The US government has banned imports of solar products from three companies in China’s Xinjiang region due to alleged forced labour.

They are Xinjiang Daqo New Energy, a manufacturer of monocrystalline silicon and polysilicon that is a subsidiary of New York Stock Exchange-listed Daqo New Energy Corp; Xinjiang GCL New Energy Material Technology, a subsidiary of GCL-Poly, which was once the world’s largest supplier of polysilicon to the solar industry; and Hoshine Silicon Industry (Shanshan), which supplies industrial silicon to polysilicon producers.

In a statement, the White House directly accused China of “cruel and inhumane…state-sponsored forced labour” of Uighurs and other Muslim minority groups in Xinjiang as part of “systematic abuses… [that] include sexual violence and large-scale forced detentions”.

“[China’s] forced labour practices… also leave American businesses and workers to compete on an uneven playing field by allowing firms to gain advantage over their competitors by exploiting workers and artificially suppressing wages.”

The restrictions would only have a limited impact as the companies do not have “vast contracts” with US solar companies, according to Daiwa analyst Dennis Ip.

“However, we see possibility for the ban to gradually extend to include restrictions on all solar modules which contain Xinjiang-produced polysilicon," he said in a note to clients.

Daqo New Energy sells its silicon products to major Chinese solar panel manufacturers including JinkoSolar and JA Solar, which both have substantial sales in the US, while Longi Solar buys polysilicon from GCL Poly.

Longi, Jinko and JA Solar were the top three solar module suppliers in the world in 2020, according to data supplier PV InfoLink.

“If modules and cells exported to the US have to be traced back to whether they use products from Hoshine Silicon, the scope of impact will be so big that it will not only affect US-based polysilicon and module manufacturers but renewable installations,” said PV InfoLink.

The Chinese foreign ministry described the US accusations as “nothing but rumours with ulterior motives and downright lies”.