China Turns Blind Eye To Lucrative Cartel Chemical Trade, DEA Says

China is ignoring a chemical industry that is fuelling the deadly U.S. drug crisis because it brings huge profits into the country, senior DEA officials have told VICE World News. 

Almost all the precursor chemicals used by Mexican cartels to make fentanyl and methamphetamine for the U.S. market are coming out of China, said the DEA’s Deputy Chief of Operations, Matthew Donahue. 

Donahue recognised that China, home to one of the world’s largest and poorly regulated chemical industries, has taken successful steps to stamp out the production and shipping of fentanyl, the drug fuelling the drug death epidemic in the U.S. 

But some of China’s estimated 400,000 chemical companies are dodging the clampdown by making and shipping huge amounts of the chemicals used to make fentanyl and methamphetamine to criminal gangs before they end up in clandestine Mexican drug labs, he said.

What appears to be irking the DEA is that Beijing is being slow to stem the leakage of precursor chemicals from its chemical companies into the hands of criminal gangs due to the fact that “billions” of dollars from their sale, according to Donahue, is laundered back into the Chinese economy.   

“China needs to do more about its precursor drug producing ability because you are looking at a country which is providing precursor chemicals for the global drug market,” he told VICE World News. 

“In Mexico the precursors from China are going directly to the cartels. China is aware that money [linked to the sale of precursor chemicals to criminal gangs] is entering back into their economy and this is facilitated by Chinese money laundering organisations through their use of China’s underground banking system. That is one of the reasons why they [Chinese chemical traffickers] don’t need to do more than just make precursor chemicals for drug producing countries. China is getting money from producing an enormous amount of precursor chemicals that are being used to produce drugs.”

Donahue said that apart from becoming a global factory for the production of the chemicals used to make most of the world’s increasingly deadly synthetic drugs, “Chinese money laundering organisations are now the primary money laundering networks for all drug cartels operating globally.” 

According to Donahue, China’s drug money cleaning networks have successfully undermined other money laundering outfits by charging zero fees to launder drug proceeds, using a variety of complex money laundering schemes. They have rapidly expanded their networks by successfully integrating with the Mexican cartels and other transnational crime groups.

“Where these criminal groups are really smart is they are not producing meth and heroin over there, they’re just producing the precursor chemicals for drug producing countries such as Colombia and Mexico. So when we attack them it’s a little more difficult.”

He said it was through the arrests of Chinese nationals in Mexico that the DEA was able to track down the rogue chemical factories and shipping companies back in China.

“Our attack point into China really is through Mexico. We are focusing on attacking the entire infrastructures of drug cartels, to include vast networks established between [drug cartels] and Chinese precursor chemical brokers and money launderers.” He said the DEA is using international trade laws as well as drug trafficking laws to go after precursor producing companies in China.

In September the DEA asked the Chinese government to introduce strict controls over the production and export of four legal precursor chemicals used in the production of fentanyl and methamphetamine: 4-AP, t-boc-4-AP, norfentanyl and methylamine. But the DEA is still awaiting action.

During the COVID-19 pandemic, the DEA has been using online video calls with chemical companies to brief them about how to avoid selling to cartels. “You have to know who you are selling these chemicals to and even if there is a legitimate use for these chemicals you shouldn’t be allowed to over produce them by ten-fold because you know they are going to the black market,” said Donahue.

Beijing has consistently argued that the U.S.' drug problem is not caused by China, but should instead be blamed on America’s liberal drug culture and on insufficient law enforcement. Unlike methamphetamine which is a problem in China, fentanyl has not found its way into the country’s drug food chain, so a clampdown on the drug and its precursor chemicals is not a domestic priority.   

With drug overdose deaths in the U.S. rising to record levels last year, largely due to the impact of fentanyl replacing less potent opioids such as heroin in the street drug trade, Donahue warned about the growing global trade in dangerous synthetic, non plant-based, drugs. He said synthetic drugs such as fentanyl can be more lethal and harder to detect by law enforcement than plant based drugs.

“We need countries to cooperate with us in order to [criminally] charge entire cartels, from the corrupt individuals who are supporting the cartels down to the people selling it in the streets. These organisations have no borders. They are unlimited when it comes to resources and money, so for us, specifically with China and Mexico, it’s about how we get them in line to work with us in a bilateral fashion,” said Donahue.

Another senior DEA official spoken to by VICE World News, who did not want to be named, was more direct in his assessment of China’s motives for failing to more firmly regulate its psychoactive drug precursor industry. 

“This is one of the reasons why the Chinese are so protective of being co-operative. China is not going to want to lose the billions of dollars that comes in from the drug trade. It’s a trade-off for them, where they can have all that money coming into their country and their economy as opposed to going after corrupt activity they know is taking place. China is in the whole cycle of being beneficiaries of the drug trafficking trade.”

The anonymous senior official also laid into Mexico’s track record in helping nail the precursor traffickers. 

“Right now, in Mexico, it’s a perfect place to be in the world for a bad guy, if you are a drug trafficker, a Sicario or a Chinese national trafficking in precursor chemicals to produce drugs in Mexico. You are looking at state, federal and local level corruption. It makes it much more complicated when you have a border with a narcostate. There are no repercussions for producing drugs that are killing hundreds of thousands of people around the world.”

They said the DEA has seen a rise in the number of Chinese criminals setting up bases in Mexico, particularly in the cartel heartlands of Sinaloa. “The Chinese know if they are going to go to Mexico they are not going to get caught, which is why we see a huge population of Chinese in Culiacan, and other places in Mexico working directly with the cartels to bring precursors in from China.”

Despite Trump’s China-baiting, Donahue foresees no change in approach to the Chinese precursor problem under a Biden presidency. “A change of administration here in the US is not going to change how we work. We are in this for the long run.”