Report: China Using Tax Rebates to Fuel US Fentanyl Crisis

House panel says makers of fentanyl precursors get subsidies if materials are only sold abroad
By Newser Editors and Wire Services
Posted Apr 17, 2024 2:43 PM CDT
Report: China Using Tax Rebates to Fuel US Fentanyl Crisis
The US and China's national flags.   (AP Photo/Andy Wong, Pool)

China is fueling the fentanyl crisis in the US by directly subsidizing the manufacturing of materials that are used by traffickers to make the drug outside the country, according to a report released Tuesday by a special House committee focused on countering the Chinese government. Committee investigators said they accessed a government website that revealed tax rebates for the production of specific fentanyl precursors as well as other synthetic drugs as long as those companies sell them outside of China. More from the AP:

  • Standout quote: "Through its actions, as our report has revealed, the Chinese Communist Party is telling us that it wants more fentanyl entering our country," said Rep. Mike Gallagher, the Republican chairman of the special House committee. "It wants the chaos and devastation that has resulted from the epidemic."
  • A presidential agreement? In November, President Joe Biden and Chinese President Xi Jinping announced a resumption of bilateral cooperation on counternarcotics with a focus on reducing the flow of precursor chemicals and synthetic drug trafficking. But the congressional report raises questions about whether China is following through.
  • To that end: The report says the Chinese government has thwarted investigations into illicit manufacturers by warning the targets of an investigation when US law enforcement has sent a formal request for assistance. Investigators said multiple current and former federal agents have described the notification of targets, leading those targets to revamp operations and make it harder to detect their activities.

  • William Barr's perspective: The former attorney general told lawmakers in Tuesday's hearing that it's hard to believe that a country with the most pervasive surveillance system in the world is not fully aware of the massive drug trafficking taking place. He said the committee's report "uncovered persuasive evidence" that China's government is not just a bystander, but is "knee deep" in sponsoring and facilitating the export of fentanyl precursors.
  • Those precursors: The chemical companies providing fentanyl precursors often have legitimate businesses with customers around the world. The report said fentanyl precursors and other synthetic narcotics are a "side hustle" designed to maximize profits.
  • Recommendations: The report calls on Congress to clarify the power of the president to sanction those involved in drug trafficking, for the US to impose financial sanctions on violators, and for regular reports to Congress on how often sanctions have been undertaken. It also calls for forming a task force that would place intelligence, economic, and enforcement resources under one roof.
(More fentanyl stories.)

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