German automotive giant Volkswagen confirmed Wednesday that it would sell its operations including the joint plant venture in China's Xinjiang region where Beijing has been accused of widespread human rights abuses, including forced labor.

The firm will sell its factory in Xinjiang's capital Urumqi as well as a test track in Turpan to a Chinese company, a spokesperson said in a press release.

"For economic reasons, the site has been sold by the joint venture as part of its strategic realignment," the spokesperson said.

VW has lost ground in China, its most important market, with sales in the country in 2023 growing modestly but at a slower rate than the previous year.

It has fallen behind domestic competitors in China, losing its title as the best-selling auto brand to BYD.

And rights campaigners have for years accused Beijing of a crackdown against Uyghurs and other Muslim minorities in Xinjiang, including through forced labor and detention camps.

The northwestern region is home to several factories that supply multinational companies, including big-name Western brands.

VW has long come under scrutiny over its factory in the city of Urumqi, which opened in 2013 and in which it has a stake via its partner SAIC.

And this year, Germany's Handelsblatt financial daily reported that forced labor may have been used to build VW's test track in Turpan in 2019.

VW said it had seen no evidence of human rights violations in connection with the project but vowed to investigate any new information that came to light.

Its operations will be sold to Chinese firm Shanghai Motor Vehicle Inspection Center (SMVIC), the car giant said Wednesday.

Calls had grown louder for VW to reconsider its business activities in Xinjiang after German chemicals giant BASF announced this year that it would accelerate its exit from two joint ventures there.

An external audit commissioned by VW last year found no evidence of forced labor among the plant's 197 employees.

However, the consultancy that wrote the report acknowledged "the challenges in collecting data" for audits in China.

The Turpan test track was not part of the audit.

In response to the VW forced labor report, China urged companies not to be "blinded by lies" about its rights record in Xinjiang.

Beijing denies allegations of abuse and insists its actions in Xinjiang have helped to combat extremism and enhance development.