U.S. Sanctions Chinese Companies for Involvement in Fentanyl Crisis

The U.S. Treasury Department on Tuesday sanctioned 28 persons and entities for their alleged involvement in a China-based trafficking network that helped fuel the worst drug crisis in the history of the United States.

The sanctioned actors were barred from the U.S. financial system, and American citizens were prohibited from engaging in financial transactions with them. Additionally, more than a dozen virtual currency wallets were blocked after having received millions of dollars in payments, Wally Adeyemo, the deputy treasury secretary, said in a press conference.

The drug ring produced and distributed tons of precursors used to manufacture methamphetamines, ecstasy and fentanyl, the substance at the core of the opioid crisis that killed a record 109,680 Americans last year, according to the Treasury's Office of Foreign Assets Control.

Adeyemo said the department would bring its entire toolkit to bear and work alongside law enforcement to identify the key players involved in trafficking the substances. The U.S. government would freeze or obstruct the capital they use to make and move the drugs, and recover the money spent purchasing them, he said.

The U.S. Justice Department moved to prosecute suspects on the same day when it unsealed indictments against eight Chinese companies and their employees for their involvement in producing, distributing and selling key drug components.

The flow of fentanyl—50 times more powerful than heroin—from China into the United States, either directly or indirectly, has been a sticking point in Washington's relationship with Beijing in recent years. Both President Joe Biden's Democrats as well as their Republican challengers have vowed to crack down on the drug trade.

Until 2019, most fentanyl and the precursors used to make it came from China. Beijing initially took strong measures at Washington's behest to control the drug and related materials.

Then in May the following year, the U.S. Treasury sanctioned an organization under China's Public Security Ministry over its alleged role in human rights abuses in China's Xinjiang region. Beijing said it hampered its capacity to police narcotics in the country.

In August 2022, in response to former House Speaker Rep. Nancy Pelosi's (D-CA) visit to Taiwan, the Chinese government suspended bilateral cooperation with the United States in counternarcotics, climate change and six other areas.

Reached by Newsweek, a spokesperson for the Chinese Embassy in Washington, D.C., said the United States, despite wanting to resume joint counternarcotics operations, "has gone ahead to impose long-arm jurisdiction on Chinese companies and nationals."

The official condemned the punitive measures as a "violation of the rights and interests of the persons and companies concerned."

Beijing's cooperation with Washington was "guided by the humanitarian spirit," the spokesperson said. The official urged the United States to "lift all sanctions on Chinese counternarcotics law enforcement institutions," and not to use fentanyl as a pretext to "sanction, indict or offer awards to hunt Chinese companies or nationals."

Currently, Mexico's cartels are responsible for trafficking the majority of fentanyl that winds up in the United States. They manufacture the drug using precursor chemicals from China that are not subject to international controls.

In an interview with Newsweek one year ago, Beijing's former envoy to Washington, Qin Gang, said China had followed through on its obligations under a 1988 U.N. convention against illicit drug trafficking. The "know your customer" identification process requested by the United States "far exceeds these U.N. obligations," Qin said.

The former ambassador, whose political future has remained uncertain since the summer, said it was incumbent upon importing nations—not exporting ones—to verify that goods were not meant for illegal uses. He also likened precursors to steel, impractical to ban because of myriad other applications.

The Biden administration last month committed an additional $450 million to fund drug "prevention, harm reduction, treatment and recovery support" to combat the opioid overdose epidemic.

Update 10/5/23, 02:40 a.m. ET: This article was updated with additional comments from the Chinese Embassy in Washington, D.C..