THE CCP'S ROLE IN THE FENTANYL CRISIS

THE CCP’S ROLE

IN THE

FENTANYL CRISIS

THE SELECT COMMITTEE ON THE

STRATEGIC COMPETITION BETWEEN

THE UNITED STATES AND

THE CHINESE COMMUNIST PARTY

Table of Contents

I. The Cost and Source of the Fentanyl Crisis ....................................................... 5

II. The CCP Has Fueled America’s Fentanyl Crisis................................................ 8

A. The PRC Government Subsidizes the Manufacturing and Export of Illicit

Fentanyl Materials through Tax Rebates...................................................... 10

B. The PRC Government Gave Monetary Grants and Awards to Companies

Openly Tracking Illicit Fentanyl Online ................................................... 18

C. The PRC Government Holds Ownership Interests In Several Companies

Tracking Illicit Fentanyl Materials ............................................................ 20

III. The CCP Fails to Prosecute Fentanyl Precursors and Synthetic Narcotics

Manufacturers ........................................................................................................ 23

A. The PRC Government Has Thwarted U.S. Law Enforcement

Investigations into Illicit Fentanyl Manufacturers .................................... 23

B. The PRC Allows the Open Sale of Fentanyl Precursors and Other

Materials that Fuel the Fentanyl Crisis on the Extensively Surveilled

Chinese Internet .............................................................................................. 26

C. The PRC Government Censors Content About Domestic Drug Sales—But

Leaves Export-Focused Narcotics Content Untouched ............................. 30

D. The PRC Aggressively Prosecutes Domestic Drug Tracking But Leaves

Illicit Drug Exports Untouched ..................................................................... 31

IV. The Fentanyl Crisis Advances the PRC’s Strategic and Economic

Interests ................................................................................................................... 32

A. The Fentanyl Crisis Benets PRC Criminal Enterprises, Helping Solidify

Support for the CCP ....................................................................................... 32

B. The PRC Has Used Asymmetric Tactics Against the United States, Some

PRC Ocials Advocate “Drug Warfare” ..................................................... 35

V. Policy Solutions ..................................................................................................... 38

EXECUTIVE SUMMARY

The fentanyl crisis is one of the most horric disasters that America has

ever faced. On average, fentanyl kills over 200 Americans daily, the equivalent

of a packed Boeing 737 crashing every single day. Fentanyl is the leading cause

of death for Americans aged 18-45 and a leading cause in the historic drop in

American life expectancy. It has led to millions more suering from addiction

and the destruction of countless families and communities. Beyond the United

States, fentanyl and other mass-produced synthetic narcotics from the People’s

Republic of China (PRC) are devastating nations around the world. It is truly

a global crisis.

The PRC, under the leadership of the Chinese Communist Party (CCP), is

the ultimate geographic source of the fentanyl crisis. Companies in China

produce nearly all of illicit fentanyl precursors, the key ingredients that drive

the global illicit fentanyl trade. The House Select Commiee on the Strategic

Competition between the United States and the Chinese Communist Party

(Select Commiee) launched an investigation to beer understand the role of

the CCP in the fentanyl crisis. This investigation involved delving deep into

public PRC websites, analyzing PRC government documents, acquiring over

37,000 unique data points of PRC companies selling narcotics online through

web scraping and data analytics, undercover communications with PRC drug

tracking companies, and consultations with experts in the public and private

sectors, among other steps.

The Select Commiee’s investigation has established that the PRC

government, under the control of the CCP:

1. Directly subsidizes the manufacturing and export of illicit fentanyl

materials and other synthetic narcotics through tax rebates. Many of

these substances are illegal under the PRC’s own laws and have no

known legal use worldwide. Like its export tax rebates for legitimate

goods, the CCP’s subsidizing of illegal drugs incentivizes international

synthetic drug sales from the PRC. The CCP has never disclosed this

program.

2. Gave monetary grants and awards to companies openly tracking

illicit fentanyl materials and other synthetic narcotics. There are even

examples of some of these companies enjoying site visits from

provincial PRC government ocials who complimented them for their

impact on the provincial economy.

3. Holds ownership interest in several PRC companies tied to drug

tracking. This includes a PRC government prison connected to

human rights abuses owning a drug tracking chemical company and

a publicly traded PRC company hosting thousands of solicitations of

open drug tracking on its sites.

4. Fails to prosecute fentanyl and precursor manufacturers. Rather than

investigating drug trackers, PRC security services have not

cooperated with U.S. law enforcement and have even notied targets

of U.S. investigations when they received requests for assistance.

5. Allows the open sale of fentanyl precursors and other illicit

materials on the extensively monitored and controlled PRC internet.

A review of just seven e-commerce sites found over 31,000 instances of

PRC companies selling illicit chemicals with obvious ties to drug

tracking. Undercover communications with PRC drug tracking

companies (whose identities were provided to U.S. law enforcement)

revealed an eagerness to engage in clearly illicit drug sales with no fear

of reprisal.

6. Censors content about domestic drug sales but leaves export-focused

narcotics content untouched. The PRC has censorship triggers for

domestic drug sales (e.g., “fentanyl + cash on delivery”), but no such

triggers exist to monitor or prevent the export of illicit narcotics out of

the PRC.

7. Strategically and economically benets from the fentanyl crisis. The

fentanyl crisis has helped CCP-tied Chinese organized criminal groups

become the world’s premier money launderers, enriched the PRC’s

chemical industry, and had a devastating impact on Americans.

While the PRC government publicly acknowledged in November 2023 that

the tracking of fentanyl precursors and other illicit narcotics materials in the

manner described above is illegal under Chinese law, the Select Commiee

found thousands of PRC companies openly selling these illicit materials on the

Chinese internet—the most heavily surveilled country-wide network in the

world. The CCP runs the most advanced techno-totalitarian state in human

history that “leave[s] criminals with nowhere to hide” and has the means to

stop illicit fentanyl materials manufacturers, yet it has failed to pursue agrant

violations of its own laws.

Armed with the knowledge gained in the course of this investigation, the

United States should:

• Establish a Joint Task Force – Counter Opioids (JTF-CO) that

concentrates all non-military elements of state power and executes

a coordinated strategy to target the weak points in the global illicit

fentanyl supply chain.

• Provide law enforcement and intelligence ocials with the statutory

authorities, tools, and resources they need to execute their

responsibilities, including through enhancing international law

enforcement cooperation, appropriately prioritizing fentanyl and anti-

money laundering in intelligence and enforcement eorts; and

recruiting and retaining top talent to combat the fentanyl threat.

• Strengthen U.S. sanctions authorities and use those authorities in an

aggressive and coordinated manner against entities involved in the

fentanyl trade.

• Enact and use trade and customs enforcement measures to restrict

fentanyl tracking.

• Close regulatory and enforcement gaps exploited by PRC money

launderers and fentanyl trackers.

I. THE COST AND SOURCE OF THE FENTANYL CRISIS

Each morning, Americans across the nation wake up to nd their child,

spouse, or parent dead from a singular cause. The killer does not dierentiate

based on age, class, or race. Young or old, rich or poor, all succumb to this deadly

substance. For some, death is swift; an overdose on a counterfeit pill leads them to

essentially drown while unconscious, the powerful chemical causing receptors in

the body to release uid into the lungs.

For others, death only comes after years

of grueling struggle with an overwhelming addiction.

The death, pain, and

despair reverberate far beyond each victim, causing a historic tragedy that has

devastated families, communities, and, ultimately, our nation and the entire

world.

The substance is fentanyl, a deadly synthetic opioid that is up to 50 times

stronger than heroin. Fentanyl kills on average over 200 Americans daily, the

equivalent of a packed Boeing 737 crashing every single day.

Fentanyl is the

leading cause of death for Americans aged 18-45 and a leading cause in the historic

drop in American life expectancy.

It has devastated families, with over 2.6 million

children being raised by other relatives due to their parents’ addiction.

Fentanyl

has likewise inicted great harm on American

communities, impacting suburban, urban, and

rural areas alike.

While the human tragedy is

by far the most pressing concern, the fentanyl

crisis also has economic implications; a

congressional report found that it cost the

United States nearly $1.5 trillion in 2020,

or 7%

of gross domestic product.

The fentanyl

epidemic therefore does not just haunt our past and devastate our present, but also

robs us of a beer and more vibrant future. And this is just the cost to our country.

In nations around the world, families suer and grieve from the mass proliferation

of PRC-origin synthetic narcotics like fentanyl. This is truly a global crisis.

The PRC, under the leadership of the CCP, is the ultimate geographic source

of America’s fentanyl crisis. Companies in China

earlier produced 97% of illicit fentanyl that entered

the United States. Today, these Chinese companies

produce nearly all fentanyl precursors that are

used to manufacture illicit fentanyl worldwide.

The PRC’s central role in the fentanyl crisis is

uncontroversial, acknowledged by

administrations of both parties and the bipartisan

This astronomical expense is especially sobering when considering the opportunity cost. In 2022, the

U.S. federal government spent $76.4 billion on education, $24.04 billion on NASA, and $6.9 billion on

cancer research. Imagine a world without the fentanyl crisis where it instead spent $1.5 trillion a year

on these and other vital pursuits.

“Today, these Chinese

companies produce nearly

all fentanyl precursors that

are used to manufacture

illicit fentanyl worldwide.”

“Fentanyl kills on average over

200 Americans daily, the

equivalent of a packed Boeing

737 crashing every single day.”

U.S. Commission on Combating Synthetic Opioid Tracking.

The Drug

Enforcement Administration (DEA),

Department of Justice (DOJ) indictments,

and independent experts have reached the same conclusion.

For years, PRC companies directly shipped fentanyl and fentanyl analogues

illegally into the United States. After years of diplomatic pressure, the PRC nally

designated all fentanyl analogues as controlled substances in May 2019.

While

this was a positive development, the PRC’s designation left a gaping loophole for

fentanyl precursors

—and Chinese chemical manufacturers pivoted to

manufacturing and exporting the essential ingredients to produce fentanyl to the

Mexican cartels.

Although PRC ocials would privately admit to U.S. ocials that

manufacturing and exporting precursors or other non-scheduled narcotics were

still illegal under PRC law when they were tied to drug tracking,

they denied

the fact publicly—a clear signal to the Chinese chemical industry.

In November 2023, after signicant U.S. diplomatic pressure, the PRC nally

issued a Notice admiing publicly that such activity is illegal—another positive

Fentanyl analogues are drugs that have a similar chemical structure to fentanyl and often have greater

lethality.

The PRC’s Synthetic Narcotics Industrial Base Fuels Other Synthetic

Drug Crises that Threaten America and the Rest of the World

The output of the PRC’s illegal synthetic narcotics industrial complex has

profound implications beyond America’s fentanyl crisis. PRC chemical

companies provide over 80% of methamphetamine precursors for cartels.

The

industrial complex also fuels waves of addiction and death around the world.

For instance, PRC-based syndicates control the massive amounts of illegal

methamphetamine tracked into Australia.

The same is true for the ketamine

ooding southeast Asia.

“China is also the dominant source country for

precursors heading into Vietnam, and recent large seizures of precursors and

pre-precursors originating in China have taken place in Laos, and precursors

from China have long headed to Thailand too.”

PRC chemical companies,

along with those in India, send bulk shipments of illicit tramadol (an opioid)

and tramadol precursors to Africa.

The PRC uses the same playbook in this

part of the world. It promises to assist, falsely claims PRC companies do not

violate Chinese law while expressing its inability to help; controls certain

substances but fails to enforce its own laws; and uses Chinese organized crime

to launder proceeds. “China likes to talk tough and schedule a lot [i.e., place

substances on controlled lists], but does not enforce much, abroad especially.”

It is therefore essential for the United States to work with partners around the

world to address this global threat.

development.

24iii

Although the acknowledgement of illegality in the Notice is

important and long overdue, there is scant evidence that this Notice has deterred

the PRC’s chemical producers from engaging in illicit activity.

The PRC

government does not police the mass exportation of these substances abroad.

There is lile to no record of any PRC prosecutions for exporting these substances

or any tangible reduction in PRC-based drug tracking.

This is in stark contrast

to the PRC’s prosecution, including of foreigners, for domestic drug tracking.

For years, the U.S. government has repeatedly brought cases and evidence to the

PRC government’s aention and asked them to prosecute the oenders under its

own laws.

Based on discussions with former government ocials and a review

of PRC criminal law databases, with the exception of one case, the PRC

government has thus far refused.

The Biden administration has recently brought

the PRC government back to the table with the announcement of a working group.

Both the previous and current administration have sought to work with this PRC

government to resolve the fentanyl crisis through a Counternarcotics Working

Group. This investigation seeks to go further, and we hope it informs the work of

the Counternarcotics Working Group going forward.

Fentanyl Supply Chains—PRC COVID Shutdowns Curtail Fentanyl Flows

In early 2020, as the CCP locked down Wuhan and other cities in the Hubei

and Hebei provinces—two regions known as a major source of fentanyl

precursors for cartels—fentanyl became increasingly scarce in the United

States.

Cartel fentanyl manufacturing stalled, supply dwindled, and prices

skyrocketed. Cartel operatives complained, acknowledging that they are “all

struggling to get the chemicals to Sinaloa from China,” which was required to

make synthetic narcotics.

It was as if the United States had, completely

accidentally, discovered an o switch for the fentanyl crisis.

This strong causal

relationship continues today, with a blockchain analysis company recently

accurately predicting the amount of fentanyl seized at the southwest border

based on cryptocurrency payments that PRC manufacturers received for

fentanyl precursors a few weeks earlier.

This was further conrmed by a

supply chain analytics rm, which reviewed hundreds of thousands of data

points relating to the movement of fentanyl precursor products to Mexican

cartels and conrmed for the Select Commiee that the PRC was the source for

essentially all of the cartels’ supplies.

In short, the PRC “has done lile to halt the ow of fentanyl to the United

States. Mexican drug tracking groups continue to almost exclusively source

iii

Rather than focusing exclusively on the harm that fentanyl causes, however, the PRC devoted half of

the Notice to warning its citizens about U.S. law enforcement’s “long arm jurisdiction” and “shing

law enforcement risks.”

fentanyl precursor and pre-precursor chemicals in China, synthetize them into

fentanyl, and smuggle them to the United States.”

Because Chinese chemical manufacturers sell fentanyl precursors at extremely

low margins,

fentanyl can be sold for a fraction of the cost of other drugs.

This

has resulted in “an unlimited and endless supply of precursor chemicals […]

coming from China to Mexico” to be sold as fentanyl in the US, according to the

DEA.

Last year, a single PRC chemical manufacturer shipped enough fentanyl

precursors to produce over 25 million lethal doses to just one undercover agent.

In 2022, DEA seized over 379 million lethal doses of fentanyl,

and California has

seized “enough fentanyl to potentially kill the

entire population of North America, twice.”

These seizures represent a fraction of the total

fentanyl smuggled into the country. PRC-

fueled fentanyl has thus ooded the streets of

the United States, outcompeting all other

forms of narcotics. It is even used as a cost-

ecient means of “cuing” other pricier

narcotics, like cocaine.

The PRC is also the source of nitazenes

and xylazines (“tranqs”), deadly new

chemicals resistant to naloxone treatment

that are increasingly killing

Americans.

Most nitazenes are substantially more potent than fentanyl, with one

common variety estimated to be 25 times stronger than the deadly opioid.

Xylazine, when mixed with fentanyl, dramatically increases the risk of death and

causes the user’s esh to rot.

According to the DEA, PRC-produced nitazenes and

xylazines are rapidly proliferating across the United States.

Unless the PRC

illegal synthetic narcotics industry is stopped, nitazenes and tranqs may usher in

a new onslaught of deaths in the ongoing opioid crisis.

II. THE CCP HAS FUELED AMERICA’S FENTANYL CRISIS

The PRC government, under the control of the CCP, provides subsidies to

entities that export fentanyl and related precursors, provides support to Chinese

Naloxone (common brand name, “Narcan”) is a life-saving medication that can counteract an opioid

overdose, so resistance to this treatment is a maer of signicant concern. Due to the potency of

nitazenes, several naloxone treatments are often needed to have a chance of saving the overdose victim.

Xylazine is a powerful sedative frequently found mixed with opioids. Due to Xylazine’s chemical

composition, naloxone cannot help those who overdose on it.

“A single PRC chemical

manufacturer shipped enough

fentanyl precursors to produce

over 25 million lethal doses to

just one undercover agent.”

The PRC is also the source of nitazenes

and xylazines (“tranqs”), deadly new chemicals

resistant to naloxone treatment that are increasingly killing Americans.

companies openly engaged in the fentanyl trade, and owns and supports, in whole

or in part, illicit drug manufacturers.

Specically, our investigation has revealed that the PRC government oers

government money in the form of tax rebates to companies to manufacture and

export illegal synthetic narcotics, including fentanyl and fentanyl analogues. The

original subsidies incentivized mass production of at least 14 fentanyl analogues,

including 3-methylfentanyl, an analogue that has no medical use and is so potent

that it has been reportedly used as a chemical

weapon.

These subsidies were solely for exporting

these deadly synthetic narcotics out of China.

This

policy was in place at least as early as 2018 and

continued during the height of diplomatic furor

between the United States and the PRC over the

massive amounts of illicit fentanyl materials it was

sending to America.

The investigation has also established that the PRC government continues

to subsidize the sale of fentanyl and illicit synthetic narcotics abroad today.

While the PRC government restricted access to the government website describing

these subsidies in 2019,

it continued the program, expanding subsidies to all

fentanyl analogues and precursors. The Select Commiee found evidence

conrming that these subsidies remain in place

as of April 2024 on a PRC government website.

This site does not reveal the subsidies when

searching for “fentanyl” in English. Instead, it

requires either input of specic rebate

commodity codes or searching for “fentanyl” in

Mandarin. In addition, the PRC government site

originally blocked our access when we aempted to look up illicit narcotics

subsidies in English from a U.S.-based IP address (but not a Chinese Virtual

Private Network (VPN)), though this function no longer seems to consistently

occur.

The subsidies do not appear to have any legitimate rationale, because they

subsidize the export of substances that were and are illegal under the PRC’s own

laws and have no known legal use worldwide.

The Select Commiee also found that the PRC government rewarded

companies in China that openly advertised their production and sale of illicit

synthetic narcotics with government grants and awards. In internal documents,

these companies boasted that they were owned by the PRC government and that

“The PRC government

oers … tax rebates to

companies to manufacture

and export … fentanyl.”

“The subsidies do not appear to have any legitimate rationale, because they subsidize

the export of substances that were and are illegal under the PRC’s own laws and have

no known legal use worldwide.”

“The PRC government

continues to subsidize the sale

of fentanyl … abroad today.”

their illicit products were tax exempt, corroborating the existence of tax rebate

subsidies.

Finally, the investigation revealed that some PRC synthetic narcotics

manufacturers are owned, in whole or in part, by PRC government entities and

individuals. This includes a PRC government prison accused of signicant human

rights abuses.

A. The PRC Government Subsidizes the Manufacturing and Export of

Illicit Fentanyl Materials Through Tax Rebates

As part of our investigation, the Select Commiee obtained materials showing

that, as far back as 2018, the PRC central government’s Value-Added Tax (VAT)

rebate system incentivized the export of at least 17 illegal narcotics that are

Schedule I controlled substances and have no legitimate purpose.

This includes

14 fentanyl analogues. The PRC also subsidized the export of a synthetic

cannabinoid and PCP (“angel dust”), which the DEA has stated has no legitimate

use.

Most of these chemicals likewise fall under a United Nations Treaty as

Schedule I controlled substances.

Several of the fentanyl analogues

not only

have no documented commercial use but also are known solely as drugs that

briey led to a surge of American opioid overdose deaths in the early 1980s.

Another, 3-methylfentanyl, is up to 6,000 times stronger than morphine and, due

to its incredible lethality, may be considered a chemical weapon.

vii

Public

reporting indicates that the Russian Federation used it in the 2002 Moscow theater

hostage crisis, with its deployment resulting in mass casualties among both

hostages and hostage takers.

The Select Commiee, through DEA’s legislative aairs oce, consulted with a DEA chemist who

conrmed this nding. The PRC subsidized Schedule I narcotics. These substances have no known

industrial or medicinal use worldwide, including in the PRC.

These include Betahydroxyfentanyl, thiofentanyl, and 3-methylthiofentanyl.

vii

The PRC’s subsidies of deadly chemicals with no known legitimate purpose—and particularly 3-

methylfentanyl, a potent chemical reportedly used as a chemical weapon—may violate a major

international treaty. The Chemical Weapons Convention—of which the U.S. and China are both

signatories—prohibits the development or production of chemical weapons. Chemical weapons

include deadly chemicals that have no permied use under the Convention. Here, the PRC, a signatory

to the Convention, subsidized the export of deadly chemicals pursuant to the Convention’s denition

with no known legitimate purpose, including one reportedly used as a chemical weapon. In particular,

because of 3-methylfentanyl’s lethality and lack of any legitimate use, it appears that the PRC’s subsidy

of its production for exportation may violate the convention. See generally, Press Release, Bureau of

Indus. and Sec., U.S. Dep’t of Com., Commerce Expands and Aligns Restrictions with Allies and

Partners and Adds 71 Entities to Entity List in Latest Response to Russia’s Invasion of Ukraine (May

19, 2023), available at hps://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-

releases/3273-2023-05-19-bis-press-release-russia-rules-and-joint-bis-ncen-alert/le (sanctions to

prevent Belarus from geing fentanyl and fentanyl precursors due to WMD concerns).

VAT “is a tax levied on all sales of commodities at every stage of production.”

VAT rebates for exports (usually in the form of a “monthly export VAT refund

claim”) reduce (and, in some cases, eliminate) the tax that a company must pay on

its exported goods, incentivizing the manufacture and export of goods subject to

the rebate.

The PRC uses its “Export VAT Refund system as an active trade policy

tool to regulate prices on its exports and improve its international

Figure 3 – PRC export rebate for 3-methylfentanyl (2019).

Figure 2 - PRC export rebate subsidies for fentanyl,

fentanyl analogues, PCP, and other chemicals. Screenshots

taken Jan.8, 2019. Both the subsidized chemical list and the

percentage of VAT rebate were adjusted between Feb 2018

(Fig. 1) and Jan. 2019 (Fig. 2).

Figure 1 - PRC export rebate subsidies for fentanyl, fentanyl

analogues, PCP, and other chemicals. Screenshots taken Feb.

21, 2018.

competitiveness.”

To this end, “[PRC] tax policy has created a VAT refund system

based on the so-called ‘refund rate’” where “[t]he authorities set refund rates for

product categories.”

Studies have found that the PRC government’s favoring of

certain products with VAT refunds dramatically incentivizes their production and

export.

