Intel’s China apology over Xinjiang remarks shows good business trumps good politics always

• Intel’s letter to employees and suppliers suggested they avoid sourcing labor and goods from Xinjiang as required by U.S. law
• U.S. giant apologized following the uproar across Chinese media after a storm in social media

US chipmaker Intel’s [INTC] dramatic apology Thursday over the content of a letter that mentioned Xinjian, a province in China that has been in the news over Beijing’s crackdown on its minority Muslim population, has created even more global uproar. Intel apologized after a backlash across Weibo, the Chinese equivalent of Twitter [TWTR].

The controversial letter written in December 2021 apparently said that it “is required to ensure our supply chain does not use any labor or source goods or services from the Xinjiang region" of China. The letter cited government restrictions and questions from investors and customers.

Also Read: Intel to list Mobileye shares in the U.S. market in 2022

"Although our original intention was to ensure compliance with US laws, this letter has caused many questions and concerns among our cherished Chinese partners, which we deeply regret," the company’s statement on Weibo said.

Allegations of forced labor

Xinjiang has been a hotbed of controversy with human rights groups accusing Beijing of detaining ethnic Uyghurs and other Muslim minority groups in "re-education" centers. There have been allegations of using them for forced labor in firms working directly or indirectly as part of global tech and retail supply chains.

Read more: Auto industry hits a bump as semiconductor shortage pinches amid COVID-19 slump, unsteady US-China ties

Xi Jinping’s government in Beijing has pushed back to sanctions from the United States and other Western countries over Xinjiang. Chinese officials call the camps “vocational training centers” set up to reduce poverty and fight religious extremism.

An Intel spokesperson told CNN Business in an email that the company would continue to ensure its global sourcing complies with the relevant laws and regulations in the United States and other jurisdictions.

"We issued a statement in China to address concerns raised by our stakeholders there regarding how we communicated certain legal requirements and policies with our global supplier network," the company said.

‘Biting the hand that feeds’

Intel's letter triggered a backlash on the Chinese state and social media. Official Communist Party media arm, People's Daily, called the statement "absurd," adding that Intel is "biting the hand that feeds it."

Chinese pop star Wang Junkai, the brand ambassador for Intel Core, announced Wednesday that he had cut all ties with Intel over its statement, saying "national interests are above all else."

On Thursday, Zhao Lijian, China's foreign ministry spokesperson, said that “claims related to Xinjiang, such as forced labor” are “lies by US's anti-China forces.” "We hope relevant businesses respect facts, distinguishing between right and wrong,” he said.

Intel’s sudden apology is seen as good business, although not good politics in view of the global condemnation of Beijing’s human rights record over the treatment of the Uighurs. U.S.-China relations have remained cold over conflict of interest in political, defense, and business realms.