No, China Is Not Getting Rich Off Of Fentanyl
All of the fentanyl in the US could fit in your garage
When U.S. Secretary of State Antony Blinken visited China last month, many hoped his meeting with President Xi Jinping would help defuse escalating tensions between the two countries.
Things got off to a strange start, however, when Blinken wasn’t given the red carpet treatment, a traditional show of respect, but rather steered down "red lines on the runway” upon his Beijing arrival.
They discussed, among other topics, fentanyl precursors, which the US accuses China of shipping to Mexico, where cartels turn it into finished fentanyl to be sold in America. China counters that the US has done almost nothing to curb our demand for deadly opioids. (Both are correct.)
Not long ago, China helped the US apprehend drug traffickers, but following Trump’s blaming China for covid and Nancy Pelosi’s visit to Taiwan, they stopped collaborating with us on international drug enforcement. Which means that when the US indicts Chinese nationals like my friend Ye Chuan Fa, there’s basically no chance he’ll be arrested.
Blinken, however, was there to mend fences. One concession he likely offered was easing sanctions on China's Institute of Forensic Science, part of the Orwellian-named Ministry of Justice, which the US believes engages in abuses against the Uyghur population.
Blinken’s efforts appear to have paid off. He told reporters that “the Chinese side agreed to set up a joint working group on narcotics.” This may not sound like much, but it’s a retreat from overt hostility.
The problem was that, immediately after Blinken returned home, the US Justice Department announced criminal charges against four Chinese chemical companies and eight individuals allegedly trafficking fentanyl precursors.
Predictably, this pissed China off. “China urges the U.S. side to stop dumping blame and to stop smear attacks on China,” said China’s foreign ministry.
So, what happens now? US senators from both sides of the aisle are promising to sanction China anew.
“We can increase tariffs and extract a massive economic cost. I think the Biden administration should be doing exactly that,” said Ohio senator J.D. Vance.*
*I also wrote a book about economic despair. Does that mean I also get to be a senator?
“We’ve got to go after all sources that are financing this and that are laundering these drugs,” added Sherrod Brown, Ohio’s other senator.*
*How do you launder drugs?
You may be wondering: Will this work?
Of course not. Fentanyl precursors are easy to make, and no one makes them more cheaply than China. Which means that even if we could somehow block these companies’ abilities to transact, new companies would just take their places immediately.
China has hundreds of thousands of chemical and pharmaceutical concerns, and many operate on the “gray market,” producing chemicals like fentanyl precursors that are banned in the West, but completely legal in China.*
*Yes, some black market Chinese labs sell pure, finished fentanyl, but Americans are much more likely to consume fentanyl that was finished in Mexico.
Further, most of these Chinese gray market companies accept Bitcoin and other cryptocurrencies. Do you really think the US Treasury Department is dynamic enough to snipe these companies off one by one and smother the market? Not a chance.
The main problem, however, is that going after fentanyl precursors is a misguided strategy to begin with. As I’ve written, stopping drugs from getting into this country (or any country) is impossible, and we should cease spending tens of billions every year trying.
Further — and I don’t think people realize this — fentanyl precursors are not particularly profitable for China.
Sure, the fentanyl trade is worth billions annually, but the Mexican cartels see most of that money.
Just do the math...