These rebates also have a “signicant and large” eect on PRC export

volume—“on average, for each percentage point increase in the VAT rebate rate,

the amount of exports increased by 13%.”

By reducing or eliminating the tax on certain exports, the PRC government

loses that tax revenue, incurring considerable costs.

VAT export rebates are

overseen by the State Taxation Administration, an arm of the central PRC

government that reports directly to the State Council.

While the PRC had individualized subsidies for over 14 fentanyl analogues in

2019, PRC law only authorized domestic sale or export of three types of fentanyl:

fentanyl, sufentanil, and remifentanil (with alfentanil added to the authorized list

in 2020).

The PRC government likewise only granted licenses for fentanyl

analogue manufacturing and export to ve companies.

There is thus no

legitimate reason for the PRC government to create a nationwide (rather than

company specic) subsidy for exporting even these three fentanyl analogues, let

alone many more that are wholly illegal Schedule I narcotics.

The PRC government also adjusted the subsidies for illicit narcotics and which

narcotics it subsidized from 2018 to 2020, showing that the subsidies were not a

holdover from an earlier administrative error long ago. The Select Commiee has

reviewed data sets for the same product categories containing several of these

synthetic narcotic export subsidies from 2018 and 2019. Several synthetic narcotics

went on and o the list of products eligible for rebates during this time. The PRC

failed to remove any fentanyl analogues. Moreover, during the height of

diplomatic furor over the fentanyl crisis, the PRC government actually increased

the VAT rebate for several fentanyl substances by an additional percent.

The

Select Commiee also obtained evidence showing that the PRC increased the

rebates again in 2020 to 13%, at that point the highest potential subsidy for any

PRC exported product.

“The PRC increased the rebates again in 2020 to 13%, at that point the highest

potential subsidy for any PRC exported product.”

The PRC’s subsidies for illicit narcotics were also unusually high. Most

Chinese VAT rebates are “3%, 6%, and 9% for dierent groups of commodities.”

The subsidies for the illicit synthetic narcotics were 13% (with one category raised

to that level in 2020). While the PRC government has not disclosed the amount of

illegal synthetic narcotics exports that the PRC government subsidized, studies

have found that the cost can be “quite substantial.”

Information about these subsidies disappeared from the PRC internet after

initial reporting in Ben Westho’s 2019 book, Fentanyl, Inc., with access to the VAT

export rebate government database for non-PRC residents quietly removed by the

PRC.

In 2024, the Select Commiee found another PRC government site

documenting the PRC’s current VAT export rebates. It found that, rather than

discontinuing the program, the PRC government expanded the export subsidies

for illicit substances to “other fentanyls and their derivatives,” which would

include all fentanyl analogues and precursors. The PRC scheduled all fentanyl

analogues as controlled substances in 2019, meaning it currently subsidizes the

export of drugs that are illegal under both U.S. and PRC law. It additionally

currently subsidizes two fentanyl precursors highly prized by the cartels, NPP and

ANPP, which the PRC scheduled in 2018.

The PRC also continues to subsidize

Figure 4 – List of known PRC export rebates for fentanyl substances and other

chemicals (2019).

other illegal drugs with no known legitimate purpose, such as PCP (“angel dust”),

MDMA, illicit amphetamines, cathinones, and synthetic cannabinoids.

viii

All of

these illegal synthetic narcotics receive a full tax rebate, the maximum potential

subsidy under this system.

The website did not reveal the fentanyl subsidies when searching for the term

in English. Instead, it required either knowing the previous product code (e.g.,

29333300) from the 2019 PRC export rebate website or searching “芬太尼”

(“fentanyl” in Mandarin).

viii

The subsidies found on the PRC export VAT rebate site only pertain to a set number of items. It does

not, for instance, subsidize commonly exported chemicals like ethylene dichloride, propylene, benzene,

iodine, or sulfuric acid. Many other legitimate items receive a substantially lower VAT rebate,

demonstrating that the PRC government selects illicit narcotics for subsidies and grants them the

maximum possible subsidy amount.

Figure 5 – PRC Export Tax Rebates for "other fentanyls and

their derivatives" (twice), fentanyl, alfentanil, and

Phencyclidine (PCP), among other chemicals.

Figures 7 & 8 – 1-pentyl-3-(1-naphthoyl)indole, aka JWH-018, a synthetic

cannabinoid marketed as "Spice" or "K2." This substance has no legal purpose

and is illegal for domestic use or export in China, yet the PRC subsidized it in

2019 (Fig. 7, above) and still subsidizes its export today (Fig. 8, below).

Figure 9 – PRC export subsidies for NPP and ANPP, key fentanyl precursors that

the PRC controlled in 2018.

Figure 10 – PRC export rebate subsidy for MDMA.

In addition, when first discovered

in late February 2024, the database

appeared to have an automated

tripwire, where searches for fentanyl in

English from a U.S. IP address resulted

in the website blocking the user and

stating, in English, “Your current

behavior is detected as abnormal.”

Accessing the website from a PRC IP

address using a VPN did not trigger

this response. As of April 10, 2024, the

tripwire only appears to trigger

intermittently.

The documents the Select Commiee reviewed only cover a small portion of

the PRC’s original VAT export rebates. Due to the system’s tripwires and diculty

searching the site, the Select Commiee’s investigation into the complete rebate

list, including what other illicit substances the PRC government still subsidizes for

export, is ongoing.

In discussions with American ocials, the PRC government has repeatedly

stated that it cannot control illegitimate actions within the PRC chemical industry

because it cannot identify which manufacturers are exporting synthetic narcotics.

The information above illustrates that the PRC government has not disclosed all

relevant information related to PRC policy. To receive a VAT refund, a company

must list the name and amount of the substance that they are exporting to show

that it qualies for the refund and to quantify the rebate amount due.

The PRC

fentanyl refund thus requires that the PRC company provide the government with

its full identication and record of its sales of illicit substances abroad. In other

words, the PRC’s VAT refunds for fentanyl materials and other synthetic narcotics

would necessarily give PRC law enforcement an opportunity to easily obtain

extensive evidence of which chemical companies participate in the global illicit

fentanyl trade from other elements of the PRC government. According to cabinet

ocials, agency heads, and other senior government ocials that the Select

Commiee has consulted, the PRC government never raised this capability during

negotiations on the fentanyl crisis and there is no evidence that they ever used it

to enforce their own laws.

Figure 11 – Screen that originally appeared when

Select Commiee investigators aempted to

access the export rebates for narcotics using a U.S.

IP address. This screen now only intermiently

appears when doing so.

The CCP’s Subsidies Dramatically Increase Illicit Narcotics Sales

Treasury Secretary Janet Yellen recently rightly condemned the CCP’s use

of export subsidies for certain goods, as it results in market distortions that are

harmful to the global economy.

Just as the CCP’s subsidies of electronic

vehicles (EVs) lead to the dumping of massive numbers of PRC EVs around the

world, the CCP’s subsidies of illegal narcotics lead to the dumping of massive

numbers of illegal narcotics worldwide. And this is born out in the data.

As discussed in Section III below, the Select Commiee used web scraping

and data analytics programs to identify and analyze instances of PRC

companies selling illicit synthetic narcotics on seven e-commerce sites. As part

of its analysis, the Select Commiee compared the amount of the PRC

subsidized synthetic cannabinoid, JWH-018,

to nonsubsidized varieties of the

same drug type. We found that the subsidized synthetic cannabinoid was

oered for sale at a 10 to 20 times higher rate than the majority of similar drugs

and greater than the next ve most frequently sold synthetic cannabinoids

combined. While this small data set has inherent limitations, the dramatic

dierence between subsidized versus non-subsidized narcotics oered for sale

demonstrates how the CCP’s illicit drug subsidies incentivizes fuel, and even

direct the global illicit drug trade.

Table 1 – Number of posts oering sale of certain synthetic cannabinoids.

B. The PRC Government Gave Monetary Grants and Awards to

Companies Openly Tracking Illicit Fentanyl Online

Our investigation also revealed that the PRC government provided grants and

awards to companies engaging in open and notorious synthetic narcotics

manufacturing and drug tracking.

For instance, in 2023, Shanghai’s Minhang District announced that it would

support Shanghai Ruizheng Chemical Technology Co., Ltd. as part of a “foreign

trade stabilization policy project” designed to boost exports.

The support

included export credit premiums and export credit insurance support. The award

was part of the Shanghai Science and Technology Innovation Policy Services,

that

in turn appears to be part of a program run by the PRC’s national Ministry of

Science and Technology.

Ruizheng, also known as “the Richest Group,” is a notorious seller of fentanyl

products, which it advertises widely and openly on Chinese websites like

Alibaba.

Despite this, Ruizheng not only received PRC government awards but

was also invited to PRC provincial government roundtables, such as a 2021 event

discussing how small- and medium-sized technology businesses can contribute to

the 14

Five-Year Plan.

In another instance, Gaosheng Biotechnology—which a prominent think tank

report identied as a prolic online seller of fentanyl precursors and synthetic

narcotics

—received government awards and site visits from PRC government

ocials while it openly advertised the sale of illegal narcotics online. Specically,

Secretary of the Guangzhou Development Zone and Deputy Director of the

Guangzhou Development Zone Management Commiee both visited the

company and spoke approvingly of its businesses impact on the provincial

economy.

Reviewing internal Gaosheng corporate records that an employee had

inadvertently left on a public facing website,

we conrmed Gaosheng’s

widespread international online presence, including sales accounts on 98 websites

and boasting of sales to the U.S., Mexico, UK, Russia, and Germany. These

documents also conrmed that Gaosheng sold dozens of dangerous synthetic

narcotics, including fentanyl analogues, U-47700, heroin, and methamphetamine.

At time of sale, these drugs were illegal under PRC law. In these corporate records,

Gaosheng also noted that it is “wholly state-owned” and “enjoy[s] tax exemption

privileges,” a description consistent with the VAT subsidies described in Section

II.A above. The internal records also

showed that it created a new

corporation, Hebai Zeqian

Biotechnology, as part of its drug

tracking scheme. After negative

western press about Gaosheng’s drug

tracking activities, Gaosheng invested

300 million RMB into this successor

Figure 12 – Gaosheng, a company openly selling fentanyl precursors and other

illicit drugs online, boasting of its PRC tax exemption in internal corporate

documents.

“The PRC government oered to fund

the creation of a second factory for a

PRC-based criminal whose entire

business model was producing synthetic

narcotics and selling them abroad.”

entity, potentially as a means to avoid being targeted by U.S. law enforcement

action and sanctions.

In addition, the Select Commiee has interviewed former federal agents who

investigated major PRC synthetic narcotics manufacturers. These agents provided

corroborating information establishing that the PRC government oered to

directly fund the creation of additional synthetic narcotic manufacturing facilities.

Specically, the PRC government oered to fund the creation of a second factory

for a PRC-based criminal whose entire business model was producing synthetic

narcotics and selling them abroad.

C. The PRC Government Holds Ownership Interests In Several

Companies Tracking Illicit Fentanyl Materials

Our investigation identied several instances where a PRC government entity

had ownership interests in companies tied to the sale of illicit synthetic narcotics.

These are eectively PRC state-owned enterprises in the illicit fentanyl trade.

Gaosheng, for instance, stated in internal documents that it is a “wholly state-

owned entity.”

Yafeng: Another state-owned

company is Yafeng Biological

Technology Co., Ltd., aka Hebei

Shijiazhuang Yafeng Chemical Plant

(hereafter, “Yafeng”). The sole owner

of Yafeng is Hebei Province Shijiazhuang Prison (河北省石家庄监狱), a PRC state-

owned prison.

Disturbingly, the Hebei Province Shijiazhuang Prison is also tied

to human rights abuses, particularly against Falun Gong practitioners. Allegations

include rape, torture, and abuse resulting in death.

Yafeng was formed in 2010, and, according to PRC corporate records, the

company ended formal operations in 2022 (with a successor entity still operating

today). In that time, Yafeng operated several websites that sold illicit synthetic

narcotics, including cathinones, synthetic cannabinoids, and U-47700, a powerful

synthetic opioid tied to overdose deaths.

U-47700 is expressly outlawed in not

just the United States but also China.

It is also listed as a controlled substance by

the United Nations.

On one of its sites, Yafeng boasts “10 years’ experience,” with sales “mainly in

America, Europe, Australia,

Southeast Asia, Middle East, and

South Africa.”

Yafeng advertises

that its “packaging can be made to

measure, normally foil bags and

hidden food bags.” Foil bags and

hidden food bags are common decoys

or “stealth” packaging used by drug

“[State-owned corporation] Yafeng

advertises that [it packages shipments

with] foil bags and hidden food bags[,]

common decoys … used by drug

distributors to avoid detection.”

“Gaosheng … stated in internal

documents that it is a ‘wholly state-owned

entity.’”

distributors to avoid detection by customs and law enforcement.

It also “oer[s]

our guarantee that 100% of our shipments will clear customs.”

Yafeng also has broader ties into the PRC’s global illicit fentanyl trade. For

instance, the same email address that registered Yafeng Biological’s website also

registered at least nine other companies that advertised the sale of illicit fentanyl

materials, including analogues and precursors, for several years. In addition,

Yafeng’s latest website shares the same registered address as two other websites

that prominently advertised the sale of fentanyl precursors and other drugs.

Several of these websites share contact information (e.g., email addresses,

WhatsApp numbers) in common. Based on these commonalities, it appears that at

least one of these sites, protonitazene.com, is under the control of the Yafeng

group. This new site advertises fentanyl precursors, nitazenes, and other synthetic

narcotics with “hot sale to Mexico.”

Figure 13 – Yafeng, a chemical company owned by a PRC prison, boasting of its

international reach. The chemicals oered on the sidebar are all synthetic narcotics.

Yuancheng Group: In another example, rst reported in Fentanyl, Inc.,

Yuancheng Group, one of the largest exporters of fentanyl precursors worldwide

during its operation,

received government grants and subsidies, and appeared to

have a Chinese Communist Party member serving as its legal representative and

the CEO of several of its subsidiaries and shell companies.

The company was

“repeatedly praised by Communist Party ocials,”

even as it openly engaged in

illegal narcotics sales.

Yuancheng’s owner admied in

an interview with Westho that the

company “knows these precursors are

used to make fentanyl” and the

“marketing materials ma[d]e this

clear.”

It was not “selling to hospitals or pharmaceutical companies [but instead]

tak[ing] orders from anyone,” accepting payment in “Bitcoin, Western union, and

direct bank transfer” while promising “’100% guaranteed clearance’ through

customs.”

Nevertheless, the PRC government continued its support of

Yuancheng for years.

Zhejiang Netsun: As Secretary of State Antony Blinken recently noted, “In

China, there’s really no distinction between private companies and the state.”

Secretary Blinken was speaking of the Chinese state’s control of the private sector.

While not unique to the PRC chemical industry, this PRC government control

extends to Chinese publicly traded companies involved in the illicit fentanyl trade.

For instance, Zhejiang Wangsheng, also known as Zhejiang Netsun, is a publicly

traded company registered on the Shanghai Stock Exchange. The PRC government

has a small ownership stake in the company and a CCP member is on its board of

directors, serving as Deputy General Manager. This is consistent with the PRC

government practice of “golden shares” (aka “special management shares”) in

sectors across the PRC economy.

“Golden shares have become a useful tool to

keep companies like these in line with party objectives without the need for the

state being a major stakeholder.”

100

Through this arrangement, “[t]he state takes

company stakes that are often

small but give it a board seat

and power to ensure that

corporate behavior hews to

the party agenda.”

101

The

specialized shares and board

seat give the PRC

government, through its

director proxy, tremendous

power over the company. This power may include decision making on hosted

content (such as veto rights), personnel decisions, compensation packages, and

investment or divestiture plans.

102

A 2018 PRC regulation likewise requires

Netsun, as a publicly traded company, to have established a Chinese Communist

Yuancheng was repeatedly praised by

Communist Party ocials, even as it

openly engaged in illegal narcotics sales.

While the PRC government exerted control on

Zhejiang through its CCP Member board seat

and Party cells, the company’s e-commerce sites

openly sold fentanyl analogues, fentanyl

precursors, and other synthetic narcotics.

Party Cell that has a “greater say in corporate governance.”

103

While the PRC

government exerted control on Netsun through its CCP Member board seat and

Party cells, the company’s e-commerce sites openly sold fentanyl analogues,

fentanyl precursors, and other synthetic narcotics, with many still available for sale

today. Across only three of its e-commerce sites, the Select Commiee identied

over 400 sales of illicit narcotics (e.g., fentanyl precursors, nitazenes) and chemicals

found on the DEA Special Surveillance List (SSL)—a list that “identies laboratory

supplies which are used in the manufacture of controlled substances and

chemicals.”

104

In addition, Netsun serves as the billing or technical contact

(suggesting it is the web host) for over a hundred individual PRC chemical

companies, including Yafeng, that previously or presently sell illegal drugs online.

III. THE CCP FAILS TO PROSECUTE FENTANYL PRE-

CURSOR AND SYNTHETIC NARCOTICS MANUFACTURERS

A nation cannot avoid responsibility for activities within its borders simply by

ignoring what is obvious. The PRC government has the means to stop illicit

fentanyl materials manufacturers, yet it continually fails to do so for those engaged

in illegal activities. It runs the most advanced techno-totalitarian surveillance state

in human history and, by its own rhetoric, has developed an omnipresent digital

and physical surveillance state that “leave[s] criminals with nowhere to hide.”

105

Yet it has failed to pursue agrant violations of its own laws. Indeed, in certain

instances, the PRC government has actively protected illicit fentanyl material

manufacturers from potential legal actions. Drugs are still openly and notoriously

tracked by PRC companies on PRC-based websites, even though the PRC

government admied that these are criminal acts. The Select Commiee has

likewise found no evidence of new criminal enforcement actions. This failure—

when combined with new evidence establishing that the PRC incentivizes the

export of illegal drugs abroad and holds ownership stake in companies doing the

same—casts doubt on the veracity of the PRC’s claims that it will act to stem the

massive export of illicit fentanyl materials and other dangerous synthetic

narcotics, and reinforces the need for global cooperation and communication

between law enforcement agencies.

A. The PRC Government Has Thwarted U.S. Law Enforcement

Investigations into Illicit Fentanyl Manufacturers

Most disturbing are reports of Chinese authorities notifying Chinese synthetic

narcotic manufacturers when the U.S. asks for assistance, thereby allowing them

to change their tactics to avoid

further U.S. detection.

106

Multiple

current and former federal agents

“PRC ocials have notied the targets of an

investigation when U.S. law enforcement

sent a formal request for assistance.”

have described instances where PRC

ocials have notied the targets of an

investigation when U.S. law enforcement

sent a formal request for assistance in

investigating a fentanyl or other synthetic

narcotics manufacturer. This notication

resulted in the target changing their

operational techniques, making it harder to detect and deter their criminal

activities. In the rare cases when U.S. law enforcement or embassy ocials were

granted permission to see a potential synthetic narcotics manufacturing site, the

“Chinese regulatory authorities continue[d] to delay requests for access to inspect

and investigate potential sites of illegal chemical production where precursors are

made. [These] requests are often delayed for days, allowing any illegal operation

to vacate or clean up the premises.”

107

When the United States managed to arrest

and prosecute a PRC citizen, the PRC government not only refused to assist the

investigation but also published warnings to the PRC drug tracking community

to avoid “falling into U.S. snares and arrest-entrapment.”

108

PRC ocials have also obfuscated, delayed, and aempted to dissuade

American law enforcement from prosecuting criminal fentanyl trackers.

109

For

instance, when presented with evidence of major illicit fentanyl analogue

trackers commiing felonies under PRC law,

the PRC ocials admied that the targets had

commied these crimes but refused to

prosecute them. Instead, they actively

prevented any aempts at further cooperation

and asked DOJ not to indict the organization. In

May 2018, a U.S. Department of Justice

investigative team met with senior ocials at

the PRC’s Ministry of Public Security’s

headquarters in Beijing to share information

from DOJ’s investigation into the Zheng Drug

Tracking Organization. In that meeting, PRC

ocials admied that the Zhengs were

tracking in fentanyl analogues but claimed

that they could not prosecute the case because

the substances were not scheduled under PRC law. DOJ then presented PRC

ocials with legal analysis of various Chinese felony provisions and evidence

“[W]hen presented with evidence of illicit fentanyl analogue tracking by a criminal

organization—which PRC ocials agreed was illegal under Chinese law—PRC

ocials refused to prosecute, asked DOJ not to indict the organization[, then] falsely

claimed [they had never received such evidence].”

“[The warnings] resulted in the

target changing their operational

techniques, making it harder to detect

and deter their criminal activities.”

Figure 14 – Fujing Zheng wanted

poster.

establishing that the Zhengs had violated them, with the seniormost PRC ocial

ultimately agreeing that the Zhengs had violated PRC law.

110

Despite this

agreement, the ocials refused to engage further, claiming that “dierent sta”

handles these types of violations and that they would not be in until the following

week. Despite the U.S. investigative team oering to change their ights to meet

the “dierent sta” to discuss further cooperation, the PRC seniormost ocial

refused and ended the meeting, stating that they would be in touch for further

cooperation.

The PRC did not cooperate further despite repeated requests from the United

States. The Department of Justice charged the Zhengs less than three months later,

with the PRC asking DOJ not to prosecute the case shortly before the indictment.

The U.S. Aorney General announced the indictment and asked the PRC to

investigate the Zhengs under its laws.

111

It did not. Instead, Yu Haibin, a senior

ocial with the oce of the China National Narcotics Control Commission, falsely

claimed that “[t]he U.S. side failed to provide China any evidence to prove Zheng

violated Chinese law, and the U.S. knows clearly about that.”

112

The United States

thereafter sanctioned the Zhengs, crippling the organization.

113

In the past ve years, the United

States and its allies have indicted,

sanctioned, or otherwise made public

evidence establishing the

involvement of dozens of Chinese

individuals and entities engaged in

fentanyl, fentanyl precursor, or other

synthetic narcotics tracking. Third

party investigative groups have

identied over a hundred more.

Despite this evidence—which was established without any access to the PRC’s

vast surveillance state—China has thus far done nothing to investigate or

prosecute these groups. To the contrary, former PRC Foreign Minister Qin Gang

admied in 2022 that “not a single criminal case has been opened in China that

involves the manufacturing, tracking and smuggling of fentanyl-related

substances since their scheduling.”

114

Aside from limited collaboration in 2017,

“Beijing has not followed up on other major U.S. indictments of Chinese nationals

on drug tracking charges.”

115

The Select Commiee has been unable to identify

any new PRC prosecutions or enforcement actions.

