China’s overseas business operations undermined by allegations of human rights abuse

China’s aspiration to become a ‘responsible great power’ is set to be undermined by high rates of human rights abuse linked to its overseas business operations. In fresh analysis released today (11 August 2021), the Business & Human Rights Resource Centre found 679 allegations of human rights abuse recorded against Chinese companies operating abroad between 2013 and 2020.

Human rights and corporate social responsibility are embedded in China’s Belt and Road Initiative (BRI) policy documents to guide overseas investors and business. Nevertheless, the highest rates of alleged abuse were recorded in countries with weaker governance and where Chinese investments were dominant, such as Myanmar and Peru. In addition, there was a widespread lack of transparency and corporate accountability among Chinese companies, demonstrated by a low response rate (24%) when invited to respond to human rights allegations made against their overseas operations. From 102 company approaches we only received 24 responses.

Key findings:

China-funded operations in Asia-Pacific recorded the highest number of human rights allegations (269), followed by Africa (181) and Latin America (177).
High-risk countries: Myanmar recorded the highest number of allegations (97), followed by Peru (60), Ecuador (39), Laos (39), Cambodia (34) and Indonesia (25). China is a major investor or trading partner in all these countries.
High-risk sectors: metals and mining (35% or 236 allegations), construction (22% or 152 allegations) and the energy (fossil fuels) sector (17% or 118 allegations).
Chinese renewable energy investments overseas have gained momentum due to China’s pledge to meet targets under the Paris Agreement and to build a green BRI. However, human rights risks in the sector are prominent, with 87 allegations (13%) recorded.
Despite commitments to openness and transparency, Chinese companies had a very low response rate (24%) when invited to address human rights allegations made against their overseas operations.
Lack of transparency was a particular concern in China’s finance and banking sector, which recorded an exceedingly low response rate to allegations (5%), compared with the sector’s global response rate of 63%.

Chinese renewable energy investment overseas has gained momentum due to China’s pledge under the Paris Agreement and their commitment to building a “green BRI”. Several Chinese Government documents have also highlighted the importance of strengthening mandatory disclosure of environmental information and the need for legislation on due diligence and environmental legal liabilities. In 2021, Chinese Ministry of Commerce encouraged the formulation of green guidelines for investment cooperation in host countries.

Despite these efforts, China’s environmental aspirations could be hindered by the prevalent human rights risks are across its renewable energy operations, with 87 allegations recorded against Chinese renewable energy business abroad. In 2020, data gathered by the Resource Centre found Chinese renewable energy companies were failing to implement policies and practices to avoid harming the communities and workers upon which a just transition depends.

Golda S. Benjamin, Programme Director, Business & Human Rights Resource Centre, said: "China has shown commitment to international initiatives such as the Sustainable Development Goals and the Paris Agreement as part of its effort to build an image of a ‘responsible great power’. However, this image risks being undermined if the Chinese Government and companies do not adequately address the need for urgent action to address human rights risks in their overseas business operations. We welcome the Chinese authorities’ published frameworks to encourage companies and financial institutions to integrate environmental and social risk management into their overseas projects. There is a need for greater enforcement and transparency among companies’ approach to human rights abuse allegations.

“Chinese companies appear reluctant to engage with civil society openly and transparently. Their significantly lower average for responding to allegations of abuse is especially glaring- particularly when compared to their counterparts in other major Asian economies such as Japan, India and Indonesia. Legislation must ensure companies are conducting effective human rights due diligence and have the appropriate grievance mechanisms in place to allow for victims of human rights abuse to access remedy. Meanwhile, Chinese companies must urgently develop clear guidelines on transparency and human rights due diligence, they risk falling behind regional – and global – competitors.”

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Note to editors:

The Business & Human Rights Resource Centre is an international NGO that tracks the human rights impacts (positive and negative) of more than 10,000 companies across nearly 200 countries. We seek responses from companies when concerns are raised by civil society.

Media contact: Pippa Woolnough, Head of Communications, Business & Human Rights Resource Centre, +353 (0) 858353757, [email protected]

Priyanka Mogul (London-based), Media Officer, Business & Human Rights Resource Centre, +44 (0) 7880 956239, [email protected]