esquel worked with the Bingtuan, according to Esquel chairman and CEO Marjorie Yang, because “they’re very professional and very disciplined… They’re probably the most efficient farmers in Xinjiang.”
On Sinica, Overholt called Esquel “a great benefactor of these Uyghur people.”
“Margie was helping the people, the farmers, by giving them a little grant, in return for a promise by them that they would deliver their cotton to her, and a promise by her that she would pay next year a bit higher than the cotton price for this year. If you’re a subsistence farmer, with a volatile commodity, like cotton, that’s a life and death benefit” (9:08-9:51).
Esquel may indeed have brokered to buy some cotton directly from small producers. Overholt is wrong to imply, however, that independent cotton farmers in Xinjiang were otherwise directly engaged with the market. Communes and central-planning have continued to dominate the southern Xinjiang economy far more than in China proper, and Uyghur farmers have been trapped in share-cropping arrangements with communes or townships, forced to buy inputs and sell their harvest at prices fixed by the state-run “company store.” Indeed, according to the Uyghur economist and 2019 Sakharov Prize winner Ilham Tohti, it was lack of access to the market that inhibited development of Uyghur regions in southern Xinjiang. The poverty in what Overholt calls an “impoverished desert society” is not culturally determined: it was produced by decades of PRC colonial policies, open discrimination and structural racism. (I discuss this and cite Tohti’s work in my 2021 Eurasian Crossroads, revised edition, chapter 8)
Esquel may have provided alternatives to this oppressive system for some. But for 22 years the company maintained its joint venture with the XPCC, the dominant enforcer of that system. Esquel only unwound its relationship with the Bingtuan in April 2020. (This fact was what Esquel’s P.R. guy was trying to get me to censor from my Brookings article.) Esquel claims otherwise, but I suspect it began divesting from the XPCC joint venture in 2019 because it read the writing on the wall: the world was recognizing that its longtime state partner in Xinjiang is committing on-going crimes against humanity.
And this brings us to the bigger question. Esquel has now convinced U.S. officialdom that it is not guilty of the narrow legal question regarding coerced labor in Xinjiang. But does that make Esquel a social responsibility superstar? Esquel has been dancing cheek to cheek with the settler colonialist regime in Xinjiang for decades. I actually sympathize with Esquel; no one was especially concerned about the XPCC until the radical assimilationist turn in 2017. And Esquel has apparently implemented better practices than other firms in China—though simply not employing slave labor and not polluting the water seems a fairly low bar. The company’s position is now tenuous, its reputation for CSR shaken. But that is not the fault of the world media and U.S. sanctions for shining a spotlight on its Xinjiang operations. Rather, Esquel’s reputation has been undermined by PRC policies in the Uyghur Region, especially the cruel turn since 2017. I hope that in addition to suing and mobilizing P.R. firms to get itself off the U.S. Entity list, Esquel has also used its stature in Xinjiang and the PRC to direct a message within the system: Xi Jinping’s policies are making it impossible for international firms to operate in Xinjiang.
The repressive, genocidal system in Xinjiang involves all local administrations; it involves the XPCC; it involves corporations both Chinese and foreign who contract with those administrations and with the Bingtuan; it involves 18 eastern Chinese provinces and municipalities which through the “mutual pairing assistance program” (對口援疆) are required to invest in Xinjiang, some building factories in conjunction with the internment camps. There is a reason that international inspectors no longer conduct audits on supply chains in Xinjiang: they are denied free access, and those supply chains are all clearly tainted insofar as they involve any interaction with local officialdom. Laws on the books in the U.S. and other countries single out coerced labor, and thus the sanctions have focused on that aspect of the atrocities in Xinjiang. But forced labor is just the tip of the iceberg.
Overholt’s argument is an old one: “engagement” by massive multinational corporations is good for the Chinese people. He does not understand Xinjiang or the Uyghurs (if your description begins “my official government guide took me to a Uyghur home” and you think Uyghurs drink Turkish coffee, some more homework is in order.) But he raises a critical issue: how to do business with China under its current Han-chauvinistic leadership.
So-called decoupling is unwise and impossible, but engagement with Xi’s China cannot just rehash the old 1990s-early 2000s pattern, hesitant to make waves over values and clinging to neo-liberal faith that commerce under any circumstances is good for the natives. If corporations conduct business as usual adjacent to a genocide, then humanity needs to call them out, and where representative government makes it possible, good people should urge those governments to use nation-state tools and mobilize international institutions to challenge corporate complicity in crimes against humanity around the world.
Overholt concludes with a telling metaphor: the fisherman who ensnares a porpoise in a large net while catching tuna, he says, is not “bad” because it is “inevitable” that he will entangle some porpoises that way, and just has to let the dolphin go again. But, to the contrary, driftnet fishing for tuna has in fact been banned for 20 years, and for other methods, NOAA’s Tuna Track and Verification Program certifies “dolphin-safe” to discourage by-catch of dolphins. We—humanity, though institutions—have already decided that, yes, it is bad for businesses to treat porpoises as collateral damage while striving to make more money. It is now abundantly clear that the global capitalist system will do little on its own to head off climate change, mass extinctions, ethnic discrimination or even genocide. Corporations, and countries, need their feet held to the fire and guardrails erected around them—media reports, government investigations, boycotts, divestment, sanctions, popular outrage—to defend our common human values and try to protect the vulnerable.
James Millward
Professor of History
School of Foreign Service
Georgetown University
August 29, 2021

James A. Millward is Professor of Inter-societal History at the Walsh School of Foreign Service, Georgetown University, teaching Chinese, Central Asian and world history. His specialties include Qing empire; the silk road; Eurasian lutes and music in history; and historical and contemporary Xinjiang. @JimMillward
William Overholt responds: [Professor James] Millward sarcastically ridicules things I didn’t say, implying I portrayed Xinjiang’s labor market as free, falsely claiming that only drift nets experience bycatch. When I describe Esquel’s unique purification of dirty city water with the world’s finest system, he disingenuously responds, “…not polluting the water is a low bar.” He mischaracterizes companies as “clinging to neo-liberal faith that commerce under any circumstances is good for the natives.” Millward praises sanctions as carefully targeted against slave labor, whitewashing a campaign that judges companies guilty until they and even distant suppliers are proven innocent. Esquel, targeted, does not use slave labor. Then, contradictorily, he provides grounds for attacking any company that does business in repressive, Han-chauvinistic China. He’s clueless regarding what CEOs should do or are already doing. Good sanctions share qualities: clear target, vital vulnerability, effective measures–Huawei. Bad sanctions share etiology: A politician sees something terrible, and thinks sanctions are the easy answer. Diverting from ineffectual sanctions’ harm to innocent Iraqis or Uyghurs, politician grasps mendacious, contradictory rationalizations like Millward’s. Fortunately, in Esquel’s case Washington has proven sensitive to consequences for actual Uyghurs, unlike Millward, whose abstract blather about neo-liberalism obscures his disdain for those actually helping Uyghurs.