The CCP’s failure to investigate these cases—and in many cases eectively

notifying criminals of investigations into criminal conduct—is deeply disturbing.

We requested that experts on Chinese law at the Congressional Research Service review publicly

available information on PRC prosecutions to inform this report. They conrmed that they did not nd

any such prosecutions.

“Former PRC Foreign Minister Qin Gang

admied in 2022 that ‘not a single

criminal case has been opened in China

that involves the manufacturing,

tracking and smuggling of fentanyl-

related substances since their scheduling.”

B. The PRC Allows the Open Sale of Fentanyl Precursors and Other

Materials that Fuel the Fentanyl Crisis on the Extensively Surveilled

Chinese Internet

Despite the fact that the PRC government publicly acknowledged that the

tracking of fentanyl precursors and other illicit narcotics materials is illegal

under Chinese law,

117

the Select Commiee’s investigation revealed that

thousands of companies are still openly advertising and selling these illicit

materials across the Chinese internet—the most heavily surveilled country-wide

network in the world.

118

The PRC’s failure to enforce its laws is especially startling when considering

the PRC’s capabilities.

119

“The idea that you can be anonymous on the Chinese

internet […] that just doesn’t happen.”

120

The PRC requires that internet users use

National IDs to sign into any social media service or website in the country.

121

also can immediately locate an internet user through location tags.

122

The PRC

government additionally has the ability to monitor nancial payment applications

The Select Commiee provided all relevant information to federal law enforcement about these

communications in a timely manner and made all incriminating evidence relating to the fentanyl

vendors available to federal law enforcement upon request.

Undercover Investigation Reveals Widespread, Blatant Sale of Illicit

Narcotics Materials

In 2024, the Select Commiee

engaged in undercover

communications with a small list of

veried fentanyl precursor and

other synthetic narcotics PRC

vendors.

116

Of the 27 that

responded, 26 oered to sell

narcotics immediately. The

communications made it clear that

the undercover investigator was

interested in the precursors and

narcotics for illegal purposes. This

did not deter any of them. In fact,

one PRC fentanyl precursor vendor

sent veried records of prior drug

shipments to Texas to show that it

was capable of making the deal.

Another repeatedly called the

undercover investigator on

WhatsApp and forcibly tried to make the sale.

Figure 15 - A PRC chemical company repeatedly

asking an undercover investigator if he wants to

buy drugs, showing (without prompting) tracking

conrmation of a drug parcel it recently

successfully sent to a U.S. customer to conrm it.

can bypass customs.

and banks, which are either under direct state control or subject to heavy

regulation.

123

As part of its investigation, the Select Commiee used web scraping and data

analytics tools to review content of a subset of seven e-commerce sites that

routinely host PRC companies selling illicit narcotics. Six sites are based in the

PRC

124

(including those controlled by the PRC government-tied public company

Zhejiang NetSun)

125

and one in Singapore.

The analysis was further narrowed by

focusing solely on a subset of illicit synthetic narcotics—fentanyl materials

(including analogues and precursors), nitazenes, xylazines, cannabinoids, and

substances on the DEA SSL—meaning that this number heavily underrepresents

the true scale of the PRC synthetic narcotic industry. This web scraping tool

resulted in the accumulation of 37,000 unique data points.

xii

Within this data set,

the Select Commiee identied over 2,048 PRC companies oering over 31,000

sales of illicit narcotics or substances on the DEA SSL.

126

These companies sales

pages included clear indicia of drug tracking with advertisements that appeared

to be catering to non-PRC (and, in many cases, specically American or Mexican)

customers.

127

These indicia include accepting Bitcoin (a cryptocurrency outlawed

in Mainland China) as a form of payment;

128

selling multiple forms of illicit

narcotics (e.g., fentanyl precursors, Nitazenes, and synthetic cannabinoids) in a

single advertisement;

129

oering special packaging and reimbursement if the

package is “lost;”

130

guaranteeing chemicals would bypass customs (e.g., “Double

Clearance 100% pass delivery to USA, Canada, Germany, Netherland, Poland,

Australia, Mexico, Russia”) [sic.];

131

and oering to “change chemical name on the

parcel to ship” and “double customs clear[a]nce service to keep safe deliver[y].”

132

On just one of these sites in February 2024, the major PRC-based e-commerce

platform Chemicalbook,

xiii

there were over 5,000 sales oered for narcotics

precursors, many in bulk. There were likewise 85 advertisements for nitazenes,

deadly opioids that are resistant to naloxone and increasingly found on American

streets, 41 for U-series opioids (e.g., U-47700), 303 for synthetic cannabinoids, and

256 for Xylazine. This activity is illegal under PRC law.

133

The Select Commiee also individually reviewed dozens of PRC company websites, many hosted by

Zhejiang NetSun, which had easily identiable sales of illicit narcotics. DNS registries and corporate

records checks conrmed these sited were hosted and headquartered in the PRC.

xii

The Select Commiee has arranged to provide this data to federal law enforcement for further

investigative steps.

xiii

In conversation with current and former federal law enforcement, the Select Commiee conrmed

that availability of illicit narcotics on these websites is a widely-known fact among fentanyl producers,

and that—similar to indictments or sanctions of violating companies—increasing public scrutiny of

these websites’ inaction is the most viable path to improved practices.

Figure 16 – PRC company website and PRC server

advertisement for protonitazene, an opioid that is up to 25 times

stronger than fentanyl and increasingly killing Americans. The

company oers to “disguise” the packaging and can supply up

to “50 tons.”

Figure 17 – Advertisement for powerful opioid

on PRC website with company accepting

payment in Bitcoin. Drug conspiracy, customs

fraud, and accepting payment in Bitcoin are all

illegal in China.

Figure 18 – PRC chemical company selling key ingredients

required for cartels to manufacture fentanyl with "hot sale to

Mexico."

Figure 19 – Advertisement for an MDMA precursor oering WeChat

ID to consummate drug sale. WeChat is a heavily monitored

application in the PRC.

Importantly, this data set revealed that, while PRC companies sell vast

amounts of synthetic narcotics online, the number of PRC companies actually

doing so appears to be comparatively small. Within the 2,048 PRC companies,

xiv

we found just over 1,500 common linkages, such as multiple companies sharing

the same phone numbers, fax numbers, email addresses, or other commonalities.

In some instances, these associations suggest a common sales force used across

companies. Many times, however, these commonalities demonstrated centralized

control, with one company or group using dozens of company names to obfuscate

their involvement. The manufacturers for these substances are also geographically

concentrated in a handful of cities, with Shanghai and Wuhan alone responsible

for a third of the identied illegal drug trade. In addition, we uncovered many

instances where companies selling illicit synthetic narcotics also sold legitimate

chemicals, sometimes on associated sites through a related company. These facts

suggest that the companies engaged in synthetic drug tracking are

geographically concentrated, fewer in number than it may rst appear, and reliant

on the remaining part of legitimate global commerce.

Individual PRC company webpages, all of which are based on PRC servers

like Alibaba cloud or Zhejiang Netsun, likewise sell a plethora of synthetic

narcotics clearly aimed at drug tracking. For example, protonitazene.com

(which shares the same DNS address, email addresses, Wickr accounts, and phone

number with a Yafeng website) sells dozens of types of nitazenes, fentanyl

precursors, and other synthetic narcotics, with “hot sales to Mexico.”

134

This is

merely one of hundreds of examples we encountered online. These postings are

designed for one purpose: drug tracking.

135

Condential Chinese Surveillance Contracts Reveal Vast Online Tracking

Capabilities

A review of a dozen never-before-reported-on PRC surveillance technology

contracts revealed the startling extent of the PRC government’s knowledge and

control over its populace. In one 135-page tender document, the PRC

government explains its “One Person, One File” approach developed by

Huawei. Using extensive surveillance technologies and data analytics,

xiv

Many of these sites had a multi-step company “verication service” that “audit[s] suppliers” and

“ensures [the seller’s] products meet all relevant regulations and standards.” See, e.g., ChemicalBook

Audited Supplier, CHEMICALBOOK, available at

hps://web.archive.org/web/20240403212444/hps://www.chemicalbook.com/ProductAdvertising.as

p (last accessed Apr. 13, 2024). These verication systems both corroborate that these companies are

providing their true names and undercut any claim by these companies that they had no idea that these

illicit activities were ongoing. For instance, many of the manufacturers selling illicit narcotics had the

“audited supplier” veried badge, indicating that ChemicalBook had audited their business and found

it acceptable for its website.

The implication of this nding is discussed in the policy recommendations section. See Section V,

supra.

authorities collected and analyzed data to create detailed proles about each

resident. This “le” includes “basic personal information, face recognition

captures, and comprehensive social information such as relationships, activity

trajectories, and peer analysis.” The PRC government constantly updates this

individual-specic le based on data it obtains from its omnipresent physical

and digital surveillance techniques to understand “many persons and complex

relationships” and receive “advance warning prediction, and suspicious

behavior discovery […] so as to fully realize the value of data.” The system not

only watches for potential criminal activity like drug tracking, but also

captures everything from their sexual orientation to political inclinations and

possible animosities toward the government (e.g., victim of prior land seizure).

These programs, when combined with the “community grid management”

approach that focuses on integrating multiple surveillance platforms to

strengthen social control, give the PRC government a disturbingly robust

capability in identifying and arresting those who violate PRC law. For instance,

in 2017, it only took security forces seven minutes to identify, locate, and detain

a BBC reporter.

C. The PRC Government Censors Content About Domestic Drug Sales—

But Leaves Export-Focused Narcotics Content Untouched

The PRC government could prevent fentanyl- and drug tracking-related

content from being posted online in the rst place. A recent Citizen Lab report

found over “66,000 rules controlling the content that is available to people using

search engines” in the PRC.

136

These rules involve algorithms that either limit

results or “provid[e] no results or by limiting the results to selected sources, which

are usually government agencies or state news organizations that follow the

Communist Party’s line.”

137

Censored categories run the gamut from Winnie the

Pooh

138

to prohibited conduct like “politics, violent terrorism, fraud and blackmail,

pornography, vulgarity, gambling, rights infringement, rumors, and a broadly

dened category of ‘other.’”

139

The CCP will stop at nothing to silence its critics and eliminate dissent. It

employs authoritarian tools of censorship, such as the so-called Great Firewall, to

wall o the PRC internet from content that might invoke concepts such as

democracy, human rights, or even basic historical facts. Yet the PRC government

does not use this extensive censorship apparatus to block keywords associated

with the export of fentanyl precursors.

The academic research institute Citizen Lab analyzed the censorship triggers

in the PRC for illicit fentanyl materials. While some censorship appeared to exist

for domestic-based fentanyl transactions (e.g., “fentanyl + cash on delivery”), no

such censorship triggers existed for any fentanyl precursors, the CAS numbers

used to nd them online, or anything related to the export of illicit narcotics.

140

Thus, although the PRC uses this tool for tens of thousands of other topics, it does

not do so for the export of deadly narcotics abroad.

D. The PRC Aggressively Prosecutes Domestic Drug Tracking But

Leaves Illicit Drug Exports Untouched

The issue is not that the PRC government does not want to use its security

apparatus to investigate and prosecute drug tracking. It does do so routinely,

but only in cases that impact its domestic population. The PRC ruthlessly

investigates, prosecutes (with no presumption of innocence), and executes many

potential drug tracker within its borders.

144

The PRC also routinely arrests and

executes foreigners who it accuses of engaging in the drug trade within the PRC.

145

China’s state-controlled Global Times stated that “China will never allow drug

trackers from any country to kill and poison the Chinese people.”

146

It also stated

that the Chinese public “detest drug tracking and believe that having mercy with

drug dealers would equal to infringing the rights of millions of Chinese.”

147

Despite this zeal, the PRC does not treat narcotics leaving its shores as a similar

priority. As Brookings’ Vanda Felbab-Brown noted:

With respect to drug tracking, China’s rst objective is to minimize

the ow of drugs into China for domestic consumption… China’s

second objective is to push illegal supply of scheduled drugs and

precursors abroad, though China lacks an equal determination to

counter Chinese smugglers and traders operating abroad, such as

through cooperating with national authorities abroad, let alone

developing its own indictment portfolios.

148

Case Study: The PRC Controls Output from China’s Chemical Producers

When motivated to do so, the PRC government has shown a robust ability

to police its chemical manufacturing industry. During a push related to

pollution control, the PRC government “shut down 30 to 40 percent of all

Chinese production capacity for monosodium glutamate and certain dyestus

and pesticides,” and implemented extensive permiing requirements and

relocation of chemical factories.

141

External experts “expect[ed] China’s

environmental authorities to continue to push enforcement energetically”

across companies that “account for nearly 50 percent of China’s chemical

production.”

142

Yet the PRC government has failed to address the rampant production and

exportation of fentanyl materials by the same sector. To the contrary, the PRC

government has not required even the most basic “know your customer” (KYC)

protocols that other nations mandate around the world. Indeed, the PRC

government does not even enforce its laws as “[p]erpetrators caught mislabeling

precursor shipments [in China] often face only civil penalties and small nes

rather than criminal charges.”

143

While the PRC has recently shown some willingness to engage on drug

tracking concerns such as “shut[ting] down” certain companies and blocking

“certain international payment accounts,”

149

some experts view it as “unlikely that

China will end its approach of subordinating its anti-drug and anti-crime

cooperation to its strategic calculus.”

150

Securing this cooperation, including by

increasing enforcement of the PRC’s own laws against exporters of illicit fentanyl

materials, is critical.

IV. THE FENTANYL CRISIS ADVANCES THE PRC’S

STRATEGIC AND ECONOMIC INTERESTS

The Select Commiee’s investigation has established that the PRC

government, under the control of the CCP (1) directly subsidizes the exports of

deadly illicit fentanyl materials and other synthetic narcotics that are illegal under

its own laws; (2) gave monetary grants and awards to companies openly

tracking illicit fentanyl online; (3) holds ownership interest in some of these

companies; (4) thwarted U.S. law enforcement investigations into illicit fentanyl

manufacturers; (5) allows the open sale of fentanyl precursors and other materials

that fuel the fentanyl crisis on the extensively surveilled Chinese internet; and (6)

fails to use its expansive surveillance and security apparatus to stop it.

These actions and omissions are abhorrent, violate the laws of nations, and

have led to profound human suering in the United States and around the world.

They also, as a factual maer, further the PRC’s strategic and economic interests.

Information related to those potential interests is laid out below.

A. The Fentanyl Crisis Benets PRC Criminal Enterprises, Helping

Solidify Support for the CCP

The global illicit fentanyl trade has enriched the PRC itself, empowered its

organized crime assets through lucrative money laundering, and oer PRC elites

a means to move a certain amount of their capital abroad, thus diminishing the

risk of their dissent. It allows the PRC to further its strategic interests by, per PRC

Major General Qiao, “caus[ing] disasters in other countries and mak[ing] huge

prots.”

151

Through subsidies, grants, and other incentives, the PRC harms

Americans while enriching PRC companies. It also, through the drug trade, gains

dominance over the world of illicit nance.

152

While the opacity of the PRC’s

nancial system makes it impossible to estimate, even earning a fraction of the

Mexican cartels’ estimated $6 to $21 billion a year in prots would certainly qualify

as “mak[ing] huge prots” under Qiao’s denition.

153

As author Ben Westho has explained, the PRC government encouraged the

export of fentanyl, fentanyl precursors, and other synthetic narcotics as they are

“seen as a vital part of its economy.”

154

To foster these exports, it oered subsidies

and tax breaks for chemical companies that produce and export those drugs that

may run into the millions of dollars in potential revenue.

155

Each individual

company can secure hundreds of thousands if not millions of dollars in potential

revenue.

156

These companies also enjoy a symbiotic relationship with the PRC

provincial authorities who consider it an imperative to achieve the provincial GDP

goals set by Beijing.

157

As Westho noted in a 2019 interview, beyond any national

policy, “you might [therefore] have a provincial ocial who wants to let these

companies keep doing what they’re doing because it brings in more revenue for

the area.”

158

In addition, illicit fentanyl material and the accompanying money laundering

also benets Chinese transnational criminal groups, many of whom have ties to

the CCP and PRC government.

159

According to public reporting, Chairman Xi has

“intensied [the PRC’s] alliance with Chinese organized crime overseas” as he has

pursued greater international inuence.

160

The partnership between the PRC

government and organized crime “mix[es] geopolitics and corruption for mutual

benet” where, according to western national security ocials, “in exchange for

their services as overseas enforcers and agents of inuence, the Chinese state

Figure 20 - PRC consul general Zhu Di (purple) meeting with an

Oklahoma Fujianese association in November 2022. This meeting

included over a half-dozen individuals convicted, charged, arrested, or

otherwise implicated in drug tracking.

Red: Names surfaced in marijuana-related criminal scheme

investigations.

Yellow: Oversaw nightclub police raided in drug and human tracking

investigations.

Orange: Arrested as part of illegal marijuana farm investigation.

Blue: Charged with drug-related oense

Green: Pleaded guilty to drug-related oense.

Source: ProPublica.

protects the mobsters.”

161

For example, Italian law enforcement has intercepted

calls in which a local Chinese organized crime boss met with the “boss from

Beijing,” a senior member of the PRC government who had met with the Italian

Prime Minister and his cabinet earlier that day.

162

As recently revealed by

ProPublica, PRC government ocials are similarly “meeting with known

criminals,” including leaders of Chinese organized criminal groups and drug

trackers in the United States.

163

Chang An Le, aka White Wolf, a notorious

mobster who served a prison sentence for heroin tracking in the United States,

now serves as both the head of a Chinese organized crime syndicate in Taiwan and

the Chinese Unity Promotion Party, a PRC front.

164

Wan Kuok “Broken Tooth” Koi,

a U.S.-sanctioned drug tracker, also serves on an advisory body to CCP

leadership, according to U.S. intelligence.

165

In the context of America and the fentanyl crisis, this partnership resulted in

Chinese organized crime taking over money laundering for the cartels, further

enriching PRC criminal networks and entrenching their inuence.

166

According to

retired DEA agent Thomas Cindric, “[a]t no time in the history of organized crime

is there an example where a revenue stream has been taken over like this, and

without a shot being red.”

167

The PRC’s success in taking over

the cartels’ money laundering

apparatus is because “the Chinese

brokers mostly manage to bypass the

U.S. and Mexican formal banking

systems, thus evading anti-money

laundering measures and simplifying

one of the biggest challenges for the

cartels, namely moving large

amounts of bulk money subject to law enforcement detection. The only interface

with the formal banking system takes place in China, into which U.S. law

enforcement agencies have lile-to-no visibility.”

168

The criminal syndicates’

money laundering activities reportedly involve individuals aliated with the

Chinese state in certain instances. U.S. law enforcement investigating Chinese

money laundering found “evidence indicating that… money laundering schemes

involved Chinese government

ocials and the Communist Party

elite.”

169

Specically, they found

evidence that Chinese organized

criminal groups were moving “tens

of millions of dollars among Chinese

banks and companies with seeming

impunity,” despite the fact that

“China’s omnipresent security forces

tightly control and monitor its state-

U.S. law enforcement investigating

Chinese money laundering found

“evidence indicating that … money

laundering schemes involved Chinese

government ocials and the Communist

Party elite.”

U.S. Southern Command’s Admiral Craig

Faller likewise testied to Congress that

Chinese launderers are the “number one

underwriter” of drug tracking in the

Western Hemisphere,” with the Chinese

government “at least tacitly supporting”

money laundering.

run economy.”

170

“More than $3.8 trillion of capital has left China since 2006,

making the country the world’s top exporters of hot money.”

171

Former

Commander of U.S. Southern Command, Admiral Craig Faller, likewise testied

to Congress that Chinese launderers are the “number one underwriter” of drug

tracking in the Western Hemisphere, with the Chinese government “at least

tacitly supporting” money laundering.

172

The money laundering system has an added benet for PRC elite, namely that

the “cash accumulated from street sales remain in the U.S.,” where it is “oered

for sale to Chinese citizens eager to avoid currency controls, which limit moving

yuan valued at more than $50,000 out of China....”

173

B. The PRC Has Used Asymmetric Tactics Against the United States, Some

PRC Ocials Advocate “Drug Warfare”

CCP General Secretary Xi Jinping has stated that the PRC’s “ideology and

social system are fundamentally incompatible with the West”

174

and that it is the

role of the PRC government to lead the construction of a “new world order [. . .]

that will supplant the [liberal democratic] Westphalian system.”

175

The PRC has

already engaged in behaviors that appear to be directly aimed at achieving this

end. For instance, earlier this year, in sworn testimony before the Select

Commiee, the nation’s top cyber authorities warned America that the PRC had

pre-positioned itself for devastating strikes at U.S. critical infrastructure that

would result in mass American casualties.

176

This includes a scenario where, as

CISA Director Easterly noted, the PRC could use its cyber forces to create a

scenario where:

[M]any [oil and gas] pipelines [are] disrupted. Telecommunications

going down so people can’t use their cell phone. People start geing

sick from polluted water. Trains get derailed, air trac control

systems, port control systems are malfunctioning. This is truly an

everything, everywhere, all at once scenario. And it's one where the

Chinese government believes that it will likely crush American will

for the U.S. to defend Taiwan in the event of a major conict there.

177

Interestingly, PLA military strategists Qiao Liang and Wang Xiangsui

anticipated exactly this type of strike against America two decades earlier, noting

that PRC cyber forces could:

Bur[y] a computer virus and hacker detachment in the opponent's

computer system in advance, while at the same time carrying out a

network aack against the enemy so that the civilian electricity

network, trac dispatching network, nancial transaction network,

telephone communications network, and mass media network are

completely paralyzed, this will cause the enemy nation to fall into

social panic, street riots, and a political crisis.

178

This treatise, published by the People’s Liberation Army Press, argued that the

PLA cannot be successful in modern warfare without pursuing asymmetric means.

As American military ocers and historians have noted, it presaged other PRC

techniques that are now commonplace,

179

such as seing up slush funds

to inuence an adversary nation’s politics,

180

and gaining control

of an adversary’s media as part of a larger cognitive warfare operation.

181

While it is not the focus of the book, Qiao and Wang in multiple sections

discuss drug warfare as an eective tactic in asymmetric warfare:

xvi

Aside from what we have discussed above, we can point out a number

of other means and methods used to ght a non-military war, some of

which already exist and some of which may exist in the future, for

example psychological warfare that causes intimidation to the enemy

and break down his will; smuggling warfare that throws markets into

confusion and aacking economic order; media warfare that

manipulates audio and video to guide public opinion; drug warfare

that cause disasters in other countries and make huge prots;

network warfare that is invisible and virtually impossible to guard

against); technological warfare by self-seing and monopolizing

patent standards; fabrication warfare (presenting a show of strength

to the enemy); resources warfare that plunders reserves and seizes

wealth; economic aid warfare that openly bestows favors while

covertly taking control ; cultural warfare that guides cultural trends to

assimilate dissidents); international law warfare that seizes the

initiative to establish rules), and more, too many to mention.

