UPDATE 2-Germany says its policy on China is under development

(Adds VW, family business association)

BERLIN, May 25 (Reuters) - Germany is concerned about the human rights situation in China's Xinjiang region, a government spokesperson said on Wednesday, urging China to be transparent about developments in the province.

Berlin's China policy "is under development," the spokesperson told a regular government news conference.

Western states and rights groups accuse Xinjiang authorities of detaining and torturing Uyghurs and other minorities in camps. Beijing denies the accusations and describes the camps as vocational training facilities to combat religious extremism.

"As far as the situation in Xinjiang is concerned, I can say in principle that the federal government - and here we are in agreement with our EU partners - continues to view the development of the human rights situation in the province with great concern," the spokesperson added, urging Beijing to ensure transparency about developments in the province.

After fresh media reports about human rights violations in the Xinjiang Uyghur Autonomous Region, Germany's economy minister on Tuesday said Berlin was changing the way it deals with China and would give human rights issues higher priority.

China's foreign ministry responded on Wednesday, saying that Beijing resolutely opposes attempts at using disinformation and lies to smear China.

The BBC, Der Spiegel and other media platforms on Tuesday said they were in possession of a huge cache of data that revealed in unprecedented detail China's use of so-called "re-education" camps and formal prisons as two separate but related systems of mass detention for Uyghurs.

A spokesperson for Volkswagen told Reuters that the carmaker, Europe's largest, viewed the recent reports coming out of China with great concern.

Albrecht von der Hagen, chief of the Association of Family Businesses, added: "The images of the human rights violations in Xinjiang leave us stunned."

"Yes, Europe must become more independent of autocracies. But this requires Germany and Europe to reposition themselves through more trade with democratic constitutional states," he said, calling for policy initiatives like a full European-American trade agreement to be "pushed vigorously."

The German government spokesperson said Berlin would "evaluate in more detail" the reports.

(Additional reporting by Rene Wagner and Victoria Waldersee; Writing by Paul Carrel; Editing by Miranda Murray, Tomasz Janowski and Mark Porter)