The Workshop of the World and the Tide of Fentanyl from China
The Asian Crime Century briefing 60
In December 2023, a spokesman for the Foreign Ministry of the People’s Republic of China (PRC) announced that counternarcotics discussions with the relevant authorities in the United States are gradually resuming (China Daily, December 22, 2023). This move followed the meeting between Presidents Biden and Xi in California on November 15 where they agreed to “the resumption of bilateral cooperation to combat global illicit drug manufacturing and trafficking, including synthetic drugs like fentanyl, and establishment of a working group for ongoing communication and law enforcement coordination on counternarcotics issues” (The White House, November 15, 2023).
While the statement from the White House prominently referred to counternarcotics cooperation in the third paragraph, the statement from the PRC Ministry of Foreign Affairs more generally referred to “jointly advancing mutually beneficial cooperation” in a variety of areas as well as the establishment of a working group on counternarcotics cooperation. The PRC statement led with references to President Xi’s strategies relating to “the era of global transformations unseen in a century.” It also warned that “the United States should not scheme to suppress and contain China” (Ministry of Foreign Affairs of the PRC, November 16, 2023).
The difference in emphasis raises questions concerning how serious PRC authorities are about combatting the supply of fentanyl precursors and what impact they realistically have on the problem. The involvement of companies and people in the PRC on fentanyl trade to the United States goes beyond merely selling the drug. The supply chain involves multifarious precursor chemicals, pill presses, stamps, dyes, and molds used in fentanyl production. The PRC is the world’s second largest economy, the leading manufacturing nation, and an export powerhouse. As such, there is a concentration of supply chains in both licit as well as illicit industries, including narcotics and, inevitably, fentanyl.
The Fentanyl Tide
Fentanyl imports to the United States continued to grow in 2023. US Customs announced in December that they “seized more than 27,000 pounds of fentanyl, compared with over 14,600 pounds in fiscal year 2022”—an increase of 860 percent over fiscal year 2019 (US Customs, December 22, 2023). In November, federal agents seized fentanyl pills worth $3.5 million in the San Diego area and another $8 million worth at the Calexico West Port of Entry into California, illustrating how the import of fentanyl has come largely from Mexico (US Customs, November 21, 2023; CBP, November 7, 2023), illustrating how the import of fentanyl has been largely from Mexico.
The role of the PRC in the supply of fentanyl is disputed, but the Wilson Centre concluded in 2019 that “China produces nearly all of the fentanyl, fentanyl analogues, and fentanyl precursors in the world” (Wilson Centre, February 2019). However, fentanyl itself and its chemical precursors are only part of the problem. Pill presses, dyes, and molds are all necessary for the production of the drug. The PRC is inevitably the source of much of the supply because of its position as the leading manufacturing and exporting country.
Pill presses, stamps, dies, and molds are a critical part of the fentanyl threat to US public health. This is because of the prevalence of counterfeit fentanyl-laced pills. These are intended to look like Vicodin, Oxycontin, or other such drugs, but instead contain potentially deadly amounts fentanyl and other fillers. The PRC is a major supplier of these critical parts of the fentanyl supply chain, that facilitate the production of tablets in Mexico or the United States. Precursor chemicals that are used to produce the drug are also being sourced from China.
The US government has already taken some actions to counter this illicit supply chain. In April 2023, the US Treasury announced sanctions against two entities in the PRC and four Chinese nationals for supplying precursor chemicals to drug cartels in Mexico (US Treasury, April 14, 2023). Wuhan Shuokang Biological Technology Co. (武汉硕康生物科技) was accused of selling fentanyl precursor chemicals and its representatives of providing information on efficient preparation methods for synthesizing illicit fentanyl. Bitcoin payments were used in all the related illicit drug transactions.
In May 2023, US authorities announced further sanctions against seven Chinese companies and six nationals involved in the supply of equipment used to produce illicit drugs. Youli Technology Development Co. (尤里科技发展) and three affiliated Chinese nationals were alleged to have shipped pill press machinery to individuals in the United States involved in the manufacture of counterfeit pills. Yason General Machinery Co. (亚新通用机械), registered in Hong Kong but based in Shenzhen, was also implicated, along with three related companies involved in the supply of press equipment internationally. Tdpmolds, located in Yantai, had shipped pill press die molds to the United States, including ones used to produce counterfeit schedule II oxycodone and amphetamine pill products (US Treasury, May 30, 2023).
From January to October 2023, US Customs officers in Cincinnati seized 60 shipments containing 22 pill press machines and 257 pill press components such as die sets, adapters, and stamps, mostly imported from the PRC. During a four month operation in 2023, US Customs officers seized 13,000 pounds of fentanyl precursor chemicals, over 2,590 pounds of non-fentanyl precursor chemicals,142 pill presses and 325 pill molds, more than 270 pounds of fentanyl pills and powder, and more than 210 pounds of Xylazine (a sedative for large animals increasingly found mixed with fentanyl and heroin) (US Customs, October 30, 2023).