182

The CCP routinely uses a variety of asymmetric tactics like those listed above

against the United States and its allies, including rampant spreading of false

information online;

183

smuggling U.S.-controlled goods to adversarial nations and

sending massive amounts of counterfeit goods abroad;

184

hacking into U.S. critical

infrastructure;

185

using TikTok as part of its “cognitive warfare campaign;”

186

gaining technological monopolies through IP theft and unfair trade practices;

187

acquiring rights to rare resources in around the world via corruption;

188

using the

Belt and Road Initiative (BRI) as debt diplomacy;

189

genocide against the Uyghurs

people through “cultural assimilation;”

190

and gaining control of international

technological standards bodies.

191

xvi

After the book’s publication by the PLA Press, rather than facing career setbacks for making

controversial arguments in favor of this type of asymmetric warfare, Qiao and Wang enjoyed a

successful career within the PRC national security apparatus. Qiao aained the rank of major general

in the PLA Air Force, deputy director of the creative department and deputy secretary-general of the

Council for National Security Policy Studies. He has appeared frequently on Chinese state television

to provide lectures on strategy. More recently, he has opined about how the PRC would defeat America

in a future conict. Wang retired from the military in 2012 and serves as a professor at Beihang

University, one of the “seven sons of national defense.”

The PRC-sourced illicit fentanyl and fentanyl precursors have indeed

“spread[] disaster” in the United States.

192

As DEA Administrator Milgram noted,

“Fentanyl is killing Americans at an unprecedented rate.”

193

Hundreds of

thousands are dead, millions are addicted, and entire communities have suered

unimaginable harm.

194

In addition to the steep price in blood, the fentanyl crisis

has also cost the American people over $1.5 trillion dollars. It also impacts force

readiness, both because it has taken a record toll on active-duty military personnel

and because it is the leading cause of death for adults 18-45 who otherwise could

serve in the military at a time of crisis.

195

In addition to being consistent with the PRC government’s tacitly approved

strategies, the enabling of fentanyl tracking also provides another value:

diplomatic leverage. As Brookings Institution’s Vanda Felbab-Brown has

previously testied, “Unlike the U.S. Government, which seeks to delink

counternarcotics cooperation with China from the overall bilateral geostrategic

relationship, China subordinates its counternarcotics cooperation to its

geostrategic relations.”

196

Put another way, illicit fentanyl is not a scourge to

eradicate, but one of many items to negotiate. The PRC government suspended all

counternarcotics and law enforcement cooperation with the United States, for

instance, after House Speaker Nancy Pelosi visited Taiwan.

197

Fentanyl is also a valuable rhetorical and propaganda tool for the PRC

government. Through its state-

owned organs and the PRC

embassy, it decries the

decadence of American-led

western democracies, stating

that the “root cause of U.S.

fentanyl abuse problem is in

itself” (i.e., the United States)

and that the PRC will “not bear

the responsibility for the abuse

of fentanyl.”

198

Chinese Central

TV even produced a

documentary showing

America’s devastation due to

fentanyl (that it blames on U.S. companies), contrasting it with the tight controls

on fentanyl in the PRC.

199

In response to criminal cases brought against PRC

citizens for fentanyl tracking, Chinese media claims that “the same trade has

become ‘state run’ in the U.S.” and that there is insucient evidence for any

charges.

200

It also claims that the United States is “slandering China” and that its

government has “not found a single case of fentanyl smuggling and

manufacturing.”

201

PRC state media also states that the United States should blame

itself for the fentanyl crisis, claiming that “while the epidemic is wreaking havoc

on the U.S. economy and the workforce” Washington is both “at its wits’ end on

how to x it” and “at times, it seems uninterested.”

202

The PRC government has

Figure 21 – Clip of Chinese state media broadcasting

disinformation about a supposed U.S. civil war, with

Weibo users superimposing inammatory rhetoric.

increasingly relied on this type of anti-American rhetoric to hide the failures of its

own policies. This has escalated to the point of absurdity, with PRC media

publishing stories about an imminent or even ongoing civil war between the

United States federal government and Texas, with PRC social media platforms

similarly elevating the topic.

203

This domestic propaganda all serves to show its

populace that the PRC government is a superior form of government over “failing”

democracies, diverting aention from the CCP’s oppression, corruption, and self-

inicted economic woes.

204

V. POLICY SOLUTIONS

It is essential for U.S. decisionmakers to understand that the global illicit

fentanyl trade has an Achilles’ heel. Unlike cartels and other wholly illegitimate

enterprises, the PRC chemical companies fueling the fentanyl crisis often have

signicant legitimate business. In fact, many of these companies have customers

in the United States, Europe, and around the world that buy legitimate chemicals

for everyday use.

205

Based on our investigation, in most cases, it appears that

fentanyl precursors and other synthetic narcotics are not necessarily the primary

business purpose of the company but rather a “side hustle” designed to maximize

prots and take advantage of the PRC government’s generous subsidies for sale of

these illicit goods.

206

That makes these entities uniquely vulnerable to U.S.

government tools (such as sanctions) that limit their ability to sell their products

to non-criminal actors, thereby dramatically impacting their prots. The same is

true for the PRC banks, e-commerce platforms that focus on chemical sales,

transhippers, and other industries that enable the global illicit fentanyl trade. They

are engaged in the drug trade alongside their legitimate business because they

think that doing so will increase their prot margins without reprisal.

207

The United States must make clear that is no longer the case. To do so, the

United States must impose strong punitive measures that create economic, trade,

and legal incentives so that the PRC companies end their involvement in the global

illicit fentanyl trade. The United States must make clear that they can be part of

global commerce or they can continue aiding the global illicit fentanyl trade, not

both.

208

Achieving this goal requires a centralized and empowered command

structure that has plenary authority from the President to ght back against the

PRC global illicit fentanyl trade and larger synthetic narcotics threat. The United

States has successfully addressed other international drug threats previously

using a similar strategy. While there are exceptional prosecutors, federal agents,

intelligence analysts, and nancial auditors in the eld doing exemplary work,

Congress can empower them to do even more with appropriate statutory

Recommendation 1: Establish Joint Task Force – Counter Opioids and fully

empower it to fulll its mission.

authorities. The United States needs a dedicated group of public servants

operating under a coordinated and centralized strategy, with pooled resources to

match their considerable goals.

Specically, Congress should:

1. Establish a Joint Task Force – Counter Opioids (JTF—CO) that

concentrates all non-military elements of national power and executes

the coordinated strategy outlined above that targets each of these weak

points in the global illicit fentanyl supply chain. The head of this group

should report directly to the Aorney General and be dual-haed as

Special Assistant to the President on the National Security Council with

authority over the opioids portfolio.

209

While this arrangement is

unorthodox, this task force would help to further address a multifaceted

problem that the U.S. government must solve. The arrangement has the

chief virtue of placing all intelligence, investigative, economic, trade, and

enforcement resources and mechanisms under a unied command,

allowing for close coordination and a robust but streamlined interagency

process.

210

A reinvigorated DEA Special Operations Division (SOD) could

play a leading role in this eort. Under a clear Presidential mandate, the

JTF-CO would engage in eective prioritization of targets for coordinated

action against the entire fentanyl ecosystem, forcing fentanyl tracking

participants and enablers to internalize the signicant economic risks that

they will face if they choose to prot from the illegal drug trade.

211

Congress should ensure law enforcement and intelligence professionals have

the tools they need to succeed in the ght against fentanyl. Specically, Congress

should:

1. Support international cooperation among law enforcement agencies to

hold bad actors accountable. Winning this bale will similarly require

close coordination and robust communication between law enforcement

agencies across the globe. Given the global nature of precursor production

and fentanyl tracking, no one country can successfully win this bale

alone. To succeed in shuing down PRC-based precursor manufacturers,

ending money laundering of PRC drug proceeds, and interdicting illicit

shipments, law enforcement and other government agencies, as well as

leaders, across the world must work together to share actionable

information and hold bad actors accountable. Failing to do so means

criminal producers of precursors can exploit this lack of coordination to

Recommendation 2: Provide law enforcement and intelligence ocials

with the statutory authorities, tools, and support they need to execute their

responsibilities.

evade detection and prosecution. Even with those with whom we do not

see eye to eye on every issue, there must be lines of communication

between law enforcement agencies to hold criminals accountable.

2. Direct the President to prioritize and appropriately resource counter-

narcotics and anti-money laundering eorts in the Intelligence

Community (IC). The IC needs to have the focus and resources needed

to address this historic threat. This includes prioritizing counter-

narcotics and anti-money laundering as metrics of the IC’s success and

providing the tools needed to produce timely and accurate intelligence.

In a manner that protects privacy and civil liberties, the IC should also

work closely with Congress to ensure that it has the appropriate

authorities for collection of foreign communications relating to drug

tracking and money laundering.

3. Ensure the U.S. Government aracts and retains talent with the skills

it needs to protect Americans from fentanyl. For instance, the

Combating Online Fentanyl Tracking Act would incentive recruitment

and retention of DOJ employees with unique cyber skills to combat

online fentanyl tracking.

Congress should also codify existing executive sanction authorities and

expand the United States’ ability to exert maximum economic pressure on the PRC

government and its companies.

Specically, Congress should:

1. Codify Executive Order 14059. EO 14059 claried the power of the

President to sanction those involved in the drug tracking trade.

Congress should codify this expansive authority.

212

Through these

and other authorities, the United States should impose nancial

sanctions on the individuals and entities that have enabled the PRC’s

illicit synthetic narcotics regime, including leaders of chemical

companies that produce precursors and synthetic narcotics,

e-commerce platforms that host agrant drug tracking, nancial

institutions that enable money laundering through at or digital

currencies, cargo companies that transship narcotics while remaining

willfully blind to the practice, and relevant PRC government entities

that have enabled the drug trade, where appropriate.

213

Finally,

Congress should require regular reporting regarding the use of this

Recommendation 3: Codify, strengthen, and impose sanctions on entities

involved in the fentanyl trade.

sanctions authority with justications for all signicant

decisionmaking.

2. Direct the President to impose sanctions and other nancial

remedies against PRC nancial institutions that launder millions of

dollars of drug proceeds for the illicit chemical manufacturers and

cartels, while also taking appropriate steps to address money

laundering that occurs using cryptocurrency. Existing authorities

give the Treasury Secretary the ability to engage in a range of

regulatory actions to protect America from illicit nance risks and

otherwise diminish a nation’s ability to engage in deleterious

activity.

214

These remedies include requiring all U.S. nancial

institutions to terminate correspondent relationships with the bank.

While that should not be the rst action taken to ensure compliance,

the President should engage in a series of escalating enforcement steps

to ensure that PRC nancial institutions end their role in the synthetic

narcotics trade. The Treasury Department has previously used this

type of authority on a PRC bank that was laundering North Korean

funds.

215

It could do so again to help end the fentanyl crisis. These

actions should be paired with appropriate action to address the

increasing use of cryptocurrency exchanges operating outside the

United States to facilitate fentanyl-related money laundering.

3. Enact the FEND O Fentanyl Act. The FEND O Fentanyl Act (H.R.

3333) strengthens U.S. sanctions to target perpetrators of the fentanyl

trade and transfers any property collected through sanctions to the

Department of Justice Assets Forfeiture Fund. The Act strengthens

anti-money laundering initiatives with a focus on Mexico, the PRC,

and Myanmar, for their prominent role in the fentanyl trade.

xvii

Another potential remedy is legislation that would formalize the right for immediate family

members to sue a foreign entity for distributing illegal narcotics like fentanyl that results in the death

of the victim. The causality and knowledge requirements could be the same as the “death resulting”

provision found in 21 U.S.C. § 841. This legislation could furthermore allow for the prevailing party to

obtain proceeds of the civil judgment through a court order to U.S. banks that have a correspondent

banking relationship with a foreign bank that holds the responsible entity’s assets. In addition, this

legislation could create a class action lawsuit vehicle for victims’ families that may not be able to prove

causality related to the specic victim, but can show that a specic foreign entity has engaged in

substantial activities that have aided and abeed opioid-based drug tracking.

The United States should also reform its trade laws that enable illicit

shipments of narcotics and employ additional trade and customs enforcement

measures to restrict imports and punish violators.

Specically, Congress should:

1. Pass legislation amending the Tari Act of 1930 to reduce the de

minimis threshold for duty-free shipments into the United States

with particular focus on foreign adversaries, including the PRC.

Approximately three million overseas packages arrive in the United

States every day. Many fall under the current de minimis threshold of

$800, resulting in the parcels receiving minimal inspection and not

having to pay duties, taxes, or fees.

216

Fentanyl precursors and

dangerous synthetic drugs currently enter the United States through

these de minimis packages.

217

During the course of its investigation, the

Select Commiee heard from California state law enforcement that

the current form of the de minimis exception leaves America so

vulnerable to drug smuggling that cartels increasingly have PRC-

sourced fentanyl precursors shipped rst into the United States before

smuggling them to Mexico. In other words, the current form of the de

minimis exception makes the United States the most vulnerable nation

in North America to this form of drug tracking. There is widespread

bipartisan support for reforming the de minimis exception.

218

It would

not only combat the fentanyl crisis and thus save lives, but also

increase American competitiveness and help prevent the importation

of goods produced with forced labor. Congress should enact

appropriate reforms to address this vulnerability and support

increased enforcement.

2. Enact legislation directing U.S. Customs and Border Patrol (CBP)

and DEA to levy escalating nes and remedies on entities that have

been found to transship improperly labeled items on the DEA SSL

or synthetic narcotics into the United States, Mexico, or Canada. To

enable this action, Congress should include additional funding,

specically for increased scrutiny of vessels originating from or

transiting through PRC and Mexican ports and for increased DOD

and DHS interdiction of such vessels. If a vessel is found to have

transshipped the above listed products, legislation should direct CBP

to impose a docking fee on all vessels operated by the entity that

operated the vessel in violation. Fees should increase with each

Recommendation 4: Enact and employ trade and customs enforcement

measures to restrict fentanyl tracking.

violation. If vessels operated by that oending entity continue to

transship such products, the United States should revoke foreign air

carrier and docking permission for all craft aliated with the

company.

219

The legislation would additionally direct and properly

resource the U.S. Coast Guard and U.S. Navy, in a manner consistent

with international law and with respect for internationally recognized

maritime borders, to interdict vessels owned by the oending entities

to search for synthetic narcotics before they reach cartel-aliated

ports in Mexico based on intelligence that synthetic narcotics or other

contraband is aboard.

220

If the transhippers thereafter continue in their

behavior without sucient reform, the United States should sanction

the transshipping companies. The repeated failure to reform would

demonstrate that the company is willfully blind to the illegal activity,

which would allow the U.S. government to overcome the very low

“reasonable basis” standard needed to survive challenges to any

sanctions. Should the PRC not improve behavior and enforce higher

standards of labeling at their ports within one year, Congress should

consider imposing docking fees on all vessels originating from or

transmiing via PRC ports. In addition, Congress should consider

imposing Know Your Customer requirements on high-risk shippers.

PRC-owned and operated brokers have eectively taken over the cartels’

money laundering business and exploit gaps in U.S. regulatory enforcement to

launder fentanyl proceeds through payment services and to sell fentanyl

precursors on commercial marketplaces.

221

The United States should take

aggressive steps to close these gaps.

Specically:

1. PRC-based applications involved in money laundering and the

fentanyl trade should be required to register as money services

businesses. There is ample evidence that certain PRC-based

applications that provide money transmiing and payment services:

engage in money laundering, have violated the PRC’s own anti-

money laundering laws, and serve as principal payment systems to

facilitate laundering of proceeds from fentanyl sales into the United

States.

222

They are so well-known that even the PRC government has

issued a record ne against a PRC company that runs one of these

applications for outing basic anti-money-laundering (AML) rules

and having lile to no compliance with essential KYC and “know

Recommendation 5: Close regulatory and enforcement gaps exploited by PRC

money launderers and fentanyl traders.

your business” procedures.

223

It is problematic that the PRC can

identify these deep aws in applications it regulates while the United

States allows the same platform to assist in global money laundering

without appropriate regulatory safeguards. The U.S. Department of

the Treasury should therefore mandate that these applications register

as money services businesses with the Financial Crimes Enforcement

Network (FinCEN). If registered, they would be subject to suspicious

activity reporting requirements, which in turn would allow U.S. law

enforcement to track and interdict fentanyl money laundering more

eectively.

a. In addition, DOJ should conduct a review to ascertain

whether Zyla, a cross-border payment facilitator for a major

PRC money transfer application, is appropriately complying

with U.S. law enforcement requests based on legal process. If

Zyla’s conduct outs U.S. legal process, then DOJ should

consider further legal action to bring it into compliance.

2. PRC online retailers and other PRC-based e-commerce

applications and sites should be required to adopt measures to

restrict the online sale of fentanyl precursors within a reasonable

period of time or face penalties in the United States. The Select

Commiee uncovered egregious evidence of synthetic narcotics

tracking aimed at Mexican cartels and American drug users on

PRC-based e-commerce sites. These include major platforms like

Chemicalbook, ChemNet, China Chem Net, among others. The

United States should impose an ultimatum on global rms: close

your platform to drug trackers or face U.S. reprisal.

ENDNOTES

Tracy Hampton, Study reveals fentanyl’s eects on the brain, THE HAR. GAZ. (Aug. 31, 2022), available at

www.news.harvard.edu/gazee/story/2022/08/study-reveals-fentanyls-eects-on-the-brain/.

Valerie Vierkant, Researchers Identify Breakthrough In Understanding Fentanyl Abuse, TEXAS A&M TODAY

(Feb. 20, 2023), available at www.today.tamu.edu/2023/02/20/researchers-identify-breakthrough-in-

understanding-fentanyl-abuse/; Drug Use Changes the Brain Over Time, UNIV. OF UTAH, available at

www.learn.genetics.utah.edu/content/addiction/brainchange

[hps://web.archive.org/web/20240315072159/www.learn.genetics.utah.edu/content/addiction/brainc

hange] (last accessed Mar. 14, 2024); Dr. Robert L. Dupont, Chemical Slavery: Understanding Addiction

and Stopping the Drug Epidemic, INST. FOR BEHAV. AND HEALTH (2018), available at

www.static1.squarespace.com/static/575830e0b09f958d96b6e4df/t/5bcdc3de15fcc0be3c647a09/1540211

678564/Chemical_Slavery_Press_Release.pdf.

Routes of Drug Use Among Drug Overdose Deaths—United States, 2020-2022, CTRS. FOR DISEASE CONTROL

AND PREVENTION (Feb. 15, 2024), available at hps://www.cdc.gov/mmwr/

volumes/73/wr/mm7306a2.htm (“More than 109,000 drug overdose deaths occurred in the United

States in 2022; nearly 70% involved illegally manufactured fentanyls (IMFs)”).

Life Expectancy in the U.S. Dropped for the Second Year in a Row in 2021, CTR. FOR DISEASE CONTROL AND

PREVENTION (Aug 31, 2022), available at www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/

20220831.htm; Rachael Rener, US Life Expectancy Dropped in 2017. Drug Overdose Deaths Are a Big

Reason Why; LIVE SCI. (Nov. 29, 2018), available at www.livescience.com/64188-life-expectancy-decline-

drug-overdose-deaths.html.

Raising the Children of the Opioid Epidemic, GENERATIONS UNITED (2018), available at

www.gu.org/resources/grand-resource-help-for-grandfamilies-impacted-by-opioids-and-other-

substance-use/. Every 15 minutes, a U.S. infant is born with opioid exposure correlated with long-term

tragic long-term health and societal implications. Megan L. Dolbin-MacNab & Lyn M. O’Connell,

Grandfamilies and the Opioid Epidemic: A Systemic Perspective and Future Priorities, CLINICAL CHILD AND

FAMILY PSYCH. REV. (Jan. 25, 2021), available at www.ncbi.nlm.nih.gov

/pmc/articles/PMC7829093/ (citing Honein et al., available at www.ncbi.nlm.nih.gov/pmc/

articles/PMC6482836/).

See, e.g., Dolbin-MacNab, supra note 5 (citing Rigg et al., available at

www.pubmed.ncbi.nlm.nih.gov/29754032/); Abene Clayton, California seizes enough fentanyl in San

Francisco to kill city’s populations three times over, THE GUARDIAN (Jun. 15, 2023), available at

hps://www.theguardian.com/us-news/2023/jun/15/california-fentanyl-overdose-newsom-

supervised-drug-use-san-francisco; Trisha Thadani, A disaster in plain sight, S.F. CHRON. (Feb. 2, 2022),

available at www.sfchronicle.com/projects/2022/sf-fentanyl-opioid-epidemic/. It also disproportionally

impacts indigenous people. See Joel Moreno, Fentanyl crisis disproportionately impacting Native Americans

in King County, KOMO NEWS (May 23, 2023), available at www.komonews.com/news/local/seale-

fentanyl-crisis-summit-address-devastating-toll-over-overdose-deaths-among-native-americans-

drugs-fatal-indian-tribes-treatment-opiod-disparities-community-epidemic-life-expectancy-tribal-

death-die.

Claire Klobucista & Mariel Ferragamo, Fentanyl and the U.S. Opioid Epidemic, COUNCIL OF FOREIGN

RELS. (Dec. 22, 2023), available at www.cfr.org/backgrounder/fentanyl-and-us-opioid-epidemic.

While the focus of the Select Commiee’s work is on the cost of fentanyl in the United States, it is

essential to note that other nations likewise are increasingly facing greater harm from the drug. Oriol

Guell, Opioid overdoses cause more than 1,000 deaths a year in Spain, EL PAIS (Oct. 23, 2019), available at

www.english.elpais.com/elpais/2019/10/22/inenglish/1571741308_549814.html. (Spain opioid overdose

increased 50%); Mimi Pierce et al., Is Europe facing an opioid crisis like the United States? An analysis of

opioid use and related adverse eects in 19 European countries between 2010 and 2018, EUR. PSYCHIATRY (Jun.

21, 2021), available at www.ncbi.nlm.nih.gov/pmc/articles/PMC8316471/; Melissa Davey, US-level

mortality? Sounding the alarm about fentanyl overdose in Australia, THE GUARDIAN (Sep. 2, 2022), available

at www.theguardian.com/society/2022/sep/03/us-level-mortality-sounding-the-alarm-about-fentanyl-

overdose-in-australia.

