The Silent Partnership
China’s ongoing clandestine efforts to undermine the US involve laundering drug money for Mexican cartels, thereby exacerbating the deadly overdose crisis and destabilizing American institutions. Recent revelations have brought Beijing’s suspected silent partnership with the Sinaloa Cartel into sharper focus. Federal prosecutors revealed a money-laundering scheme in California, where wealthy Chinese nationals exchanged currency to hide the cartel’s drug profits.
The Money-Laundering Operation
Prosecutors found no direct evidence that the Chinese nationals knew they were laundering drug money. However, a former federal agent questioned the plausibility of Beijing’s ignorance regarding the tens of millions of dollars moved by the operation. Given China’s extensive surveillance of its citizens both domestically and internationally, it is difficult to believe they were unaware.
Eroding American Society
Michael Brown, a former DEA special agent, stated that Beijing’s tacit approval of the relationship with the cartels aims to weaken America from within. According to Brown, China’s support for the cartels is part of a broader strategy to erode American ethics, morality, and resilience. This non-aggressive attack is one of several tactics China employs to chip away at US sovereignty, alongside spying on military bases, stealing intellectual property, and encouraging cyberattacks.
The Fentanyl Crisis
One of the most damaging aspects of this partnership is the Sinaloa Cartel’s expansive fentanyl trade. Fentanyl, a synthetic opioid significantly more potent than heroin, has been identified as a major cause of the spike in overdose deaths in the US during the COVID-19 pandemic. Data from the CDC shows that drug overdoses soared from around 75,000 per year in early 2020 to over 100,000 per year by mid-2021.
Border Policies and Drug Trade
The Biden administration’s border policies have been criticized for facilitating the drug trade. In fiscal 2023, US Customs and Border Protection seized 27,000 pounds of fentanyl, more than the previous two fiscal years combined. The Sinaloa Cartel acquires the necessary chemicals to produce fentanyl from China, with the Chinese state reportedly supporting these transactions.
Financial Schemes
A congressional report accused the Chinese Communist Party of providing tax rebates to companies that manufacture these chemicals, provided they are sold outside China. The Los Angeles-based money-laundering ring utilized more than $50 million of cartel cash to purchase precursor chemicals. These chemicals were then shipped to Mexico, where the cartel used them to produce fentanyl and methamphetamine.
Regulatory Challenges
China restricts its citizens from investing more than $50,000 annually overseas, leading them to employ brokers to circumvent these limits. The large amounts of cash handled by these brokers should have raised suspicions, according to federal prosecutors. From 2019 to 2023, two dozen people were charged in connection with the money-laundering ring.
Interagency Cooperation
Mr. Brown emphasized the need for cooperation among federal agencies such as the IRS and the Treasury Department to identify and disrupt illicit cash flows linked to China. However, he also noted that law enforcement agencies often work in isolation, hindering intelligence sharing crucial for tackling the fentanyl crisis.
Local Impact
While federal authorities strategize, local communities bear the brunt of the fentanyl epidemic. Cartel influence has spread to less populated areas like Montana and the Dakotas, where they can sell pills at significantly higher prices. For instance, pills that cost a few dollars at the source can sell for $80 to $100 in these regions.
