Germany has refused investment guarantees in China due to human rights issues in the Muslim-dominated Xinjiang region, Economy Minister Robert Habeck said Friday.

The decision was the "first time an investment guarantee has not been given on human rights grounds", the minister told Welt am Sonntag weekly.

Habeck did not name the company but Der Spiegel magazine said the the refusal related to auto giant Volkswagen.

Opened in 2013, Volkswagen operates a factory in Xinjiang's capital Urumqi together with its Chinese partner SAIC.

China's Communist Party is accused of detaining over one million Uyghurs and other Muslim minorities in the far-western region as part of a years-long crackdown the United States and lawmakers in other Western countries have labelled a "genocide".

Beijing is also accused of forcibly sterlising women and running labour camps that fuel global supply chains.

China vehemently denies the abuse allegations, calling them the "lie of the century".

While the investments were not directly for projects in Xinjiang, Berlin denied Volkswagen's request because a link to the region "could not be ruled out", Der Spiegel said, citing unnamed sources.

"In light of the forced labour and mistreatment of the Uyghurs we cannot guarantee any projects in the region of Xinjiang," Habeck told Welt am Sonntag.

Future decisions would be made "on a case-by-case basis", Habeck said.

Volkswagen CEO Herbert Diess told US TV programme 60 Minutes in April there is "no forced labour" at the works, adding that he wanted to keep the site open.

UN rights chief Michelle Bachelet is currently on a long-planned trip to China and visited Xinjiang.

Bachelet has come under fire from rights groups and Uyghurs overseas, who say she has been suckered into a slickly choreographed Communist Party tour including a conversation with President Xi Jinping later portrayed in state media as a mutual endorsement of China's high ideals on rights.

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