Leer from Rep. Susie Lee et al., to The Honorable Antony Blinken, Sec’y of State (Aug. 2, 2023),

available at hps://craig.house.gov/sites/evo-subsites/craig.house.gov/les/evo-media-document/nal-

bipartisan-leer-to-secretary-blinken-on-prcs-role-in-fentanyl-crisis.pdf (citing brieng to U.S.

International Trade Commission); The CCP’s Role in the Fentanyl Crisis, Hearing Before the H. Select Comm.

on the CCP, 118th Cong. (2024) (written testimony of Benjamin Westhoff); Administrator Milgram

Remarks as Delivered, U.S. DRUG ENF’T ADMIN. (Oct. 4, 2023), available at

hps://www.dea.gov/sites/default/les/2023-10/FINAL_Operation%20ChemKong%20Press%20

Conference%20Remarks%20as%20Delivered.pdf (“nearly all fentanyl precursors come from China.”).

Countering Illicit Fentanyl Tracking, Hearing Before the S. Comm. on Foreign Rels., 118th Cong. (2023)

(testimony of Dr. Rahul Gupta), available at hps://www.whitehouse.gov/wp-

content/uploads/2023/02/Testimony-Dr.-Rahul-Gupta-Senate-FRC-Feb.-15-2023.pdf (“Criminal

elements, mostly in the People’s Republic of China, ship precursor chemicals to Mexico, where they

are used to produce illicit fentanyl”); Tackling Fentanyl: The China Connection, Hearing Before the

Subcomm. on Africa, Glob. Health, Glob. Human Rights, and Int’l Orgs. of the H. Com. on Foreign As., 115th

Cong. (2018) (testimony of Mr. Paul E. Knierim), available at www.congress.gov/event/115th-

congress/house-event/108650/text; Final Report, COMM’N ON COMBATING SYNTHETIC OPIOID

TRAFFICKING (Feb. 8, 2022), available at www.rand.org/pubs/external_publications/EP68838.html

(“Mexico is the principal source of this illicit fentanyl and its analogues today. In Mexico, cartels

manufacture these poisons in clandestine laboratories with ingredients—precursor chemicals—

sourced largely from the People’s Republic of China (PRC);” “PRC appear to be, directly or indirectly,

the primary sources of chemical precursors used to synthesize fentanyl and other novel synthetic

opioids.” (citation omied)).

See, e.g., Fentanyl Flow to the United States, U.S. DRUG ENF’T ADMIN., (Jan. 2020), available at

www.dea.gov/sites/default/les/2020-03/DEA_GOV_DIR-008-

20%20Fentanyl%20Flow%20in%20the%20United%20States_0.pdf; see also Lauren Greenwood & Kevin

Fashola, Illicit Fentanyl from China: An Evolving Global Operation, U.S.–CHINA ECON. AND SEC. REVIEW

COMM’N (Aug. 24, 2021), available at www.uscc.gov/sites/default/les/2021-

08/Illicit_Fentanyl_from_China-An_Evolving_Global_Operation.pdf.

Sealed Indictment, United States vs. Hubei Amarvel Biotech Co., Ltd., et al., 23-CRIM-302 (SDNY 2023)

(“Today, fentanyl-related precursors are principally sourced from China-based chemical

manufacturers, many of which openly advertise such precursors on the Internet. These China-based

chemical manufacturers ship fentanyl-related precursors around the world, including to the United

States and to Mexico, where drug cartels operate clandestine laboratories, use the precursors to

synthesize nished fentanyl at scale, and distribute the deadly fentanyl into and throughout the United

States”).

RICARDO BARRIOS ET AL., CONG. RSCH. SERV., IF10890, CHINA PRIMER: ILLICIT FENTANYL AND CHINA’S

ROLE (2024), available at hps://crsreports.congress.gov/product/pdf/IF/IF10890 (While China was the

primary source of illicit fentanyl in the US before 2019, paerns changed after the Chinese imposed

stricter controls on the drug trade, according to the Congressional Research Service. Since then, Mexico-

based organizations – like the Sinaloa Cartel – source precursor chemicals from China to then produce

the illicit drugs in Mexican labs before shipping them into the US); Vanda Felbab-Brown, China and

Synthetic Drugs Control: Fentanyl, Methamphetamines, and Precursors, BROOKINGS INST. (Mar. 2022),

available at www.brookings.edu/wp-content/uploads/2022/03/FP_20221107_drug_tracking_felbab_

brown.pdf.

China: Announcement to place all fentanyl-related substances under national control, UNODC LAB. AND SCI.

SERV. PORTALS (Apr. 2019), available at www.unodc.org/LSS/Announcement/Details/f2adea68-ed-

4292-a4cc-63771c943318.

The PRC has refused to label as controlled substances three fentanyl precursors that presently fuel

the cartels’ fentanyl industry, despite the U.S., Mexico, and United Nations all listing them as illegal

substances used in the narcotics trade. United Nations Convention Against Illicit Trac in narcotic

Drugs and Psychotropic Substances, Dec. 20, 1988, available at

hps://www.unodc.org/pdf/convention_1988_en.pdf (March 2022 revision to Table 1). These

precursors include N-Phenyl-4-piperidinamine (4-AP), tert-Butyl 4-(phenylamino)piperidine-1-

carboxylate (boc-4-AP), and norfentanyl, three precursors scheduled for international control by the

U.N. after its member states recognized its high likelihood for use in drug manufacturing but notably

not controlled in the PRC.

Barrios, supra note 13. While China ultimately controlled two fentanyl, NPP and 4-ANPP, after

signicant diplomatic pressure, it did not control other chemicals widely recognized as precursors for

illicit fentanyl.

Sean O’Connor, Meth Precursor Chemicals from China: Implications for the United States, U.S.-CHINA

ECON. AND SEC. REV. COMM’N (July 18, 2016) available at

www.uscc.gov/sites/default/les/Research/Sta%20Report_PrecursorChemicalReport%20071816_0.p

df (“around 80 percent of precursor chemicals used in Mexican meth come from China.”).

Felbab-Brown, supra note 13.“China is also the dominant source country for precursors heading into

Vietnam, and recent large seizures of precursors and pre-precursors originating in China have taken

place in Laos, and precursors from China have long headed to Thailand too.” Id.

Id.

Laura Salm-Reierscheidt, Tramadol: the opioid taking over Africa, THE INDEPENDENT (Aug. 12, 2019),

available at hps://www.independent.co.uk/health-and-wellbeing/tramadol-opioid-africa-drugs-togo-

a9010916.html.

Id.

See Section III.A, infra.

See (国家禁毒委员会办公室) [China O. of the Nat’l Narcotics Control Comm’n], (国家禁毒委员会办

公室发布通告提醒相关企业和个人谨慎销售可制毒物品) [The Oce of the National Narcotics Control

Commission issued a notice reminding relevant companies and individuals to be cautious in selling substances

that can be used to make narcotics], TENCENT (Nov. 16, 2023),

hps://mp.weixin.qq.com/s/ZhbYujIwr28E7k6MJjC66Q [hps://web.archive.org/web/

20240227190236/hps://mp.weixin.qq.com/s/ZhbYujIwr28E7k6MJjC66Q]. The Notice provides that the

“Criminal Law of the People’s Republic of China” outlaws “illegally producing, trading, transporting

[…] raw materials and preparations used to make drugs.” The Notice also stated that it is “strictly

prohibited for any organization or individual to produce, trade, or transport the items specied in [non-

scheduled precursors and other drug ingredients] for others knowing that they are manufacturing

drugs.” Doing so would result in the oender being “punished as an accomplice in the crime of

manufacturing drugs.” The Notice acknowledged that other activities corresponding to fentanyl

precursor sales, such as falsely declaring goods to customs, are likewise unlawful. It furthermore stated

that “[p]ostal, express delivery companies and logistics companies” must report any instances of

“illegal mailing, transportation, or entrainment of suspected narcotic drugs or psychotropic drugs,

precursor chemicals and other drug-making raw materials” to “public security organs.” Id.

See Section III.B., infra.

Felbab-Brown, supra note 13; see also Section III.B., infra.

See Section III.D., infra. The Select Commiee had Library of Congress Chinese law experts canvas

PRC criminal case databases. It did not nd any cases relating to fentanyl precursor exports. The sole

exception was a 2017 joint U.S. Department of Homeland Security and PRC Ministry of Public Security

operation.

See Section III.D., infra. See also China sentences Canadian citizen to death in drugs case, FR. 24 (Jan. 14,

2019), available at www.france24.com/en/20190114-china-sentences-canadian-citizen-schellenberg-

death-drugs-case-justice.

The CCP’s Role in the Fentanyl Crisis, Hearing Before the H. Select Comm. on the CCP, 118th Cong. (2024)

(wrien testimony of DEA Assistant Special Agent in Charge Donald Im (ret.)).

Id.; Stopping the Poison Pills: Combaing the Tracking of Illegal Fentanyl from China, Hearing Before the

S. Caucus on Int’l Narcotics Control, 115th Cong. (2018) (testimony of Mahew C. Allen), available at

hps://www.ice.gov/sites/default/les/documents/Testimony/2018/ChinaFentanylTestimony.pdf

(detailing 2017 collaboration between Homeland Security Investigation’s New Orleans Oce and the

PRC’s Narcotics Control Bureau).

Leon Krauze, With coronavirus hurting drug business, there’s an opportunity to corner cartels, WASH. POST

(May 26, 2020), available at www.washingtonpost.com/opinions/2020/05/26/with-coronavirus-hurting-

drug-business-theres-an-opportunity-corner-cartels/.

Deborah Bonello, Coronavirus is leading to shortages of fentanyl and meth, VICE NEWS (Mar. 19, 2020),

available at hps://www.vice.com/en/article/wxek4m/coronavirus-is-leading-to-shortages-of-fentanyl-

and-meth; Keegan Hamilton Sinaloa Cartel Drug Trackers Explain Why Coronavirus is Very Bad for Their

Business, VICE NEWS (Mar. 23, 2020), available at www.vice.com/en/article/bvgazz/sinaloa-cartel-drug-

trackers-explain-why-coronavirus-is-very-bad-for-their-business; Hepeng Jia, COVID-19 mostly

behind it, China’s chemical industry struggle to rev up, C&EN (Mar. 30, 2022), available at

www.cen.acs.org/business/economy/COVID-19-mostly-behind-China-chemical-

industry/98/web/2020/03.

Cartels are scrambling’: Coronavirus snarls global drug trade, L.A. TIMES (Apr. 20, 2020), available at

www.latimes.com/world-nation/story/2020-04-20/cartels-are-scrambling-virus-snarls-global-drug-

trade.

Crypto and the Opioid Crisis: What Blockchain Analysis Reveals About Global Fentanyl Sales, CHAINALYSIS

(Mar. 7, 2024), available at www.chainalysis.com/blog/cryptocurrency-fentanyl-analysis-2023/.

Felbab-Brown, supra note 13. This is in contrast to the PRC’s demonstrated capacity to prevent the

export of illegal narcotics by its synthetic chemical industry when it so desires. For instance, the

Department of State’s International Narcotics Control Strategy Report since the May 2019 PRC class

scheduling of fentanyl analogues showed a marked reduction in fentanyl analogues seized at the

border that were directly shipped from the PRC. See, e.g., BUREAU OF INT’L NARCOTICS AND LAW ENF’T

AFFS., U.S. DEP’T OF STATE, INTERNATIONAL NARCOTICS CONTROL STRATEGY REPORT VOL. 1, DRUG AND

CHEMICAL CONTROL (2020), available at hps://www.state.gov/wp-content/uploads/2020/06/Tab-1-

INCSR-Vol.-I-Final-for-Printing-1-29-20-508-4.pdf; BUREAU OF INT’L NARCOTICS AND LAW ENF’T AFFS.,

U.S. DEP’T OF STATE, INT’L NARCOTICS CONTROL STRATEGY REPORT VOL. 1, DRUG AND CHEMICAL

CONTROL (2021), available at hps://www.state.gov/wp-content/uploads/2021/02/International-

Narcotics-Control-Strategy-Report-Volume-I-FINAL-1.pdf; BUREAU OF INT’L NARCOTICS AND LAW

ENF’T AFFS., U.S. DEP’T OF STATE, INT’L NARCOTICS CONTROL STRATEGY REPORT VOL. 1, DRUG AND

CHEMICAL CONTROL (2022), available at hps://www.state.gov/wp-content/uploads/2022/03/22-00767-

INCSR-2022-Vol-1.pdf.

Crypto and the Global Fentanyl Trade, ELLIPTIC (2023), available at www.elliptic.co/resources/elliptic-

report-crypto-and-the-global-fentanyl-trade (“As a result, the industry appears to be very competitive.

This meant that it was not dicult to shop around for deals among all the suppliers willing to service

our requests, which suggests slim prot margins for some”).

SAM QUINONES, THE LEAST OF US: TRUE TALES OF AMERICA AND HOPE IN THE TIME OF FENTANYL AND

METH (2021).

Greenwood & Fashola, supra note 11.

Indictment, United States vs. Hubei Amarvel Biotech Co., Ltd., et al., 23-CRIM-302 (SDNY 2023).

Drug Enforcement Administration Announces the Seizure of Over 379 million Deadly Doses of Fentanyl in

2022, U.S. DRUG ENF’T ADMIN. (Dec. 20, 2022), available at hps://www.dea.gov/press-

releases/2022/12/20/drug-enforcement-administration-announces-seizure-over-379-million-

deadly#:~:text=United%20States%20Drug%20Enforcement%20Administration&text=The%20DEA%20

Laboratory%20estimates%20that,times%20more%20potent%20than%20heroin; Public Safety Alert,

U.S. Drug Enf’t Admin., DEA Laboratory Testing Reveals that 6 out of 10 Fentanyl-Laced Fake

Prescription Pills Now Contain a Potentially Lethal Dose of Fentanyl, available at

www.dea.gov/alert/dea-laboratory-testing-reveals-6-out-10-fentanyl-laced-fake-prescription-pills-

now-contain.

Press Release, O. of Gov. Gavin Newsom, California Seized Enough Fentanyl to Potentially Kill the

Entire Population of North America, Twice, (Dec. 23, 2022), available at

www.gov.ca.gov/2022/12/23/california-seized-enough-fentanyl-to-potentially-kill-the-entire-

population-of-north-america-twice/.

See generally Beau Kilmer et al., Rapid Changes in Illegally Manufactured Fentanyl Products and Prices in

the United States, RAND CORP. (May 13, 2022), available at www.rand.org/pubs/external_publications

/EP68916.html (The RAND Corporation found in an analysis of DEA nationwide data sourced from

2013-2021 that the share of heroin that had fentanyl mixed into it grew from “<1% to ~40%” while the

median price per gram of fentanyl sold at the >10 to < 100 gram level “fell by more than 50% from 2016

to 2021.”); DEA Bulletin, U.S. Drug Enf’t Admin., Deadly Contaminated Cocaine Widespread in Florida

(2018), available at hps://www.dea.gov/sites/default/les/2018-07/BUL-039-18.pdf (“A review of

cocaine exhibits acquired by law enforcement authorities during operations across Florida and

analyzed by forensic laboratories during the period from 2016 to 2017 revealed the widespread

adulteration of cocaine with fentanyl and fentanyl-related substances.”).

Adam Holland et al., Nitazenes—heralding a second wave for the UK drug-related death crisis?, THE

LANCET (Jan. 12, 2024), available at www.thelancet.com/journals/lanpub/article/PIIS2468-2667(24)00001-

X/fulltext (noting that various forms of nitazenes are 50 to 500 times more potent than heroin, making

most of them substantially more potent than fentanyl).

See New, Dangerous Synthetic Opioid in D.C., Emerging in Tri-State Area, U.S. DRUG ENF’T ADMIN. (June

1, 2022), available at www.dea.gov/stories/2022/2022-06/2022-06-01/new-dangerous-synthetic-opioid-

dc-emerging-tri-state-area (“A drug that was never approved for medical use, nitazines are being

sourced from China and being mixed into other drugs.”); Julie Wernau, FDA Restricts Imports of ‘Tranq’

Drug Xylazine, WALL ST. J. (Feb. 28, 2023), available at www.wsj.com/articles/fda-restricts-imports-of-

tranq-drug-xylazine-5711892c (“Federal regulators said they would restrict imports of xylazine, an

animal tranquilizer commonly manufactured in China that is being diverted into the illicit drug supply

to deadly eect.”).

David Ovalle, On the streets, opioids sometimes more potent than fentanyl: Nitazenes, THE WASH. POST

(Dec. 10, 2023), available at hps://www.washingtonpost.com/health/2023/12/10/nitazenes-opioid-

stronger-than-fentanyl/.

Public Safety Alert, U.S. Drug Enf’t Admin., DEA Reports Widespread Threat of Fentanyl Mixed with

Xylazine, available at hps://www.dea.gov/alert/dea-reports-widespread-threat-fentanyl-mixed-

xylazine.

U.S. Drug Enf’t Admin., supra note 44.

Patrick Kozakiewicz, Moscow Theater Crisis: Unknown Chemical Agent Revisited, CBRNE (Mar. 10, 2014),

hps://www.cbrneportal.com/moscow-theater-crisis-unknown-chemical-agent-revisited/

[hps://web.archive.org/web/20180617165328/hps://www.cbrneportal.com/moscow-theater-crisis-

unknown-chemical-agent-revisited/] (“Later, Boris Grebenyuk, the All-Russia Disaster Relief Service

chief, said the services used trimethyl phentanylum (3-methylfentanyl), a fentanyl analog that is about

1000 times more potent than morphine.”). 3-methyl fentanyl has likewise killed many Americans and

Europeans due to overdose deaths during the time that the CCP subsidized its manufacture and export.

See Ilkka Ojanperä et al., An epidemic of fatal 3-methylfentanyl poisoning in Estonia, 122 INT’L J. OF LEGAL

MED. 395, 395-400 (2008), available at hps://www.semanticscholar.org/paper/An-epidemic-of-fatal-3-

methylfentanyl-poisoning-in-Ojanper%C3%A4-Gergov/38ecf7e64edd4db424adaf2eb97d2edd09b2f2d

9; Magie Fox, New synthetic opioids are killing even more people, CDC says, NBC NEWS (Jul. 11, 2018)

(“Another is 3-methylfentanyl, which is four times as powerful. Deaths from these drugs nearly

doubled from 2016 to 2017, the CDC said.”).

Piyush Chandra & Cheryl Long, VAT rebates and export performance in China: Firm-level evidence, J. OF

PUBLIC ECON. (2013) available at www.doi.org/10.1016/j.jpubeco.2013.03.005 (for “Chinese exports,” the

“empirical ndings demonstrate signicant and large eects of VAT rebates on export volume”—“on

average, for each percentage point increase in the VAT rebate rate, the amount of exports increased by

13%.”).

The website that previously granted access to the export rebate database—

hp://hd.chinatax.gov.cn/fagui/action/initchukou.do—was taken down when Ben Westho’s Fentanyl,

Inc. rst noted the existence of them in 2019 and instead redirects to the State Taxation Administration

homepage. There is presently no way for an individual outside the PRC to access this database. See The

CCP’s Role in the Fentanyl Crisis, supra note 9 (“…following the publication of Fentanyl, Inc., the

Chinese State Taxation Administration website stopped making this information publicly

available.”).

The PRC government has a new site where this data is locatable:

hps://web.archive.org/web/20240226214943/hps://hd.chinatax.gov.cn/nszx2023/cktslcx2023.html..

See discussion of Gaosheng’s internal records in Section II. B., infra.

Phencyclidine, U.S. DRUG ENF’T ADMIN. (Apr. 2023), available at

hps://www.deadiversion.usdoj.gov/drug_chem_info/pcp.pdf (establishing that “PCP is no longer

produced or used for medical purposes in the United States”).

International Drug Control Conventions, U.N. COMM’N ON NARCOTIC DRUGS, available at

www.unodc.org/unodc/en/commissions/CND/Mandate_Functions/Scheduling.html.

GL Henderson, Designer Drugs: Past History and Future Prospects, J. FORENSIC SCI., 569 (1988); Olaf H.

Drummer, Fatalities caused by novel opioids: a review, FORENSIC SCIS. RSCH. (May 7, 2018), available at

hps://www.ncbi.nlm.nih.gov/pmc/articles/PMC6609322/ (“3-Methylfentanyl, known as “China

White”, was rst reported to cause hospitalizations and many deaths in California (and some in

neighbouring States) and Pennsylvania in the 1980s as well as a number of other fentanyl derivatives.”).

Drummer, supra note 55 (“China White, or 3-methylfentanyl, is some 6,000 times more potent than

morphine and is active from a few micrograms.”); Susan B. Glasser & Peter Barker, Russia Conrms

Suspicions About Gas Used in Raid, WASH. POST (Oct. 31, 2022), available at

hps://web.archive.org/web/20070313010109/hps://pqasb.pqarchiver.com/washingtonpost/access/22

9153381.html?dids=229153381:229153381&FMT=ABS&FMTS=ABS:FT&fmac=&date=Oct+31%2C+2002

&author=Susan+B.+Glasser++and+Peter+Baker&desc=Russia+Conrms+Suspicions+About+Gas+Used

+in+Raid; Debora MacKenzie, Mystery of Russian gas deepens, NEWSCIENTIST.COM (Oct. 29, 2022),

available at

hps://web.archive.org/web/20070314004159/hps://www.newscientist.com/article.ns/?id=dn2979.

Kozakiewicz, supra note 50 (“Later, Boris Grebenyuk, the All-Russia Disaster Relief Service chief, said

the services used trimethyl phentanylum (3-methylfentanyl), a fentanyl analog that is about 1000 times

more potent than morphine.”).

Liam Ebrill et al., The Allure of the Value-Added Tax, INT’L MONETARY FUND (June 2022), available at

www.imf.org/external/pubs/ft/fandd/2002/06/ebrill.htm.

Sourcing from China: Export VAT Refund, DELOITTE, available at

hps://www2.deloie.com/content/dam/Deloie/mx/Documents/China/Sourcing_from_China_Expor

t_VAT.pdf (last accessed Apr. 1, 2024) (explaining how if the VAT rate is “When Chinese exporters incur

VAT on costs (raw materials, overheads, machinery), they would typically pay 17 percent VAT on costs.

If the VAT refund rate of the goods exported is less than 17 percent, such as 13 percent, the exporter is

left with a 4 percent cost.”); See also Bing Lu & Hong Ma, The “Mahew eect” in rebates: How does VAT

rebates allocation aect rm export performance, J. OF PUBLIC ECON. (2023), available at

www.doi.org/10.1016/j.jpubeco.2023.104982 (“A few studies that directly examine the impact of VAT

rebates on Chinese exports, including Bai et al. (2011), Chao et al. (2001) and Chen et al. (2006), who

use industry level data, and Gourdon et al. (2022) and Lee et al. (2021) who rely on more disaggregate

product level data. All these studies nd that VAT rebates strongly promote exports.”).

