China threatens Calvin Klein owner with blacklist over Xinjiang cotton

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China has accused the parent company of Calvin Klein of boycotting cotton from its western Xinjiang region, threatening for the first time to put a US company with significant interests in the country on a national security blacklist.

Beijing’s threat to include PVH, a clothing maker whose brands include Calvin Klein and Tommy Hilfiger, on its “unreliables list” is likely to alarm international companies at a moment when China is struggling to attract foreign investors.

The Chinese commerce ministry said in a statement on Tuesday that PVH had 30 days to explain to authorities whether it had discriminated against Xinjiang-related products over the past three years.

In a separate notice, the ministry accused the group “of violating normal market trading principles and unreasonably boycotting Xinjiang cotton and other products without factual basis”.

International clothing companies have faced increasingly conflicting pressure from China and western governments over sourcing from cotton-rich Xinjiang. Beijing strongly rejects accusations by the UN High Commissioner for Human Rights and independent watchdogs that it is responsible for human rights abuses against Xinjiang’s mainly Muslim Uyghur ethnic group that include widespread use of forced labour.

China’s commerce ministry said PVH would be investigated by its “Unreliable Entity List Working Mechanism Office” — a national security-related body set up five years ago after the eruption of a trade war with the US.

The unreliables list mirrors the US commerce department’s “entities list”, which targets companies accused of human rights and other violations of American law.

Beijing’s implementation of the blacklist followed tightening US restrictions and sanctions on Chinese technology and exports, particularly on its telecom equipment maker Huawei.

But foreign lawyers argue that provisions of China’s blacklist are too vague, targeting companies accused of “endangering national sovereignty, security or development interests of China”.

China has publicly placed five US companies on the list, including military suppliers Lockheed Martin and Raytheon Technologies for selling weapons to Taiwan, but these groups do little or no business in China.

PVH could face fines, have its activities in China restricted, or face other unspecified penalties. The New York-based company, which has subsidiaries registered in China and stores and warehouses in the country, did not immediately respond to requests for comment.

The ministry statement said PVH’s alleged discrimination against Xinjiang products “seriously damages the legitimate rights and interests of relevant Chinese companies and endangers China’s sovereignty, security and development interests”.

Under the 2021 Uyghur Forced Labor Prevention Act, the US bans goods made in Xinjiang unless importers can prove they were not made using forced labour.

In a company filing this year, PVH said it had made “efforts” to confirm that materials covered by measures such as the US act “are not present in our supply chain”.

China’s commerce ministry rejected any suggestion the use of its blacklist might deter foreign investors.

China was “prudent in handling the issue of the Unreliable Entity List, targeting only a very small number of foreign entities that undermine market rules and violate Chinese laws”, it said. “Honest and law-abiding foreign entities have nothing to worry about.”