US funds back mining in China ‘prison’ zone

‘Very little, if any, due diligence or disclosure in the categories of national security and human rights’

TWO of America’s biggest investors have been criticised for backing a Chinese state-controlled mining business in Xinjiang – where the US says more than a million Muslims are living in “concentration camps”.

The pair – the $300bn (£231bn) California Public Employees’ Retirement System (Calpers), and a $600bn mega-fund launched by businessman David Booth – both held stakes in Xinjiang Xinxin Mining, which is listed on the Hong Kong Stock Exchange.

Xinjiang Xinxin is one of the largest producers of copper and nickel in China, owning several large mines in the western region of Xinjiang.

The region is home to millions of Uighur Muslims who are suffering a violent crackdown, with dissidents rounded up and shut in so-called reeducation centres. Amnesty International describes it as “an openair prison”.

Calpers, America’s largest pension fund, has now sold its stake in the mining company but declined to say when this happened.

Meanwhile Texas-based Dimensional Fund Advisors is the second-largest shareholder in Xinjiang Xinxin after China’s Communist regime. The fund was founded in 1981 by Mr Booth, who later gave his name to the Chicago Booth School of Business.

The mining company is ultimately controlled by Beijing through state holding company Xinjiang SASAC.

Rian Thum, a historian who has been conducting research in Xinjiang for nearly two decades, said that it has become a “police state to rival North Korea, with a formalised racism on the order of South African apartheid”.

The Pentagon estimates that up to three million ethnic Muslims may be imprisoned in detention centres, which Beijing claims are simply re-education camps providing vocational training to help clamp down on violent religious extremism.

After being contacted for comment, Dimensional acknowledged its stake in the company via a disclosure on its website.

Since 2007, Dimensional has invested in China through listings that trade outside of mainland China but provide exposure to firms incorporated in or controlled by Chinese entities. The asset manager runs a number of index funds that invest in every company in a particular industry or market.

Roger Robinson, chief executive of consultant RWR Advisory Group, said stocks such as Xinjiang Xinxin are “picked up by the index providers in sizeable numbers and sluiced into US investor portfolios with seemingly very little, if any, due diligence or disclosure in the categories of national security and human rights”.