Chinese Government announces signicant reduction to VAT rates as China enters new VAT legislative phase,

KPMG (Mar. 5, 2019), available at hps://kpmg.com/cn/en/home/insights/2019/03/china-tax-alert-

08.html.

Harm Hoostra, VAT in China, MS ADVISORY (May 12, 2022), available at

hps://www.msadvisory.com/vat-in-china/; PRC Value-Added Tax, PRICEWATERHOUSECOOPERS (Jan. 15,

2024), available at hps://taxsummaries.pwc.com/peoples-republic-of-china/corporate/other-taxes

(“The VAT refund rate for exported services is the same as the applicable VAT rate. For exported goods,

the VAT refund rates range from 0% to 13%.”).

Piyush Chandra & Cheryl Long, VAT rebates and export performance in China: Firm-level evidence, J. OF

PUBLIC ECON. (2013) available at www.doi.org/10.1016/j.jpubeco.2013.03.005 (for “Chinese exports,” the

“empirical ndings demonstrate signicant and large eects of VAT rebates on export volume”—“on

average, for each percentage point increase in the VAT rebate rate, the amount of exports increased by

13%.”).

Id.

Studies have found that this cost can be “quite substantial.” See id. As explained, “VAT rebates in

China have absorbed substantial government nancial resources since their formal implementation in

1994.” Id. (discussing how the central government pays for the majority of the rebate, with the local

government having to pay the remainder). The PRC government has never explained why it has

incurred “substantial” costs to incentive the export of highly addictive and deadly drugs abroad.

See (化学药品目录集) [Chemical Drug Catalog Collection], (国家药品监督管理局药品审评中心) [DRUG

EVALUATION CTR. FOR THE STATE DRUG ADMIN.], available at

www.cde.org.cn/hymlj/listpage/9cd8db3b7530c6fa0c86485e563f93c7 (last accessed Apr. 1, 2024)

(listing only variants of Fentanyl, Remifentanil, Alfentanil, and Sufentanil); (重磅！宜昌人福3类仿制药

盐酸阿芬太尼即将获批上市) [Heavy! Yichang Renfu’s Class 3 generic drug alfentanil hydrochloride is about

to be approved for marketing], PHIRDA (Feb. 21, 2020), available at

hp://www.phirda.com/artilce_21404.html?cId=1 (noting alfentanil was rst approved for production

by the PRC government in 2020). See also BEN WESTHOFF, FENTANYL, INC.: HOW ROGUE CHEMISTS ARE

CREATING THE DEADLIEST WAVE OF THE OPIOID EPIDEMIC (2019) (“only three types of fentanyls are

allowed to be legally manufactured in China”). Even these three types of fentanyls fall under the

Regulations on the Administration of Narcotic Drugs and Psychotropic Substances (revised in 2016).

Mazul Yaopin He Jingshen Yapoin Guanli Tiaoli (麻醉药品和精神药品管理条例) [Reguls. on the Admin.

of Narcotic Drugs and Psychotropic Substances] (promulgated by the Standing Comm. Nat’l People’s

Cong., Aug. 3, 2005; rev’d Feb. 6, 2016) St. Council Gaz., Supp. 2016 2, available at

hps://www.gov.cn/gongbao/content/2016/content_5139413.htm (China).

China’s National Medical Products Administration only lists ve companies lawfully permied to

produce and export fentanyl, sufentanil, alfentanil, and remifentanil. No companies are allowed to

produce the other illicit narcotics listed in the subsidies. See also Westho, supra note 65 (only ve

companies are legally permied to manufacture and export fentanyl in the PRC).

The CCP’s Role in the Fentanyl Crisis, supra note 9.

(关于提高部分产品出口退税率的公告) [Announcement on increasing the export tax rate for some products],

(中华人民共和国财政部) [Ministry of Fin. of China] (Mar. 17, 2020), available at

hps://web.archive.org/web/20231129194847/hp://szs.mof.gov.cn/zhengcefabu/202003/t20200317_34

84123.htm (including the aachment at hps://web.archive.org/web/20240225181257/

hp://szs.mof.gov.cn/zhengcefabu/202003/P020200317628211806329.xls showing increase to

commodity code 29333300 to 13%).

Id.

See Chandra & Long, supra note 62 (discussing how the central government pays for the majority of

the rebate, with the local government having to pay the remainder : “VAT rebates in China have

absorbed substantial government nancial resources since their formal implementation in 1994”).

The CCP’s Role in the Fentanyl Crisis, supra note 9 (“…following the publication of Fentanyl, Inc., the

Chinese State Taxation Administration website stopped making this information publicly

available.”). A review of the Internet Archive after the publication of Fentanyl, Inc. reveals a HTTP 302

message. See Internet Archive page for previous PRC Export Tax Rebate Database, available at

hps://web.archive.org/web/20200131071813/hp://hd.chinatax.gov.cn/fagui/action/InitChukou.do

(capturing an HTTP 302 error before redirecting the user to the PRC Ministry of State Taxation

Administration homepage). An HTTP 302 error occurs when the requested resource has been

temporarily moved to a new location.

Press Release, U.S. Drug Enf’t Admin., China Announces Scheduling Controls On Two Fentanyl

Precursor Chemicals (Jan 5. 2018), available at hps://www.dea.gov/press-releases/2018/01/05/china-

announces-scheduling-controls-two-fentanyl-precursor-chemicals.

The CCP’s Role in the Fentanyl Crisis, supra note 9 (“…VAT rebates [] are tax reimbursements given to

companies for tax money already paid during the production of their products.”); Alexander Chipman

Koty, Export Tax Rebates in China Increase for 397 Products, ASIAN BUS. CONSULTANTS, available at

www.theabcgroupllc.com/export-tax-rebates-in-china-increase-for-397-products (last accessed Apr. 1,

2024) (“Applying for export tax rebates – In order to receive an export tax rebate, exporters must

provide their business license and export approval documentation to the relevant local authorities, and

submit monthly tax declarations. Export approval documentation includes a summarized declaration

form for export tax refunds, a customs declaration form for exports, and a VAT declaration form for

export tax refunds, among others.”); Gidon Gautel, China’s Five-in-One Business License: Pressure Mounts

for Foreign Businesses to Implement, CHINA BRIEFING (Aug. 9, 2017), available at www.china-

brieng.com/news/ve-one-business-license-pressure-mounts-foreign-businesses-implement; Export

VAT Rebate in China, DEZAN SHIRA & ASSOC. (Aug. 2019), available at

www.dezshira.com/library/qa/export-vat-rebate-china.html (explaining the same [and manager vs.

trading company dierential]).

See Yellen warns China’s industry ramp up is distorting world economy, BLOOMBERG (Mar. 27, 2024)

available at hps://www.bloomberg.com/news/articles/2024-03-27/yellen-sounds-alarm-on-china-

roiling-world-with-industry-ramp-up?embedded-checkout=true; Alice Hancock & Edward White, EU

launches 2 probes into China solar manufacturers, FIN. TIMES (Apr. 3, 2024), available at

hps://www.ft.com/content/5e677032-82c6-4761-9053-a441ef1a71c4 (EU opening two probes into PRC

market distorting subsidies of electronic vehicles); Alex Willemyns, U.S. and China feud over subsidies for

green tech, RADIO FREE ASIA (Mar. 27, 2024), available at hps://www.rfa.org/english/news/china/yellen-

green-technology-03272024104304.html.

The CCP’s Role in the Fentanyl Crisis, supra note 9 (“The synthetic cannabinoid JWH-018 also received

a 13 percent rebate.”). Using the same commodity/product code, the Select Committee confirmed that

JWH-018 continued to have the 13% rebate (a full tax exemption subsidy) in 2024.

As described below, these grants were often national government funds awarded by provisional

governments. See also id. (in discussing a known illicit drug manufacturing chemical company, “Some

of these companies have listed addresses in “special industrial zones” offering government-subsidized

land and rent, shared manufacturing infrastructure, and other resources.”

(2022年度闵行区稳外贸政策项目拟扶持企业项目企业名单公示) [Announcement of the list of enterprises

planned to be supported by the Minhang District Foreign Trade Stabilization Policy Project in 2022], (闵行区

经济委员) [MINHANG DIST. ECON. COMM’N] (Jul. 29, 2023), available at hps://www.sh-

hitech.com/bt/8454.html [hps://web.archive.org/web/20240414212908/hps://www.sh-

hitech.com/bt/8454.html]. The Minhang District Economic Commission is connected to the Shanghai

PRC provincial government and has CCP members on the Commiee. See Press Release, Shanghai

Mun. Gov’t, Press Release for Media Brieng of the Shanghai Municipal Government on August 25,

2020 (Aug. 27, 2020), available at

hps://service.shanghai.gov.cn/sheninfo/newsdetail.aspx?Id=bc31bad7-0da1-4fe2-9190-0f2803efa1

[hps://web.archive.org/web/20240414213200/hps://service.shanghai.gov.cn/sheninfo/newsdetail.as

px?Id=bc31bad7-0da1-4fe2-9190-0f2803efa1] (noting that the Shanghai municipal government had a

press conference to discuss city initiatives in the Minhang District, with a member of the Chinese

Communist Party speaking on behalf of the Minhang District Economic Commission).

Several other companies boast that their work is directly tied to government-owned universities and

academies, such as Zhejiang University, or receive money from provincial funds like the Shanghai

Science and Technology Innovation Fund. While the Select Commiee lacks the means of corroborating

this information, the fact that companies selling narcotics feel comfortable advertising their ties to PRC

government organizations and funding streams is alarming.

The announcement stated that awardees were only selected after District Economic Commission

engaged in due diligence through a “project review.” The award matches the logo for the national PRC

Torch grant and award program. For discussion of this program, see Westho, supra note 65.

Steven Dudley, et al, The Flow of Precursor Chemicals for Synthetic Drug Production in Mexico, INSIGHT

CRIME (May 2023), available at www.insightcrime.org/wp-content/uploads/2023/05/The-Flow-of-

Precursor-Chemicals-for-Synthetic-Drug-Production-in-Mexico-InSight-Crime-March-2023-3.pdf.

(上海市科技企业联合会调研科技中小企业创新能力) [Shanghai Federation of Science and Technology

Enterprises investigates the innovation capabilities of small and medium-sized science and technology

enterprises], SOHU (July 5, 2021), available at hps://www.sohu.com/a/475542794_100053214;

hps://web.archive.org/web/20240224215630/hps://www.sohu.com/a/475542794_100053214.

Michael Lohmuller et al., Lethal Exchange: Synthetic Drug Networks in the Digital Era, C4ADS (Nov. 17,

2020), available at www.c4ads.org/reports/lethal-exchange/.

Archived Document (not posted by Select Commiee) from Gaosheng Website, SLIDESHARE, available

at hps://www.slideshare.net/ssuser968761/1-75337462 (last accessed Apr. 1, 2024); see also Lohmuller

et al., supra note 82.

The Select Commiee spoke with two former federal agents who provided this information and

provided corroborating documentation.

The Select Commiee consulted with a retired senior DEA ocial, who corroborated the information

that its investigation uncovered on the prison facility.

China: Falun Gong practitioner said to have been tortured in detention, AMNESTY INT’L (Sep. 23, 2016),

available at www.amnesty.org/en/wp-content/uploads/2021/05/ASA1748692016ENGLISH.pdf;

Shijiazhuang No. 1 Detention Center, FALUN INFO (Feb. 2, 2022), available at

www.faluninfo.net/shijiazhuang-no-1-detention-center/; Investigative Report on the Persecution of Falun

Gong by Wu Zhenhua, Li Zunying, Zang Shengye, Zhang Zhenjiang, Fan Guohua, Guo Sushan, and Ma

Wensheng, WORLD ORG. TO INVESTIGATE THE PERSECUTION OF FALUN GONG (Jan. 2, 2021), available at

www.upholdjustice.org/node/518.

Homepage, YAFENG BIOLOGICAL TECHNOLOGY CO., LTD., available at

hps://web.archive.org/web/20240214015942/hp://www.chinayj.com/ (last accessed Apr. 9, 2024).

Press Release, U.S. Drug Enf’t Admin., China Announces Scheduling of New Psychoactive

Substances/fentanyl-class Substances (June 19, 2017), available at hps://www.dea.gov/press-

releases/2017/06/19/china-announces-scheduling-controls-new-psychoactive-substancesfentanyl

Annex I: Non-fentanyl opioids and relaed new psychoactive substances with no currently known legitimate

uses, INT’L NARCOTICS CONTROL BOARD, available at

hps://www.incb.org/documents/Global_Projects_OPIOIDS/INCB.GRIDS.OPIOIDS.NoFOs_list.pdf

(last accessed Apr. 13, 2024).

About Us, YAFENG BIOLOGICAL TECH. CO., LTD., available at

hps://web.archive.org/web/20240214015942/hp://www.chinayj.com/ (last accessed Apr. 9, 2024).

Indictment, United States v. Zheng et al., Case No. 1:18 CR 474 (N. Oh.). Case: 1:18-cr-00474-JRA.

Protonitazene, HK BENTON PHARM CHEMICAL CO., LTD., available at hps://www.protonitazene.com/

[hps://web.archive.org/web/20240228011845/hps://www.protonitazene.com/ (last accessed Apr. 1,

2024).

The CCP’s Role in the Fentanyl Crisis, supra note 9.

Westho, supra note 65 at 199.

Id. at 192, 193.

Id. at 202.

Id.

Lingling Wei, China’s New Way to Control its Biggest Companies: Golden Shares, WALL ST. J. (Mar. 8,

2023), available at hps://www.wsj.com/articles/xi-jinpings-subtle-strategy-to-control-chinas-biggest-

companies-ad001a63.

Id.

100

Id.

101

Id.

102

Id.

103

Chinese Communist Party Cells in Private Companies: Though Not Yet Universal, Increasingly Situated to

Play Greater Roles in Corporate Governance, SAYARI (Apr. 7, 2021), available at

www.sayari.com/resources/chinese-communist-party-cells-in-private-companies-though-not-yet-

universal-increasingly-situated-to-play-greater-roles-in-corporate-governance/.

104

Special Surveillance List of Chems., Prods., Materials and Equip. Used in the Manufacture of

Controlled Substances and Listed Chems., 88 Fed. Reg. 73,044 (Oct. 24, 2023) (notice), available at

hps://www.federalregister.gov/documents/2023/10/24/2023-23478/special-surveillance-list-of-

chemicals-products-materials-and-equipment-used-in-the-manufacture-of.

105

China’s enormous surveillance state is still growing, THE ECONOMIST (Nov. 23, 2023), available at

hps://www.economist.com/china/2023/11/23/chinas-enormous-surveillance-state-is-still-growing

(citing People’s Daily).

106

The CCP’s Role in the Fentanyl Crisis, supra note 29. (“When we passed leads regarding a China-based

company involved in drug or precursor chemical tracking, Ministry of Public Security ocials would

ask for additional details of the company in question and the scope of our investigation. We

subsequently determined and realized through sources, the targeted company, if owned or was linked

to a Chinese Communist Party (CCP) member, would be notied and warned that US law enforcement

authorities were either investigating or monitoring them.”).

107

Greenwood & Fashola, supra note 11.

108

Jacob Gu, China Warns Its Citizens on ‘Entrapment’ by US Law Enforcement, BLOOMBERG (July 10, 2023),

available at hps://www.bloomberg.com/news/articles/2023-07-10/china-warns-its-citizens-on-

entrapment-by-us-law-enforcement.

109

The CCP’s Role in the Fentanyl Crisis, supra note 29 (“Outside of a handful of successful cooperative

results, thousands of leads were met with silence or responses that, ‘a crime was not commied

according to China’s laws.’ Regardless of proven drug funds transferred into Chinese banks directly

linked to a specied unlawful activity, even under Chinese law, they would reply that there were no

crimes commied on Chinese soil.”).

110

In greater detail, the U.S. prosecutor asked the PRC ocials to conrm their interest in prosecuting

the Zhengs if they had the legal means to do so. The PRC ocials strongly reiterated their desire to

assist through criminal prosecution, so long as they had a chargeable case. At that point, the prosecutor

pulled out another three-inch thick binder of evidence, along with a treatise on Chinese law veried by

an expert at the Library of Congress. The prosecutor then presented comprehensive analysis with

accompanying evidence of how the Zhengs had violated a half-dozen PRC felonies. After the

presentation, there was a long moment of silence followed by a quiet and frantic discussion in

Mandarin among the PRC delegation. Ultimately, the seniormost PRC ocial conrmed to the

American prosecutor in English that it appears that the Zhengs did violate these PRC laws but,

unfortunately, the PRC ocials present at the meeting did not handle those types of violations. The

prosecutor asked if the correct ocials were available to speak with his team. The PRC ocials said

they were not in today. The prosecutor said his team could return the next day, at which point the PRC

ocial said that the right ocials were not available then either. The prosecutor asked when they were

available, with the PRC ocial asking in turn when the American delegation was ying back to Ohio.

The prosecutor said the ight was on Friday, with the PRC ocial expressing dismay that the correct

ocials for these types of violations were not available until the following Monday. The prosecutor

then said that they would change their ight and meet with these ocials on Monday. At that point,

the seniormost PRC ocial said that would not be necessary and that they would be in touch for further

cooperation. The meeting ended immediately thereafter. The PRC did not cooperate further.

111

O. of Pub. As., Aorney General Sessions Makes Multiple Major Announcements as the Justice

Department Continues to Combat the Opioid Crisis, U.S. DEP’T OF JUSTICE (Aug. 22, 2018), available at

www.justice.gov/opa/speech/aorney-general-sessions-makes-multiple-major-announcements-

justice-department-continues (“We also allege that the Zheng organization manufactured counterfeit

drugs that purported to be Adderall and discussed manufacturing various trademarked cancer drugs,

but were fake. They were actually bath salts. Adulteration of medicine with synthetic drugs would of

course be illegal in both the United States and China.”)

112

Afterward, a senior Department of Justice ocial sent a leer to his Chinese counterpart making the

formal request for the PRC to prosecute the Zhengs for clear violations of Chinese law. The

correspondence included a comprehensive collection of relevant evidence. The Chinese ocial replied

with a form response that ignored the evidence and the request for assistance. Mo Hong’e, China takes

unprecedented eort in fentanyl control despite U.S. slander, ECNS (Sep. 21, 2018), available at

hps://web.archive.org/web/20240414142819/hps://www.ecns.cn/news/2018-09-21/detail-

ifyyehna1449279.shtml. Near in time to the indictment, the Chinese government provided a small

amount of redundant evidence to the prosecution team and asked them not to prosecute the case. See

also Steven Jiang, China downplays role in US opioid epidemic, CNN (Nov. 3, 2017), available at

www.cnn.com/2017/11/03/health/china-drugs-fentanyl-trump/index.html (“The suspects’ arrest will

depend on evidence provided by the US and evidence discovered by Chinese police,” he said.

“The two countries have different laws governing such substances – and China can only take

actions based on its domestic laws and what its law enforcement officers find.”).

113

Press Release, U.S. Dep’t of the Treasury, Treasury Targets Chinese Persons Involved with Drug

Tracking Org. Moving Fentanyl (July 17, 2020), available at hps://home.treasury.gov/news/press-

releases/sm1063; OFAC Sanctions Internet-based Suppliers of Illicit Fentanyl and Other Synthetic Drugs,

CHAINALYSIS (Nov. 9, 2022), available at www.chainalysis.com/blog/ofac-sanctions-suppliers-of-illicit-

fentanyl/.

114

Ambassador Qin Gang Takes an Interview with Newsweek on the Fentanyl Issue, EMBASSY OF CHINA IN THE

U.S. (Sept. 30, 2022), available at hps://web.archive.org/web/20240414143913/hp://us.china-

embassy.gov.cn/eng/dshd/202209/t20220930_10775097.htm.

115

Felbab-Brown, supra note 13.

116

The Select Commiee investigator chose the vendors based on a veried list of active synthetic

narcotics vendors provided by award-winning academics that study this issue that the Select

Commiee then conrmed with a leading AI supply chain and logistics rm and through its own open

source investigation. The Select Commiee investigator did not purchase any narcotics or engage in

any acts illegal under U.S. or PRC law and coordinated with U.S. law enforcement, as appropriate. The

Select Commiee investigator engaged with and oered full transparency to federal law enforcement

relating to these eorts.

117

This includes chemicals unscheduled under PRC law but still sold to an individual when there is

indicia that the chemicals would be used for drug tracking.

118

The PRC Ministry of Public Security published a “Notice” on Weixin, the PRC’s version of WeChat,

a platform that is ubiquitous in China. The Notice, “remind[ed] relevant enterprises and individuals to

be cautious in selling drug-formulating substances.” Seong Hyeon Choi & Vanessa Cai, US-China

relations: Beijing warns companies against selling equipment, precursors for fentanyl, S. CHINA MORNING POST

(Nov. 17, 2023), available at www.scmp.com/news/china/diplomacy/article/3241885/china-warns-

companies-against-selling-equipment-precursors-fentanyl. In the remainder of the Notice, however,

the PRC publicly acknowledged for the rst time what was already clear under its laws: that “a person

who produces, sells, transports, imports, or exports non-regulated chemicals [i.e., precursors] and

equipment [i.e., pill presses and dyes] for another person, knowing that the laer will use them in the

illicit manufacture of narcotic drugs or psychotropic substances, shall be punished as an accomplice to

the crime of drug manufacture.” It also noted that exporting “goods or articles prohibited or restricted

by the state” or “goods or articles on which taxes should be paid” is “an act of smugglings, which

constitutes a crime.”]

119

As the master of the world’s most comprehensive surveillance state, it uses a nationwide surveillance

panopticon, acquisition of vast amounts of personal data without independent judicial oversight, and

AI analysis to constantly monitor for any activities it sees as a threat to its rule. Under the PRC Criminal

Procedure Law, all public security organs (police), PR curatorial organs (prosecutors), and national

security organs have access to PRC residents’ private communications and data as “technical

investigative measures.” Zhonghua Renmin Gongheguo Zingshi Susong Fa (中华人民共和国刑事诉讼

法) [PRC Crim. Proc. Law] (promulgated by the Standing Comm. Nat’l People’s Cong., July 1, 1979;

rev’d Oct. 26, 2018), General O. of the Standing Comm. Nat’l People’s Cong.,

hps://k.npc.gov.cn/detail2.html?ZmY4MDgwODE2ZjEzNWY0NjAxNmYxZDFiODFiMDEz

NTE%3D [hps://perma.cc/C4XH-J8VY] (China). Under PRC Ministry of Public Security (MPS) Rules,

this includes (but is not limited to) “monitoring of records, location tracking, monitoring of

communications, and location surveillance.” Gongan Jiguan Banli Xingshi Anjian Chengxu Guiding (

公安机关办理刑事案件程序规定) [Procedural Reguls. on the Handling of Crim. Cases by Pub. Sec.

