Drug and Trade War

China’s shipments of illegal fentanyl into the United States are a factor in the two sides’ ongoing trade war.

US accusations that China is flooding American communities with illegally produced “fentanyl” have poisoned bilateral ties.

When China harshly sentenced nine drug traffickers for selling the fentanyl to American buyers, the convictions were viewed by some as an “olive branch” offered by Beijing to Washington amid their “trade war” talks.

Fentanyl, a highly addictive synthetic Opioid that can be up to 50 times more potent than heroin, caused more than 32,000 drug overdose deaths in the US in 2018, according to official statistics.

China has been singled out by the US as a major supplier of the “illicit drug” and its chemical precursors, a bilateral sore point that has featured in the background of the two sides’ “bitter trade dispute.”

“Washington has strongly urged Beijing to clamp down on the illegal trade, one which China has largely denied significant involvement. In an August 23 tweet, US President Donald Trump accused his Chinese counterpart Xi Jinping of not doing enough to stop the flow of synthetic Opioid into the US. Those drug deals, reports show, are often conducted over the Internet. The China connection was unearthed by US Drug Enforcement Agency (DEA) officials in 2015, when a Chinese salesperson who went by the name Li Li was found to be selling the drug through online ads and over social media.”

According to a New York Times investigation China has between 160,000 and 400,000 chemical companies “operating legally, illegally or somewhere in between — an expansive estimate that reflects both the vastness of the industry and the scarcity of information.”

 Those factories produce not only fentanyl but also a variety of legal chemicals and pharmaceuticals. That means they cannot readily be compared to underground heroin laboratories or cocaine processing plants, which are often hidden in remote areas and guarded by heavily armed private militiamen.

Seized illegal fentanyl packages on display in New York.

The drugs can then be shipped as “pharmaceuticals” or hidden in “chemical” shipments. Reports show they are also frequently sent by standard mail courier services, making the US Postal Service perhaps the largest “drug transportation network” in the world through its delivery of Chinese-made fentanyl straight to American homes.

Given the size and complexity of China’s chemical and pharmaceutical industries, and with annual profits estimated to be at least US$100 billion, it is not easy task for authorities to monitor and prevent the “illicit” drug trade.

Whether or not the recent sentences of fentanyl dealing drug traffickers will give new impetus or build new trust to ongoing trade war negotiations remains to be seen.

But the fact that the arrests came after Chinese authorities acted on a 2017 tip from the US Homeland Security Department shows a certain degree of improved cooperation between the two sides.

On the other hand, a senior official with “China’s Narcotics Control Commission” said that the sentences were not in any way related to the trade war.

Chinese officials have frequently denied that their country is the main source of fentanyl sold on US black markets, which also enters the US from Mexico.

Illegal fentanyl flows from China into the US along various routes. Photo: US Government Accountability Office/Screenshot.

Fentanyl was first made in the 1960s and approved for medical use in the US in 1968. It is often used as an “anesthetic” during surgery in hospital emergency rooms, or to alleviate “pain” for cancer patients.

Taken recreationally, often mixed with heroin, it has a massive sedative effect, often causing hallucinations. Because fentanyl is purely synthetic, it is easier to make than heroin, which requires opium poppies that must be harvested and the sap refined into white powder.

It is also considerably cheaper than pure heroin, which has made it a drug of choice in poor US communities, where most of the overdoses are taking place.

Likely acting on US pressure, on May 1, China placed fentanyl and related substances on its list of controlled drugs and pledged to tighten controls. At the same time, China has publicly insisted it is not a major fentanyl supplier to US black markets.

Liu Yuejin, deputy director of the China National Narcotics Control Commission, at a press conference on June 17, 2019.

Liu Yuejin, vice commissioner of the Ministry of Public Security’s drug control agency, recently cited US government statistics showing only six kilograms of a total of 537 kilograms of fentanyl related substances seized by US authorities between October 2018 and this March originated from China.

Most of the drugs seized came from Mexico, the same statistics showed. Liu also dismissed reports claiming that Chinese companies had shipped fentanyl to Mexico as a way to obscure the drugs’ actual origin.

In late August, China’s foreign ministry urged the US to improve its domestic regulations to tackle the roots of the Opioid crisis at home, and not blame China for the lethal scourge. China is also a victim of the legal and illicit sale of Opioids, where synthetic drugs are becoming more widely available than opium and its derivative heroin.

US drug officials, meanwhile, insist that apart from direct online sales to American consumers, fentanyl is also being shipped from China to Mexico, where it is reportedly sold to drug cartels for around $3,000 per kilogram.

According to the New York Times investigation, 100 kilograms of fentanyl pressed into pills would have a street value of millions or even billions of dollars.

Other press reports citing US narcotics control officers say Chinese fentanyl can be bought on black markets for $6,000 per kilogram. Once mixed with heroin and pressed into tablets, it can be sold for as much as $1.6 million on US streets.

Either way, it is clearly an extremely lucrative business for Chinese manufacturers as well as middlemen and the distributors.

Skeptics argue that the claims of Chinese complicity in the trade echo similar stretched allegations made by the US in the late 1960s, when American drug enforcement officials claimed that opium was grown in China, made into heroin there, and then smuggled to the US.

The first US official to gainsay the claim was then-US Assistant Secretary of State Marshall Green, who in a July 1971 interview with the now defunct Hong Kong weekly “Far Eastern Economic Review” said that opium poppies were instead cultivated in a “golden triangle” stretching from northeastern Myanmar to northern Thailand and northwestern Laos.

Image of pharmaceutical fentanyl.

At the time, Washington was trying to curry favor with Beijing and, in the same month as the article appeared, it was later announced that then-US president Richard Nixon would visit China the following February, resulting in a historic thaw in relations.

The term “golden triangle” captured the public imagination and within a few years the Golden Triangle — later stylized with a capital “G” and “T”—came to symbolize the lawlessness of opium and its trade, then often conducted literally on the backs of mules.

Fast forward to the present, drugs are moved by other means and sold over the internet, but narcotics remains a bane in the area. And this time it is undeniable that China is part and parcel of the problem.

As previously, drug-dealing allegations are still a tool in high-stakes international diplomacy, as seen in Trump’s connecting America’s fentanyl epidemic with his wider trade war with China.

US President Donald Trump and Chinese President Xi Jinping at the 2018 G20 summit in Buenos Aires. Photo: AFP/Yomiuri Shimbun

According to a November 7 report by the US news network CNBC, “Trump cares passionately about overdoses and passionately about drug use…he didn’t want to sit down until this of the ‘seven deadly sins’ was agreed to” with the Chinese.

Trump’s supposed “passion” for curbing the illicit trade may be explained by the fact that the worst-affected US communities, including in the so-called Rust Belt in the country’s Midwestern region, are situated in important swing states ahead of 2020 elections.

The November 7 sentencing of nine Chinese fentanyl traffickers could yet represent a step forward in bilateral trade war talks. But clearly much more must be done on both sides of the Pacific to tackle drug scourge that is taking annually thousands of American lives.