China is subsidising global fentanyl supply, says report by US congressional panel – Technologist

China must be pressured to address the global supply of fentanyl and its ingredient chemicals, by further economic sanctions if necessary, which it is subsidising as the “scourge” kills more Americans annually than died during the Vietnam war, according to a report and congressional testimony on Tuesday.

While experts said an agreement to address the deadly drug hammered out between US President Joe Biden and President Xi Jinping at a summit in November was positive, there is little evidence that China is committed to the effort or that it is seeing much result, they told the House Select Committee on the Chinese Communist Party.

“Simply put, without China’s production and export of fentanyl and fentanyl precursors, there would be no fentanyl crisis in the United States, and the mass slaughter would effectively stop,” said William Barr, who served as attorney general under president Donald Trump.

“I don’t think we can count on their goodwill as we have in the past,” said Barr, who negotiated an agreement with Beijing in 2019 that saw China add fentanyl to its list of controlled substances.

Barr and other witnesses called on Congress to impose economic sanctions on Chinese companies and financial institutions involved in producing or financing the drug or its ingredients, known as precursors. Barr also called on victims, including several in the hearing room, to bring civil lawsuits against companies and individuals involved in distributing the precursors and synthetic drugs.

The select committee has no power to introduce legislation but can influence lawmakers on other committees.

Fentanyl, a powerful synthetic drug, is up to 100 times more potent than morphine and up to 50 times more potent than heroin. It is often added to other drugs and used unknowingly and has been implicated in the deaths of 112,000 Americans annually. China reportedly makes 97 per cent of the global supply of precursors.

On Tuesday, the bipartisan select committee released a report saying China “directly” subsidises those who make and export fentanyl. It also alleged that Beijing encourages the production of precursor chemicals by providing “monetary grants and awards”, including state tax rebates and other financial incentives after the product is exported.

US lawmakers criticise lifting of sanctions to gain China’s help on fentanyl

The Chinese embassy in Washington pushed back, saying that China has launched a special campaign to crack down on smuggling, manufacturing, trafficking; has investigated companies, individuals and online sales; and held an inaugural meeting in January of the China-US counter-narcotics working group.

Embassy spokesman Liu Pengyu added that drug enforcement agencies from the two sides were in regular communication and that Beijing was keeping Washington in the loop, acting on US tips and otherwise “fully demonstrating China’s sincerity”.

“There is no fentanyl problem in China, and the fentanyl crisis in the United States is not caused by the Chinese side,” Liu added. “Blindly blaming China cannot solve the US’s own problem.”

Witnesses acknowledged that even if all Chinese fentanyl and related exports were halted tomorrow, America’s drug problem would not disappear. As a primary producer, however, China is the first step in a complex ecosystem that needs to be attacked at multiple points, said David Luckey, a defence researcher at the Rand Corporation. These range from supply, demand and harm reduction efforts to payments made using cryptocurrency, to money laundering, border protection and better intelligence.

“Everything that we’re doing now to get a handle on the synthetic production of illegal drugs will only pay more dividends in the future,” said Luckey, formerly with the Office of the Director of National Intelligence. “And our strength lies in working bilateral bilaterally with other nations, China and Mexico and multilaterally … to present a unified front.”

Also on Tuesday, US Treasury Secretary Janet Yellen said that Washington and Beijing were “increasing cooperation in our shared work” against money laundering. She spoke on the eve of the World Bank and International Monetary Fund meetings this week in Washington.

Ray Donovan, a retired Drug Enforcement Administration official, said making a dent in the fentanyl would require attacking various “choke points”, with China as the source being the most effective.

Chinese chemical companies with legitimate operations around the world often view the production of fentanyl precursors and other synthetic narcotics as a “side hustle” designed to boost profits, the report said.

It called on Congress to elucidate what powers the president has to sanction producers, banks, online platforms and shipping companies involved in the illicit trade. And it recommended setting up a task force that brings together intelligence, economic and enforcement operations, reporting directly to the US attorney general.

Others said it was counterproductive to rule out help from Beijing, citing Barr’s 2019 agreement with China.

“The fact that we have engaged with [China], the same way that the Trump administration did, has actually made some progress,” said Representative Seth Moulton, a Democrat from Massachusetts. “We should engage, even as we must be incredibly clear-eyed in doing so, because in this case that engagement literally saves lives.”