Organs] (promulgated by the Min. Pub. Sec., Dec. 3, 2012, eective Jan. 1, 2013) art. 255, St. Council

Gaz., translated in hps://perma.cc/JL6K-U88R (China) (English translation by US-Asia Law Institute at

New York University School of Law) (MPS Rules). There is no requirement for an independent

judiciary to approve these steps via a search warrant, as MPS ocials approve it internally. MPS Rules,

art. 256. According to MPS Rules, PRC authorities may use these techniques not only on criminal

suspects and defendants but also on others whose activities are directly related to the criminal activity.

Id., art. 255. Under the PRC Cybersecurity Law, technology companies like WeChat and Alibaba, are

required to assist MPS and other PRC entities in this surveillance and furthermore require that users

网络安全法) [PRC Cybersecurity Law] (promulgated by the Standing Comm. Nat’l People’s Cong.,

Nov. 7, 2016, eective June 1, 2017) arts. 1, 5, 24, Xinhua News Agency, translated in

hps://perma.cc/48Y9-B3ZH (China) (English translation provided by DigiChina, Stanford University).

The Cybersecurity Law requires network operators to provide technical support and assistance to the

public security organs and the national security organs in the authorities’ activities of protecting

national security and investigating crimes. Id., art. 28. The law does not dene such technical support

and assistance. They furthermore are obligated to monitor all user content and, upon discovering any

information prohibited by law from being published or transmied, it must take immediate steps to

stop the transmission of such information, delete the information, and report the information to the

relevant authorities. Id., art. 47. Under the PRC Data Security Law, organizations and individuals must

also cooperate with PRC authorities in data requires relating to criminal and national security

investigations. Zhonghua Renmin Gongheguo Shuju Anquan Fa (中华人民共和国数据安全法) [PRC

Data Security Law] (promulgated by the Standing Comm. Nat’l People’s Cong., June 10, 2021, eective

Sept. 1, 2021) art. 35, Nat’l People’s Cong, translated in hps://perma.cc/F4NP-ALRD (China) (English

translation provided by DigiChina).

120

Keena Alwahaidi, ‘They can track people over time’: Inside China’s extensive surveillance network, CBC

(Dec. 8, 2022), available at www.cbc.ca/radio/thecurrent/china-surveillance-network-1.6677778.

121

Id.

122

Joy Dong, China’s Internet Censors Try a New Trick: Revealing Users’ Locations, N.Y. TIMES (May 18,

2022), available at www.nytimes.com/2022/05/18/business/china-internet-censors-ip-address.html.

123

Anh Cao, How the Party is Increasing Control of China’s Banks, FAIRBANK CTR. FOR CHINESE STUD. (Aug.

15, 2023), available at hps://fairbank.fas.harvard.edu/news/how-the-party-is-increasing-control-of-

chinas-banks/. In 2018, the PRC began requiring all mobile payments to be cleared by the People’s Bank

of China (PBOC), meaning that the CCP touches all mobile payment transactions in China. See Andrew

Liu, An Analysis of the PBOC’s New Mobile Payment Regulation, 39 CATO J. 87, 87 (2019), available at

hps://www.cato.org/sites/cato.org/les/serials/les/cato-journal/2019/2/cj-v39n1-6.pdf. “By gaining

access to the billions of proprietary consumer data points collected by mobile payment providers, the

CCP and PBOC gain incredible insight into the behavior of the hundreds of millions of Chinese citizens

that use mobile payment platforms.” Id. The National Financial Regulatory Administration (NFRA),

previously called the China Banking and Insurance Regulatory Commission, regulates the nancial

industry (with the exception of securities). China Regulator to Speed Reform of Smaller Financial

Institutions, REUTERS (Dec. 3, 2023), hps://www.reuters.com/world/china/china-regulator-speed-

reform-smaller-nancial-institutions-2023-12-03/.

124

One of these websites, Foreign-Trade.com, plays an outsized role in agrant online drug tracking

by PRC companies. While this website bears indicia of a PRC-operated website and the Select

Commiee has identied evidence tying it to the PRC, Foreign-Trade uses a privacy service that

obfuscates most of its corporate information. Federal law enforcement should consider further research

into this site to understand its ownership structure and what policies, if any, it has in place to identify

drug tracking on its site.

125

See Section II.C., supra.

126

This is the nal number after de-duplication.

127

Specic Listing for 1-boc-4-AP, a Currently Controlled List I Chem., 87 Fed. Reg. 67,550 (Nov. 9,

2022) (nal rule), available at hps://www.federalregister.gov/documents/2022/11/09/2022-

24155/specic-listing-for-1-boc-4-ap-a-currently-controlled-list-i-chemical; Three precursors of the most

common synthesis routes used in illicit fentanyl manufacture now under international control, UNODC LAB.

AND SCI. SERV. PORTALS (Apr. 2022), available at

www.unodc.org/LSS/Announcement/Details/b152bda5-5d71-4f7e-9d68-1bdd9af04a83; U.N.

Convention Against Illicit Trac in narcotic Drugs and Psychotropic Substances, art. 10, Dec. 20, 1988,

available at hps://www.unodc.org/pdf/convention_1988_en.pdf. For the fentanyl precursors

norfentanyl, 4-Piperidone, and1-Boc-4-AP, while the PRC has refused to schedule them, its November

2023 Notice makes clear that the PRC government considers any sale of these chemicals tied to drug

tracking as a crime.

128

See, e.g.,, Xylazine free base, CHEMICALBOOK, available at

hps://web.archive.org/web/20240414004000/hps://www.chemicalbook.com/ProductDetail_EN_xyla

zine-free-base_2452943.htm (last accessed Apr. 1, 2024); Xylazine, CHEMICALBOOK, available at

hps://web.archive.org/web/20240408181619/hps://www.chemicalbook.com/ProductDetail_EN_xyla

zine_2538983.htm (last accessed Apr. 1, 2024); Protonitazene, CHEMICALBOOK, available at

hps://web.archive.org/web/20240414032622/hps://www.chemicalbook.com/ProductDetail_EN_prot

onitazene_2511822.htm (last accessed Apr. 1, 2024).

129

1H-Benzimidazole-1-ethanamine, N,N-diethyl-5-nitro-2-[(4-propoxyphenyl)methyl]-,

CHEMICALBOOK, available at hps://www.chemicalbook.com/ProductDetail_EN_1h-benzimidazole-1-

ethanamine-nn-diethyl-5-nitro-2-4-propoxyphenylmethyl_2162666.htm (last accessed Apr. 1, 2024)

(listing many illicit synthetic narcotics for sale in a picture).

130

Xylazine, supra note 128.

131

Xylazine, CHEMICALBOOK, available at hps://web.archive.org/web/20240414033340/

hps://www.chemicalbook.com/ProductDetail_EN_xylazine_723687.htm (last accessed Apr. 1, 2024).

132

Xyalzine, CHEMICALBOOK, available at h hps://web.archive.org/web/20240326010417/

hps://www.chemicalbook.com/ProductDetail_EN_xylazine_1917814.htm (last accessed Apr. 1, 2024).

133

See (国家禁毒委员会办公室) [China O. of the Nat’l Narcotics Control Comm’n], “(国家禁毒委员会

办公室发布通告提醒相关企业和个人谨慎销售可制毒物品) [The Oce of the National Narcotics

Control Commission issued a notice reminding relevant companies and individuals to be cautious in

selling substances that can be used to make narcotics],” TENCENT (Nov. 16, 2023),

hps://mp.weixin.qq.com/s/ZhbYujIwr28E7k6MJjC66Q [hps://web.archive.org/web/20240227190236/

hps://mp.weixin.qq.com/s/ZhbYujIwr28E7k6MJjC66Q]. The Notice provides that the “Criminal Law

of the People’s Republic of China” outlaws “illegally producing, trading, transporting […] raw

materials and preparations used to make drugs.” The Notice also stated that it is “strictly prohibited

for any organization or individual to produce, trade, or transport the items specied in [non-scheduled

precursors and other drug ingredients] for others knowing that they are manufacturing drugs.” Doing

so would result in the oender being “punished as an accomplice in the crime of manufacturing

drugs.” The Notice acknowledged that other activities corresponding to fentanyl precursor sales, such

as falsely declaring goods to customs, are likewise unlawful. It furthermore stated that “[p]ostal,

express delivery companies and logistics companies” must report any instances of “illegal mailing,

transportation, or entrainment of suspected narcotic drugs or psychotropic drugs, precursor chemicals

and other drug-making raw materials” to “public security organs.” Id.

134

Protonitazene, supra note 92.

135

See generally Tara John et al., The US sanctioned Chinese companies to ght illicit fentanyl. But the drug’s

ingredients keep coming, CNN (Mar. 30, 2023), available at www.cnn.com/2023/03/30/americas/fentanyl-

us-china-mexico-precursor-intl/index.html (chemist nding that similar PRC-based narcotics

tracking posts in early 2023 were “obviously a list curated to help people create illicit drugs.”).

136

Steven Lee Myers, China’s Search Engines Have More Than 66,000 Rules Controlling Content, Report Says,

N.Y. TIMES (Apr. 26, 2023), available at www.nytimes.com/2023/04/26/business/china-censored-search-

engine.html; Jerey Knockel et al., Missing Links: A comparison of search censorship in China, CITIZEN LAB

(Apr. 26, 2023), available at www.citizenlab.ca/2023/04/a-comparison-of-search-censorship-in-china/.

137

Myers, supra note 136.

138

Stephen McDonnell, Why China censors banned Winnie-the-Pooh, BBC (July 17, 2017), available at

www.bbc.com/news/blogs-china-blog-40627855.

139

Jerey Knockel et al., Missing Links: A comparison of search censorship in China, CITIZEN LAB (Apr. 26,

2023), available at www.citizenlab.ca/2023/04/a-comparison-of-search-censorship-in-china/.

140

Analysis conducted by Citizen Labs at the Select Commiee’s request. For instance, there is no

censorship triggers for “fentanyl +” any of the following terms "America," "United States," "Mexico,"

"Europe," "Africa," "Australia," "International," "Abroad," "Foreign" "Customs" or "Border."

141

Sheng Hong, China’s Chemical Industry: New Strategies for a New Era, MCKINSEY & CO. (Mar. 20, 2019),

available at hps://web.archive.org/web/20240414005230/hps://www.mckinsey.com/industries/

chemicals/our-insights/chinas-chemical-industry-new-strategies-for-a-new-era.

142

Id.

143

BUREAU OF INT’L NARCOTICS & LAW ENF’T AFFS., U.S. DEP’T OF STATE, INT’L NARCOTICS CONTROL

STRATEGY REP. VOL. 1, DRUG & CHEM. CONTROL (2021), available at hps://www.state.gov/wp-

content/uploads/2021/02/International-Narcotics-Control-Strategy-Report-Volume-I-FINAL-1.pdf.

144

Benjamin Haas, Thousands in China watch as 10 people sentenced to death in sport stadium, GUARDIAN

(Dec. 17, 2017), available at www.theguardian.com/world/2017/dec/18/thousands-china-watch-

executed-sport-stadium.

145

See generally Philippines: China Executed 2 Filipinos Convicted of Drug Tracking, VOA (Dec. 2, 2023),

available at www.voanews.com/a/philippines-china-executed-2-lipinos-convicted-of-drug-

tracking/7381736.html; Choi Si-young, China executes S. Korean for drug tracking, KOR. HERALD (Aug.

4, 2023), available at www.koreaherald.com/view.php?ud=20230804000619; China’s latest use of the death

penalty for drug oences condemned, AMNESTY INT’L (Mar. 29, 2011), available at www.amnesty.org/en/wp-

content/uploads/2021/07/asa170162011en.pdf (China does not tell the world how many people it

executes, but is believed to put to death thousands of people each year—more than the rest of the world

combined); Aurelie Placais, China reduces the number of crimes punishable by death to 46, but keeps drug

tracking in the list, WORLD COAL. (Oct. 7, 2015), available at www.worldcoalition.org/2015/10/07/china-

reduces-the-number-of-crimes-punishable-by-death-to-46-but-keep-drug-tracking-in-the-list/.

These include two Filipinos who allegedly smuggled just over four kilograms of heroin within the

PRC’s borders. China’s latest use of the death penalty for drug oences condemned, AMNESTY INT’L (Mar. 29,

2011), available at www.amnesty.org/en/wp-content/uploads/2021/07/asa170162011en.pdf. In another

instance, the PRC executed a Canadian oil rig worker who it accused of smuggling methamphetamine

shortly after the Canadians arrested Huawei Chief Financial Ocer Meng Wanzhou, which many saw

as a diplomatic ploy rather than a just sentence. See China sentences Canadian citizen to death in drugs case,

FR. 24 (Jan. 14, 2019) available at www.france24.com/en/20190114-china-sentences-canadian-citizen-

schellenberg-death-drugs-case-justice.

146

China will never allow drug trackers from any country to kill and poison its people: Chinese Embassy in

Canada, GLOB. TIMES (Aug. 11, 2021), available at www.globaltimes.cn/page/202108/1231146.shtml.

147

Id.

148

Felbab-Brown, supra note 13 (emphasis added).

149

Press Release, White House, Background Press Call on the Counternarcotics Working Group Trip to

Beijing (Jan. 28, 2024), available at hps://www.whitehouse.gov/brieng-room/press-

briengs/2024/01/28/background-press-call-on-the-counternarcotics-working-group-trip-to-beijing/

(“We have information that the PRC started taking action against Chinese synthetic drug and chemical

precursor suppliers right around the time of the summit and in the following months. So we saw

companies shut down. We saw international payment accounts blocked.”).

150

Felbab-Brown, supra note 13.

151

QIAO LIANG & WANG XIANGSUI, UNRESTRICTED WARFARE: CHINA’S MASTER PLAN TO DESTROY

AMERICA (1999) (translated from original Mandarin by native Mandarin speaker on Select Commiee

Sta).

152

China in Our Backyard: How Chinese Money Laundering Organizations Enrich the Cartels, Hearing before

the H. Comm. on Oversight and Accountability, Subcomm. On Health Care and Fin, Servs., 118th Cong. (202)

(testimony of Anthony Ruggiero), available at hps://www.fdd.org/analysis/2023/04/26/china-in-our-

backyard/.

153

Follow the Money: The CCP’s Business Model in Fueling the Fentanyl Crisis, Hearing before the H. Comm.

on Fin. Servs., Subcomm. on Nat’l Sec., Illicit Fin., and Int’l Fin. Insts., 118th Cong. (2023) (testimony of

Vanda Felbab-Brown), available at hps://www.brookings.edu/articles/chinas-role-in-the-fentanyl-

crisis/.

154

China’s Role in Illicit Fentanyl Running Rampant on US Streets, OFF. OF REP. DAVID TRONE (Jan. 8, 2023),

available at hps://trone.house.gov/2023/01/08/chinas-role-in-illicit-fentanyl-running-rampant-on-us-

streets/; Westho, supra note 65.

155

Id.

156

Chinese businesses fueling the fentanyl epidemic and receive tens of millions in crypto payments, ELLIPTIC

(May 23, 2023), available at www.elliptic.co/blog/chinese-businesses-fueling-the-fentanyl-epidemic-

receive-millions-in-cryptocurrency-payments.

157

Westho, supra note 65. See also The CCP’s Role in the Fentanyl Crisis, supra note 29 (“These provincial

governors and other CCP leaders compete with one another for higher positions based on economic

performance in their province. Hence, the pursuit of economic growth and competition, created an

atmosphere of reduced oversight, regulations, accountability and enforcement, leading to significant

corruption throughout China’s provincial governments, and even up to high level military and CCP

party members. Chinese Customs and Trade Ministry Officials in certain provinces either participated

or and encouraged capital investment with incentives such as subsidies or reduced taxes and tariffs for

exporting companies, or reduced inspections and laxed regulations. Many China-based chemical

companies that supplied fentanyl precursors and illicit drugs benefited from these incentives for many

years.”).

158

Interview with Ben Westho, Fentanyl as a dark web prot center, form Chinese labs to U.S. Streets, NPR

(Sept. 4, 2019), available at hps://www.npr.org/transcripts/757089868?storyId=757089868

?storyId=757089868. Moreover, the PRC government “has prioritized biopharmaceuticals as one of ten

key sectors in the Made in China 2025 initiative,” increasing the demand for provincial success in this

sector and making it unlikely that any provincial ocial would want to shut down a biopharmaceutical

company. This fact, along with “the pharmaceutical and chemical sectors play[ing] an important role

in local economies and the careers of local administrators, reduc[es] incentives to police bad actors.”

Comm’n on Combating Synthetic Opioid Tracking, supra note 10.

159

Follow the Money, supra note 153 (“The triads’ connections to China’s legal system, economy and

enterprises remain signicant and essential. Like many criminal groups around the world, the triads

use legal businesses as fronts for their illegal operations and money-laundering, and they plug into the

infrastructure and transportation networks of legal businesses. But they also provide a variety of

services to Chinese legal business enterprises, including those connected to government ocials and

the CCP, such as in the promotion and facilitation of Chinese businesses abroad, the building up of

networks of political inuence for China abroad, and the informal information gathering and

enforcement against Chinese fugitives and Chinese diaspora outside of China, such as to prevent

criticism of the regime”).

160

This conclusion relied on interviews with more than two dozen current and former national security

ocials in Europe and the U.S., Chinese immigrants, human rights advocates, and others, as well as

exhaustive review of court records and other documents. Sebastian Rotella, Outlaw Alliances: How China

and Chinese Maas Overseas Protect Each Other’s Interests, PROPUBLICA (July 12, 2023), available at

www.propublica.org/article/how-beijing-chinese-maa-europe-protect-interests. For other examples

of Chinese organized crime working to the benet of the PRC government, see Gerry Shih, China’s

backers and ‘triad’ gangs have a history of common foes. Hong Kong protesters fear they are next., WASH. POST

(July 23, 2019), available at www.washingtonpost.com/world/asia_pacic/chinas-backers-and-triad-

gangs-have-history-of-common-foes-hong-kong-protesters-fear-they-are-next/2019/07/23/41445b88-

ac68-11e9-9411-a608f9d0c2d3_story.html (describing how triad gangs aacked Hong Kong protesters).

See also JM Cole, On the Role of Organized Crime and Related Substate Actors in Chinese Political Warfare

Against Taiwan, TAIWAN MIN. OF JUST. INVESTIGATIVE BUREAU (2018), available at

hps://www.mjib.gov.tw/FileUploads/eBooks/6f2646ebb06a4ddba2449c950a42533d/

Section_le/8a0b255919bc48e1bc3d2a38825cd3c8.pdf (“A few words are nevertheless necessary to

explain how and why triads have had the ability to play a role in the CCP’s campaign against Taiwan.

Soon after its victory in the Chinese Civil War in 1949, the CCP made a one-time “oer” to criminal

organizations across China, which basically said collaborate with us or die. The crime syndicates that

agreed to the terms of this “oer” were allowed to prosper, but as part of the deal they had to develop

a symbiotic relationship with the party-state apparatus, providing local assistance whenever “muscle”

was needed to intimidate civil society or would-be opponents of CCP rule.”).

161

Sebastian Rotella, Outlaw Alliances: How China and Chinese Maas Overseas Protect Each Other’s

Interests, PROPUBLICA (July 12, 2023), available at www.propublica.org/article/how-beijing-chinese-

maa-europe-protect-interests.

162

Id.

163

Sebastian Rotella et al., A Diplomat’s Visits to Oklahoma Highlight Contacts Between Chinese Ocials and

Community Leaders Accused of Crimes, PROPUBLICA (Mar. 22, 2024),

hps://www.propublica.org/article/oklahoma-marijuana-china-diplomat-visits.

164

Chang An-lo, WIKIPEDIA, available at www.en.wikipedia.org/wiki/Chang_An-lo (last accessed Apr. 1,

2024).

165

James Griths, US blacklists Chinese triad boss ‘Broken Tooth’ in latest round of anti-corruption sanctions,

CNN (Dec. 10, 2020), available at www.cnn.com/2020/12/10/asia/us-sanction-broken-tooth-triad-china-

intl-hnk/index.html.

166

Sebastian Rotella & Kirsten Berg, How a Chinese American Gangster Transformed Money Laundering for

Drug Cartels, PROPUBLICA (Oct. 11, 2022), available at www.propublica.org/article/china-cartels-xizhi-li-

money-laundering.

167

Id. See also The CCP’s Role in the Fentanyl Crisis, supra note 29 (“China’s massive export economy has

helped create the world’s largest money laundering system, fueled by the multi-billion-dollar illicit

drug industry.”).

168

Follow the Money, supra note 153.

169

Rotella & Berg, supra note 166.

170

Id.

171

Id.

172

S. Comm. on Armed Servs., To Receive Testimony on United States Southern Command and United States

Northern Command in Review of the Defense Authorization Request for Fiscal Year 2022 and the Future Years

Defense Program, 117th Cong. (2021), available at hps://www.armed-

services.senate.gov/imo/media/doc/21-12_03-16-2021.pdf.

173

Thomas J. Dusterberg, Fentanyl Is a Growth Industry in China’s Weakening Economy, WALL ST. J. (June

19, 2023), available at www.wsj.com/articles/fentanyl-is-a-growth-sector-in-chinas-weakening-

economy-drug-trade-crime-syndicate-overdose-daba1c2c; see Felbab-Brown, supra note 13 (“Although

it is not clear what percentage of the cartels’ illicit prots is laundered through Chinese money transfer

networks, U.S. ocials fear that the eectiveness of their money laundering is such that it is even

displacing established Mexican and Colombian money launderers and puing the ows of cartel

money even more out of reach of U.S. law enforcement.”). See also The CCP’s Role in the Fentanyl Crisis,

supra note 29 (“China’s strict capital ight restrictions implemented in 2016, limit Chinese citizens from

transferring large sums of cash abroad. The TBML system has allowed many wealthy Chinese citizens

and government ocials a way to bypass these regulations and transfer billions in wealth to more

stable economies.”).

174

Strategic Support for Achieving the Great Chinese Rejuvenation, one in a series of ocial texts on “Xi

Jinping Thought,” (Beijing: National Defense University 2018) quoted by Ma Poinger et al., Xi Jinping

in his own words, FOREIGN AFFS. (Nov. 30, 2022), available at hps://www.foreignaairs.com/china/xi-

jinping-his-own-words.

175

Id.