PRC Government Counternarcotics
Before the Xi-Biden November meeting and agreement to resume cooperation in counternarcotics, the language from the PRC government was blunt. In June 2022 the Ministry of Foreign Affairs issued a long statement titled “Reality Check: Falsehoods in US Perceptions of China” in which it accused the United States of creating its own fentanyl problem, stating that:
“With five percent of the world’s population, the US consumes 80 percent of opioids in the world, making the country the world’s biggest market for narcotics. There is a prevalent tradition of prescription painkiller abuse in the US, undergirded by a complete chain of pharmaceutical companies, medical representatives and doctors. All-out marketing by pharmaceutical companies, over-prescription by doctors, ineffective government crackdowns and the negative implications of marijuana legalization are among the combination of factors behind an ever-growing market for narcotics. Opioid abuse in the US and its rising toll started with OxyContin, an opioid painkiller made by Purdue Pharma and approved by the US Food and Drug Administration (FDA) in 1995. When it comes to discouraging demand and curbing production, the US should have done a lot more.” (Ministry of Foreign Affairs, June 19, 2022)
Aspects of this statement may be accurate, as the opioid crisis in the United States has a complex history. But it is counter-intuitive for the supplier of materials used for creation of narcotics to accuse the user of being at fault. The United States may well be the biggest global market for narcotics, but that is not a reason to tolerate the sale of related materials from suppliers in the PRC.
The PRC government only agreed to resume counternarcotics cooperation after the US government removed the Institute of Forensic Science of China—under the control of the Ministry of Public Security—from its Entity List (US Federal Register, 17 November 17, 2023). The Institute of Forensic Science of China had been sanctioned, with restrictions on access to US technology, because of alleged complicity in human rights violations against Uighurs, ethnic Kazakhs, and other members of Muslim minority groups in Xinjiang (US Department of Commerce, May 22, 2020).
The PRC had long signaled that inclusion of the Institute of Forensic Science of China on the Entity List was an obstacle to cooperation on counternarcotics. Chen Wenxin, executive director of the China Institutes of Contemporary International Relations Institute of American Studies, stated that "With the removal of the institute from the list, bilateral cooperation in narcotics control is expected to proceed more smoothly" (China Daily, November 17, 2023). The Institute does not seem to produce any apparent research into narcotics, but the address of the National Drug Laboratory is reportedly at the China Institutes of Contemporary International Relations Institute of American Studies (National Narcotics Control Commission, November 17, 2023).
After the China-US agreement to resume counternarcotics cooperation, the China National Narcotics Control Commission issued a notice to Chinese companies and individuals to exercise caution in selling substances that can be used to make narcotics. The twelve point notice reminded Chinese enterprises of the relevant criminal law provisions relating to narcotics, and in particular “Enterprises and individuals involved in the production, operation, import and export of chemicals controlled by the United States should be cautious about orders from the United States, Mexico and other related countries, and be wary of exported items being used to manufacture drugs and possible "long-term consequences", "extra-territorial jurisdiction" or even "law enforcement entrapment" risks.” In addition, the Commission warned that enterprises producing and exporting tablet press equipment and molds should be cautious about orders from the US and Mexico to prevent them from flowing into illegal channels and avoid the risk of " law enforcement entrapment" or sanctions (National Narcotics Control Commission, November 17, 2023).
The PRC authorities have pointed out publicly that they have taken measures to control narcotics, with strict regulations covering aesthetic and psychotropic drugs, all fentanyl-like substances, and 38 types of controlled precursor chemicals (China Daily, November 17, 2023). In December, Foreign Ministry spokesman Wang Wenbin stated that “Recently, China has been engaged in campaigns against fentanyl and its precursor chemicals, and cracked down on illegal and criminal activities involving the smuggling, illicit manufacturing, trafficking and abuse of fentanyl-related substances. We have carried out a sweeping inspection of key businesses, personnel and equipment. We have been working to clean up information about online sales of fentanyl, and strictly prevent the smuggling and trafficking of relevant chemical substances to protect people’s physical and mental health. The counternarcotics authorities of China and the US are resuming regular communication. The Chinese side has notified the US side of the progress made in US-related law enforcement operations against narcotics. China has responded to US request for verifying clues on certain cases and taken action. The two sides are in close communication on setting up a working group on counternarcotics cooperation.” (Ministry of Foreign Affairs, December 22, 2023)
However, although the National Narcotics Control Commission has issued a comprehensive notice, government officials have made public statements, and reports in state controlled news media indicate an intent to cooperate on counternarcotics, it is questionable whether there is a practical materiality or the ability to control the obscurely diverse national supply chains of fentanyl chemical precursors and manufacturing materials, which are often also part of licit supply chains
Conclusion
The supply of fentanyl related materials from the PRC to the United States has gone far beyond the drug itself or precursor chemicals, and also involves pill press machines and other equipment used to impress counterfeit trade markings of legitimate pharmaceuticals onto illicitly produced pills, often laced with deadly amounts of fentanyl.
The challenge for the PRC authorities, and in particular the National Narcotics Control Commission, is not only listing fentanyl and precursor chemicals as controlled substances but also interdicting wider areas of the fentanyl manufacturing supply chain. Given the alternative uses of items such as pill presses, dies and molds in the manufacture of both licit and illicit products, it is difficult to see how this can be achieved.
The supply of fentanyl precursors and production equipment from the PRC is so diverse that it has become a tide that cannot be turned back. This is because China has become the ‘workshop of the world’, producing such a huge and diverse range of products, parts and materials that both licit and also illicit markets have come to rely upon this supply chain. Deeper and stronger collaboration on counternarcotics between United States and the PRC is needed to better understand these illicit supply chains. But success hinges on greater trust between agencies in the two countries. It will become clearer in 2024 if the meeting between Presidents Biden and Xi is the basis for the development of prolonged trust or if it has only brought a temporary improvement in collaboration between the two governments.