What role does China play in combating the illegal fentanyl trade?

Zongyuan Zoe Liu is the Maurice R. Greenberg senior fellow for China studies at the Council on Foreign Relations.

Small chemical manufacturers in China have become shadow suppliers, fueling secret labs in Mexico and beyond, churning out illicit fentanyl and fentanyl-related substances that fuel the global drug trade and the U.S. opioid epidemic. Despite China regulating the production and distribution of fentanyl and its precursors for more than three decades, a sprawling cottage industry of small chemical factories has flourished, supported in part by industrial policies aimed at boosting Beijing’s chemical and pharmaceutical sectors. Today, international drug cartels are increasingly turning to specialized Chinese criminal gangs for fast, cheap, and secure money-laundering services.

Why are more and more variants of fentanyl being created?

Fentanyl is a synthetic opioid that is up to 50 times more potent than heroin and 100 times more potent than morphine. However, fentanyl is cheaper to produce than many common illegal drugs, such as heroin or cocaine, and is much more profitable for drug dealers due to its lower cost. According to the U.S. Drug Enforcement Administration (DEA), one kilogram (2.2 pounds) of fentanyl sold “wholesale” can be worth $80,000 (PDF), which can then generate a profit of around $1.6 million if sold on the street, or about twenty times the profit of heroin.

Chinese regulators faced a challenge when new variants of fentanyl, chemically different enough to not yet be controlled, emerged faster than they could be added to the government’s list of controlled substances. Because synthetic drugs like fentanyl are made entirely from man-made substances, the possible methods of production are limitless. In 2016 alone, 63 new variants were created in China, compared to just six new variants between 2012 and 2015.

Since the drug’s creation in 1959, researchers have developed at least three methods of producing fentanyl, each of which relies on different precursor chemicals (the compounds used to make the drug). Criminals have continued to modify these processes to use a wider set of more readily available precursor chemicals.

In May 2019, the Chinese government placed all potential fentanyl variants on its list of controlled substances. Since that year, the supply of fentanyl from China directly to the United States has “decreased substantially,” according to the 2020 US National Drug Threat Assessment (PDF). However, fentanyl precursors are still produced in China and then shipped to Mexico and Central American countries, which are the primary suppliers (PDF) of illicit fentanyl and fentanyl analogues sold in the United States..

How does China regulate the production and distribution of fentanyl?

China has had laws combating the illegal trade in fentanyl for more than three decades. The State Council regulates the production and distribution of narcotics in China and periodically publishes lists of controlled substances and chemical precursors with input from the Ministry of Public Security, the State Food and Drug Administration and other agencies.

In 2017, after the Chinese government clamped down on two common fentanyl-related precursor chemicals, Chinese manufacturers switched to selling three different, still-unregulated chemicals used to make fentanyl: 4-AP, 1-boc-4-AP, and norfentanyl. The United Nations added these compounds to its list of controlled substances in November 2022. (The DEA had already been monitoring these chemicals in some form since May 2020.)

In August 2024, Chinese authorities added 4-AP, 1-boc-4-AP and norfentanyl to the list of controlled precursor chemicals. This means stricter supervision of their production and sale. Exporters must, among other things, apply for a license.

However, this is unlikely to solve the core problem, as criminals will continue to discover new ways to make fentanyl using other chemical precursors that also have legitimate industrial uses.

How is fentanyl used in China?

The Chinese government, like many others, recognizes the medical necessity of narcotics and other controlled substances. But there are no clinically approved oral dosage formulations in China yet. The use of fentanyl injections is strictly limited to hospitals and requires special regulations. Hospitals are required to recycle used fentanyl transdermal patches, which still contain between 3.71 percent and 75.15 percent drug residue after three days of use, due to concerns that if discarded indiscriminately, they are likely to pollute the environment or be used by criminals to produce illicit fentanyl.

In December 2023, Chinese authorities granted 40 fentanyl production licenses to five domestic pharmaceutical companies. These companies have been given special permission to produce fentanyl-related active pharmaceutical ingredients (APIs), injections and transdermal patches for medical use.

According to the law, the designated manufacturers are only allowed to sell their products to three pharmaceutical companies: Chongqing Pharmaceutical, Shanghai Pharmaceuticals and Sinopharm. These national wholesalers are responsible for distributing the products to authorized regional wholesalers, who supply directly to medical institutions such as hospitals in their region.

Due to their strong position in the domestic market and their regulated distribution, it is unlikely that these licensed manufacturers will have a substantial export surplus, although a small amount of diversion may be possible. Furthermore, none of the five domestic pharmaceutical companies with fentanyl production licenses have received approval from the U.S. Food and Drug Administration for their fentanyl products for clinical use. Without such approval, generic drugs cannot be legally sold in the United States. As a result, China’s licensed domestic manufacturers cannot yet export and sell their fentanyl pharmaceutical products in the U.S. market.

What more could be done?

Securing support from Beijing to stem the flow of illicit fentanyl and its precursor chemicals is an important first step in addressing the supply chain crisis in the United States. U.S. law enforcement agencies also need the support of Chinese local governments and law enforcement agencies, particularly provinces with large numbers of chemical manufacturers. In addition, the Treasury Department and U.S. law enforcement agencies should build on their existing working mechanisms with their Chinese counterparts and strengthen cooperation on anti-money laundering to combat the illicit flow of money related to the drug trade. To this end, Washington and Beijing should consider establishing an anti-money laundering information exchange mechanism.

The U.S. government should also promote cooperation between Canada, China, and Mexico on drug control and build on existing cooperation mechanisms to establish a quadrilateral working group on drug control cooperation.

The United States and China began cooperating on counter-drug efforts in 1985, while China and Mexico held the first working group meeting on precursor chemicals in October 2023 in Beijing. There, the two sides agreed to establish a China-Mexico Precursor Chemicals Working Group to exchange regulations, share intelligence on illicit precursor chemical production and trade, and conduct joint law enforcement operations to combat cross-border precursor chemical crimes. That same year, the Joe Biden administration established the US-Canada-Mexico Trilateral Fentanyl Committee to counter the threat of illicit fentanyl in North America.

International cooperation to combat the flow of illicit fentanyl products and the money that comes with the trade is only half the solution, because it only addresses the supply side of the problem. Washington needs to be realistic and honest about the real root of the fentanyl crisis: the incredibly high demand. If the U.S. government doesn’t try to solve the country’s addiction problem, there will be other synthetic drugs causing more overdose crises, even if international cooperation could eliminate fentanyl opioids.

Will Merrow created the map.

This work represents solely the views and opinions of the author. The Council on Foreign Relations is an independent, nonpartisan membership organization, think tank, and publisher, and does not take institutional positions on policy matters.