176

The CCP Cyber Threat to the American Homeland and National Security, Hearing Before the H. Select Comm.

on the Strategic Competition Between the United States and the Chinese Communist Party, 118th Cong. (2024),

available at hps://selectcommieeontheccp.house.gov/media/remarkstranscripts/hearing-transcript-

ccp-cyber-threat-american-homeland-and-national.

177

Id.

178

This treatise was translated and sold abroad as Unrestricted Warfare. Qiao & Wang, supra note 151 at

123.

179

David Barno & Nora Bensahel, A New Generation of Unrestricted Warfare, WAR ON THE ROCKS (Apr.

19, 2016), available at hps://warontherocks.com/2016/04/a-new-generation-of-unrestricted-warfare/.

180

Sam Cooper, Two high-level memos allege Beijing covertly funded Canadian election candidates, GLOB.

NEWS (Mar. 8, 2023), available at www.globalnews.ca/news/9534893/high-level-memos-beijing-2019-

election-candidates/.

181

Michael Martina, US accuses China of global media manipulation, REUTERS (Sep. 29, 2023), available at

www.reuters.com/world/us-accuses-china-global-media-manipulation-2023-09-28/; Leer from Sen.

Tom Coon & Sen. Marco Rubio to The Honorable Janet Yellen, Sec’y Treasury (Aug. 9, 2023), available

at www.coon.senate.gov/imo/media/doc/forbes_leer1.pdf; Mackenzie Smith & Toby Mann, China is

trying to buy inuence with media in the Pacic as it aims to strengthen its presence in the region, PACIFIC BEAT

(Aug. 2, 2023), available at www.abc.net.au/news/2023-08-02/china-buys-inuence-solomon-islands-

star-newspaper-pacic/102668914; Nita Farahany, TikTok is part of China’s cognitive warfare campaign,

THE GUARDIAN (Mar. 25, 2023), available at www.theguardian.com/commentisfree/2023/mar/25/tiktok-

china-cognitive-warfare-us-ban; Josh Baughman & Peter Singer, China’s social-media aacks are part of a

larger ‘cognitive warfare’ campaign, DEF. ONE (Oct. 17, 2023), available at

www.defenseone.com/ideas/2023/10/chinas-social-media-aacks-are-part-larger-cognitive-warfare-

campaign/391255/.

182

Qiao & Wang, supra note 151 (emphasis added) (translated from original Mandarin by native

Mandarin speaker on Select Commiee Sta). Unrestricted Warfare referenced drug warfare again in its

section on "combination warfare," which described how an aggressor can combine two or more

seemingly unrelated aggressive techniques (e.g., drug warfare, psychological warfare, smuggling

warfare) to make a new and more powerful means of defeating their enemy.

183

Donie O’Sullivan et al., China is using the world’s largest known online disinformation operation to harass

Americans, a CNN review nds, CNN (Nov. 13, 2023), available at www.cnn.com/2023/11/13/us/china-

online-disinformation-invs/index.html.

184

Press Release, U.S. Dep’t of Just., Chinese Nationals Charged with Illegally Exporting U.S.-Origin

Electronic Components to Iran and Iranian Military Aliates (Jan. 30, 2024), available at

hps://www.justice.gov/usao-dc/pr/chinese-nationals-charged-illegally-exporting-us-origin-

electronic-components-iran-and; Channing Mavrellis & John Cassara, China’s Role in Transnational

Crime & Illicit Financial Flows, GLOB. FIN. INTEGRITY (Oct. 27, 2022), available at gntegrity.org/press-

release/china-plays-an-outsized-role/.

185

The CCP Cyber Threat to the American Homeland and National Security, supra note 176.

186

Farahany, supra note 181.

187

Zeba Siddiqui, Five Eyes intelligence chiefs warn on China’s ‘theft’ of intellectual property, REUTERS (Oct.

18, 2023), available at www.reuters.com/world/ve-eyes-intelligence-chiefs-warn-chinas-theft-

intellectual-property-2023-10-18/.

188

Michael J. Kavanagh & William Clowes, China Cash Flowed Through Congo Bank to Former President’s

Cronies, BLOOMBERG (Nov. 28, 2021), available at www.bloomberg.com/news/features/2021-11-28/africa-

s-biggest-data-leak-reveals-china-money-role-in-kabila-s-congo-looting?embedded-checkout=true.

189

CK Tan, China vows Belt and Road ramp up despite debt-trap criticism, NIKKEI ASIA (Oct. 10, 2023),

available at www.asia.nikkei.com/Spotlight/Belt-and-Road/China-vows-Belt-and-Road-ramp-up-

despite-debt-trap-criticism.

190

Lindsay Maizland, China’s Repression of Uyghurs in Xinjiang, COUNCIL ON FOREIGN RELS. (Sep. 22,

2022), available at www.cfr.org/backgrounder/china-xinjiang-uyghurs-muslims-repression-genocide-

human-rights.

191

Valentina Pop, et al, From Lightbulbs to 5G, China Bales West for Control of Vital Technology Standards,

WALL ST. J. (Feb. 8, 2021), available at www.wsj.com/articles/from-lightbulbs-to-5g-china-bales-west-

for-control-of-vital-technology-standards-11612722698.

192

Qiao & Wang, supra note 151.

193

Press Release, U.S. Drug Enf’t Admin., U.S. Dep’t of Just., DEA Warns of Increase in Mass-Overdose

Events Involving Deadly Fentanyl (Apr. 6, 2022), hps://www.dea.gov/press-releases/2022/04/06/dea-

warns-increase-mass-overdose-events-involving-deadly-fentanyl.

194

See Section I, supra.

195

Meryl Korneld, et al, Fentanyl has taken a record toll on Army. Families demands answers., THE WASH.

POST (June 12, 2023), available at www.washingtonpost.com/national-security/2023/06/12/fentanyl-

overdoses-military-fort-bragg/; DEA Administrator on Record Fentanyl Overdose Deaths, U.S. DRUG ENF’T

ADMIN., available at www.getsmartaboutdrugs.gov/media/dea-administrator-record-fentanyl-

overdose-deaths.

196

Follow the Money, supra note 153.

197

Phelim Kine, Beijing cuts U.S. cooperation to protest Pelosi’s Taiwan visit, POLITICO (Aug. 5, 2022),

available at www.politico.com/news/2022/08/05/beijing-protest-pelosi-taiwan-00050155; Barrios, supra

note 13.

198

Xinhua, Root cause of U.S. Fentanyl abuse problem is “in itself”—Chinese embassy, PEOPLE’S DAILY

ONLINE (Sept. 3, 2021), available at

hps://web.archive.org/web/20230924004702/hp://en.people.cn/n3/2021/0903/c90000-9891885.html;

Yuandan Guo (郭媛丹), “(【环时深度】专访公安部禁毒情报技术中心副处长花镇东：“芬太尼危机”根

源是美国！) [Exclusive Interview with Hua Zhendong, Deputy Director of the Anti-Narcotics

Intelligence Technology Center of the Ministry of Public Security: The root cause of the ‘fentanyl crisis’

is the United States],” Huanqiu Shibao (环球时报) [GLOB. TIMES] (Oct. 13, 2021), available at

hps://web.archive.org/web/20221219161634/hps://nance.sina.com.cn/tech/2021-10-13/doc-

ikscyx9339209.shtml; Wu Changhua (吴昌华), “Lanyong Fen Tai Ni Zhe Kou Guo, Zhongguo Bu Bei!

(“滥用芬太尼这口‘锅,’ 中国不背!”) [China will not bear the responsibility for the abuse of fentanyl in

the U.S.],” Wangyi Xinwen (网易新闻) [NETEASE NEWS] (Sept. 2, 2021), available at

hps://web.archive.org/web/20240403213318/hps://c.m.163.com/news/a/GIU2JT56053469LG.html;

Remarks by spokesperson of the Chinese Embassy in the United States on the fentanyl issue, EMBASSY OF CHINA

IN THE U.S. (May 30, 2023), available at hps://web.archive.org/web/20240121220840/hp://us.china-

embassy.gov.cn/eng/lcbt/sgfyrbt/202305/t20230531_11086289.htm; Yin Yeping, U.S. blames China for

drug tracking to disguise its own failure: experts, GLOB. TIMES (July 22, 2020), available at

hps://web.archive.org/web/20230804231257/hps://www.globaltimes.cn/content/1195344.shtml.

199

CCTV, “(在美国每5分钟就有一个人死于药物过量！美国阿片类药物滥用却甩锅给中国？揭穿美国毒

品泛滥真相 |《破局芬太尼》CCTV中文国际) [Every 5 minutes someone dies from a drug overdose in

the United States! Is the U.S. blaming China for opioid abuse? Exposing the truth about the drug

epidemic in the United States | "Breaking Fentanyl" CCTV Chinese International],” YOUTUBE (June 13,

2023), hps://www.youtube.com/watch?v=JteJcxrfIcU.

200

Zhongxinshe Huayu, “美国通缉贩售芬太尼的中国公民，同样买卖在美国却成了国营” [The U.S.

issues warrant on Chinese citizen for fentanyl tracking, while the sale of fentanyl in the US is

becoming state-owned], 网易新闻 [NetEase News], September 7, 2021,

hps://web.archive.org/web/20240403213252/hps://c.m.163.com/news/a/GJAL39IQ0514DTKM.html;

Global Times, China urges U.S. to scrap warrant on ‘fentanyl tracker,’ provide more evidence, PEOPLE’S

DAILY ONLINE (Sept. 1, 2021), available at

hps://web.archive.org/web/20240414022342/hp://en.people.cn/n3/2021/0901/c90000-9890412.html.

201

Zhao Yusha, Ministry urges US to stop slandering China over its own opioid problem, GLOB. TIMES (Sept.

4, 2019), available at

hps://web.archive.org/web/20230804231257/hps://www.globaltimes.cn/content/1163493.shtml.

202

Wang Linggui, U.S. playing tricky with its fentanyl problems, CHINA DAILY (Oct. 10, 2019), available at

hps://web.archive.org/web/20240414022342/hp://en.people.cn/n3/2021/0901/c90000-9890412.html

(“In fact, the US should blame itself as the root cause of its fentanyl epidemic”); Xinhua, Explainer: Why

blaming China won’t address opioid epidemic in America? PEOPLE’S CHINA DAILY (Sept. 20, 2023), available

at hps://web.archive.org/web/20240414030611/hp://en.people.cn/n3/2023/0920/c90000-

20074272.html (“Today, the epidemic is wreaking havoc on the U.S. economy and workforce. Although

fully aware of the problem, Washington seemed at its wits' end over how to x it fundamentally. At

times, it seems uninterested”).

203

Erin Burne, Chinese media seizes on US tensions to oat false ‘civil war’

hps://www.cnn.com/videos/world/2024/02/08/china-media-us-disinformation-pkg-ripley-ebof-

vpx.cnn (last accessed Apr. 9, 2024); Kerry Allen, Misinformation spreads in China on ‘Civil War’ in Texas,

BBC (Feb. 2, 2024), available at ww.bbc.com/news/world-us-canada-68185317; Dong Zhe & Zhuang Jing,

Is Texas on the brink of war with the US?, RADIO FREE ASIA (Feb. 7, 2024), available at

hps://www.rfa.org/english/news/afcl/fact-check-texas-02072024164301.html (showing Weibo posts of

tanks allegedly being sent to the “frontlines” in Texas).

204

One could also suggest that it diverts from China’ own growing, though early-stage, drug problem

that the PRC government has failed to combat. See generally Follow the Money: The CCP’s Business Model

in Fueling the Fentanyl Crisis, Hearing before the H. Comm. on Fin. Servs., Subcomm. on Nat’l Sec., Illicit Fin.,

and Int’l Fin. Insts., 118th Cong. (2023) (testimony of John. A Cassara), available at

hps://www.congress.gov/118/meeting/house/115542/witnesses/HHRG-118-BA10-Wstate-CassaraJ-

20230323.pdf; Follow the Money, supra note 153 (“Both internally and externally, China emphasizes its

‘eectiveness’ in stemming drug abuse in China, though in reality Chinese drug use has been growing

steadily for the past four decades”); Shannon Tiezzi, China's Growing Drug Problem: China’s drug problem

is geing worse, despite harsh penalties, DIPLOMAT (Mar. 28, 2015), available at

www.thediplomat.com/2015/05/chinas-growing-drug-problem/.

205

Crypto and the Global Fentanyl Trade, supra note 36.

206

See, e.g., Homepage, TYPU GROUP CO., LTD., available at hp://www.typugroup.com/ (“specializes in

the production of APIs, fungicides, daily chemicals, and dye intermediaries”) and Typu’s Foreign-

Trade site, available at hps://www.foreign-trade.com/exporter/typygroup/ (“provid[ing] all kinds of

research chemicals, cannabinoids, opioid chemicals” with “100% customs clearance"); RICHEST GROUP,

available at hps://www.chem-rubber.com/ (last accessed Apr. 1, 2024) (Shanghai Ruizheng / Richest

Group (“Shanghai Ruizheng cooperates with global brands, such as ZhongTai, XinFa, Tianye, Erdos,

Junzheng and so on.”) while also engaging in extensive drug tracking, see Section II.B., supra).

207

While the Select Commiee has broad jurisdiction, its focus is on strategic competition with the

Chinese Communist Party. The recommendations herein thus focus on directly addressing the source

of the fentanyl crisis in the PRC. Like the broader investigative report, it does not analyze other issues

tied to the fentanyl crisis, like border security, domestic law enforcement, and medical treatment.

208

Fatima Hussein, More sanctions for deadly fentanyl if bill becomes law, ASSOCIATED PRESS (Apr. 25, 2023),

available at hps://apnews.com/article/biden-fentanyl-china-mexico-drug-policy-opioids-

6cf58911caf1f69d17d469a92b8bcd91 (“Vanda Felbab-Brown, a senior fellow at the Brookings

Institution, called for wider sanctions on Chinese rms.” I don’t think sanctions will change the

behavior of the Chinese government, to willingly enforce drug laws within China,” she said, “But I do

believe there is potential that sanctions will impact Chinese industry actors if sanctions are done in

fairly large numbers.”) (emphasis added); Exec. Order No. 14,059, 31 C.F.R. 599 (app. A), reprinted in 50

U.S.C. 1701, available at hps://www.whitehouse.gov/brieng-room/presidential-

actions/2021/12/15/executive-order-on-imposing-sanctions-on-foreign-persons-involved-in-the-

global-illicit-drug-trade/ (E.O. 14,059); Press Release, O. of the Press Sec’y, White House, Fact Sheet:

Overview of Foreign Narcotics Kingpin Designation Act (Apr. 15, 2009), available at

hps://obamawhitehouse.archives.gov/the-press-oce/fact-sheet-overview-foreign-narcotics-

kingpin-designation-act.

209

DOJ created Task Force Vulcan, a multi-agency group designed to address the MS-13 threat, which

reported directly to the Aorney General. This model was proven highly eective. See Press Release,

O. of Public Aairs, U.S. Dep’t of Just., The Department of Justice Announces Takedown of Key MS_13

Criminal Leadership (July 15, 2020), available at hps://www.justice.gov/opa/pr/department-justice-

announces-takedown-key-ms-13-criminal-leadership.

210

At present, within the Department of Justice alone, information about fentanyl trackers can be

found within DEA’s Special Operations Division, FBI TOC-East, the Narcotics and Dangerous Drug

Section, the Money Laundering and Asset Recovery Section, the OCDETF Fusion Center, each U.S.

Aorney’s Oce that has an open Chinese-origin fentanyl case, and every FBI and DEA eld oce

investigating the same. Similar balkanization can also be found across the federal government, with

critical information separately housed within the Department of Treasury, Department of Homeland

Security, Department of State, Department of Commerce, Department of Defense, U.S. Postal

Inspection Service, and the Central Intelligence Agency, among others. While it is possible to query

these databases, more can be done to put the data in one place and then comprehensively analyzing it

for enforcement actions. If even a plurality of this data was brought together and analyzed by one

dedicated team, the U.S. government would glean invaluable information about how to combat

fentanyl tracking that it could use with streamlined interagency decision making to eectively target

the weak points in the global illicit fentanyl trade en masse.

211

For sanctions in particular, under Executive Order 14059 and the Kingpin Act, the United States can

sanction any entity the U.S. government has “reason to believe” the target is involved in or enables

international narcotics tracking. See Fulmen Co. v. Oce of Foreign Assets Control, 547 F. Supp. 3d 13,

24 (D.D.C. 2020) (citing Holy Land Found. For Relief & Dev. V. Ashcroft, 219 F. Supp. 2d 57, 75 (D.D.C.

2002), a’d, 333 F.3d 156, 357 U.S. App. D.C. 35 (D.C. Cir. 2003)). See also E.O. 14,059; supra note 208.

Once sanctioned, a target is eectively cut o from global trade, as no individual with any ties to the

U.S. economy can transact with them without incurring civil or criminal liability. See DEP’T OF COM. ET

AL., COMPLIANCE NOTE: OBLIGATIONS OF FOREIGN-BASED PERSONS TO COMPLY WITH U.S. SANCTIONS AND

EXP. CONTROL LAWS (Mar. 6, 2024), available at hps://ofac.treasury.gov/media/932746/download?inline

(“These measures [sanctions] can create legal exposure not only for U.S. persons, but also for non-U.S.

companies who continue to engage with sanctioned jurisdictions or persons in violation of applicable

laws”). Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per

violation to more severe criminal penalties. Criminal penalties for corporate ocers may include up to

30 years in prison and nes up to $5 million. Criminal nes for corporations may reach $10 million.

Other individuals could face up to 10 years in prison and nes pursuant to Title 18 of the United States

Code for criminal violations of the Kingpin Act or related regulations. See O. of Foreign Asset Control,

Counter Narcotics Tracking Sanctions, U.S. DEP’T OF THE TREASURY, available at

hps://home.treasury.gov/system/les/126/narco_overview_of_sanctions.pdf (last accessed Apr. 1,

2024). Given the reported low prot margins and tight competitiveness within the PRC illicit fentanyl

trade, most PRC businesses facing this pressure will choose legitimacy over fentanyl and bankruptcy.

See Crypto and the Global Fentanyl Trade, supra note 36. (“As a result, the industry appears to be very

competitive. This meant that it was not dicult to shop around for deals among all the suppliers willing

to service our requests, which suggests slim prot margins for some”); Final Report, COMM’N ON

COMBATING SYNTHETIC OPIOID TRAFFICKING (Feb. 8, 2022), available at

www.rand.org/pubs/external_publications/EP68838.html (“With producers in the PRC having moved

from exporting nished fentanyl to exporting much cheaper precursors, that amount in revenue could

be substantially less. Clearly, that is a truly tiny amount compared with the amount in the total

pharmaceutical industry in the PRC or its chemical exports.”).

212

The codication should clearly provide the President discretionary authority to sanction PRC

shipping companies that the President deems to be negligent in handling and shipping improperly

labeled fentanyl precursors and sanction PRC port operators from which those improperly labeled

shipments originate.

213

Press Release, O. of Pub. As., U.S. Dep’t of Just., Nicolás Maduro Moros and 14 Current and

Former Venezuelan Ocials Charged with Narco-Terrorism, Corruption, Drufg Tracking and Other

Criminal Charges (Mar. 26, 2020), available at hps://www.justice.gov/opa/pr/nicol-s-maduro-moros-

and-14-current-and-former-venezuelan-ocials-charged-narco-terrorism; CLARE RIBANDO SEELKE,

CONG. RSCH. SERV., IF10715, VENEZUELA: OVERVIEW OF U.S. SANCTIONS POLICY (2024), available at

hps://crsreports.congress.gov/product/pdf/IF/IF10715.

214

Press Release, supra note 213; Press Release, U.S. Dep’t of the Treasury, Targeting Key Sectors,

Evasion Eorts, and Military Supplies, Treasury Expands and Intensies Sanctions Against Russia

(Feb. 24, 2023), available at hps://home.treasury.gov/news/press-releases/jy1296.

215

Press Release, U.S. Dep’t of the Treasury, FinCEN Further Restricts North Korea’s Access to the U.S.

Financial System and Warns U.S. Financial Institutions of North Korean Schemes (Nov. 2, 2017),

available at hps://home.treasury.gov/news/press-releases/sm0205.

216

Press Release, Bureau of U.S. Customs & Border Protection, U.S. Dep’t of Homeland Sec., De Minimis

Value Increases to $800 (Mar. 11, 2016), available at hps://www.cbp.gov/newsroom/national-media-

release/de-minimis-value-increases-800.

217

Rana Foroohar, Small packages are causing big problems in the US, FIN. TIMES (Nov. 13, 2023), available

at www.ft.com/content/1fe394c6-6fe4-4093-aa68-1a4d251f1666.

218

Press Release, O. of Rep. Earl Blumenauer, Reps. Blumenauer, Dunn, Sens. Brown, Rubio Introduce

Legislation to Strengthen American Competitiveness, Close Import Loophole (June 15, 2023), available

at hps://blumenauer.house.gov/media-center/press-releases/reps-blumenauer-dunn-sens-brown-

rubio-introduce-legislation-to-strengthen-american-competitiveness-close-import-loophole; Leer

from Mr. Alan Wilson, S.C. A’y Gen. et al. to The Honorable Joseph R. Biden, Jr., President (Jan. 18,

2024), available at www.ag.ky.gov/Press%20Release%20Aachments/De%20Minimis%20Leer%20-

%20President%20Biden.pdf; Press Release, O. of Sen. Tammy Baldwin, Baldwin, Cassidy Introduce

Bill to Stop China from Exploiting Loophole that Undercuts U.S. Manufacturers, Allows Fentanyl in

U.S. (June 14, 2023), available at hps://www.baldwin.senate.gov/news/press-releases/baldwin-cassidy-

introduce-bill-to-stop-china-from-exploiting-loophole-that-undercuts-us-manufacturers-allows-

fentanyl-in-us.

219

FAA, NAT’L REGULS. REQUIREMENTS, GEN 1.2 FLIGHTS INTO OR OVER U.S. TERRITORIAL AIRSPACE §

3.1.1, available at hps://www.faa.gov/air_trac/publications/atpubs/aip_html/

part1_gen_section_1.2.html; 19 C.F.R. § 4.1 (2023).

220

In these instances, the United States would coordinate, as appropriate, with the nation under which

the ship is agged or registered. Shiprider agreements could also be used as part of these interdiction

eorts.

221

See Section IV.A, supra.

222

See Rotella & Berg, supra note 166.

223

Jing Yang, Tencent Faces Possible Record Fine for Anti-Money-Laundering Violations, WALL ST. J. (Mar.

14, 2022), available at hps://www.wsj.com/articles/tencent-faces-possible-record-ne-for-anti-money-

laundering-violations-11647242561?mod=article_inline.