What Is China’s Role in Combating the Illegal Fentanyl Trade?

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

Small chemical manufacturers in China have become shadow suppliers fueling clandestine labs in Mexico and beyond, churning out illicit fentanyl and fentanyl-related substances that are contributing to the global drug trade and the U.S. opioid epidemic. Despite more than three decades of China regulating the production and distribution of fentanyl and its precursors, a sprawling cottage industry of small chemical plants thrives, partly bolstered 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 swift, cheap, and secure money laundering services.  

Why are more fentanyl variants being made?

Fentanyl is a synthetic opioid that is up to fifty times stronger than heroin and one hundred times stronger than morphine. However, fentanyl is cheaper to make than many common illicit 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 make a profit of some $1.6 million being sold on the street, or about twenty times the profit of heroin. 

Chinese regulators have faced a challenge as new variants of fentanyl—chemically distinct enough not to be already controlled—emerged faster than they could be added to the government’s list of controlled substances. Because synthetic drugs such as fentanyl are made entirely from artificial substances, the potential manufacturing methods are limitless. In 2016 alone, sixty-three 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 manufacturing methods for fentanyl, each relying on different precursor chemicals (the compounds used to make the drug). Criminals have continued to adapt these processes to use a broader set of more readily available precursor chemicals.

In May 2019, the Chinese government placed all potential fentanyl variants on the controlled substances list. Since that year, the supply of fentanyl from China directly to the United States has “decreased substantially,” according to the 2020 U.S. National Drug Threat Assessment [PDF]. However, fentanyl precursors continue to be produced in China, then shipped to Mexico and countries in Central America; these countries are the leading suppliers [PDF] of illicit fentanyl and fentanyl analogs sold in the United States.     

How does China regulate the production and distribution of fentanyl? 

China has had laws in place combating the illicit fentanyl trade for more than three decades. The State Council regulates the manufacture and distribution of narcotics in China, periodically publishing 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 placed two common fentanyl-related chemical precursors under control, Chinese producers 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 controlled these chemicals in some form since May 2020.)

In August 2024, Chinese authorities added 4-AP, 1-boc-4-AP, and norfentanyl to its list of controlled precursor chemicals, imposing stricter oversight over their production and sale, including by requiring exporters to obtain 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, as many others do, recognizes the medical need for narcotic drugs and other controlled substances. But there are not yet any clinically authorized oral dosage formulations in China. The use of fentanyl injections is strictly restricted to hospitals and requires special prescriptions. Hospitals are mandated 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 randomly, they are likely to pollute the environment or be used by criminals to produce illicit fentanyl.

As of December 2023, Chinese authorities granted forty 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. 

By law, the designated manufacturers are only permitted to sell their products to three pharmaceutical firms: Chongqing Pharmaceutical, Shanghai Pharmaceuticals, and Sinopharm. These national wholesalers are responsible for distributing the products to authorized regional wholesalers, who directly supply medical institutions such as hospitals within their regions. 

Due to their strong position in the domestic market and their regulated distribution, these licensed manufacturers are unlikely to have a substantial export surplus, although a small amount of diversion could be possible. Furthermore, none of the five domestic pharmaceutical companies with fentanyl production licenses have obtained approval by the U.S. Food and Drug Administration for their clinical-use fentanyl products. Without such approval, generic drugs cannot be legally sold in the United States. Consequently, China’s licensed domestic manufacturers are not yet able to export and sell their pharmaceutical fentanyl products in the U.S. market.

What more could be done?

Obtaining support from Beijing to stop the flow of illicit fentanyl and its precursor chemicals is an important first step in addressing the supply problem of the crisis in the United States. U.S. law enforcement agencies also need the support of Chinese local governments and law enforcement agencies, especially provinces that have large numbers of chemical makers. Additionally, the Treasury Department and U.S. law enforcement agencies need to build on their existing working mechanisms with their Chinese counterparts and strengthen anti-money laundering cooperation to combat the illicit money flow associated with the drug trade. To that end, Washington and Beijing should consider establishing an anti-money laundering intelligence exchange mechanism.

The U.S. government should also encourage anti-drug cooperation among Canada, China, and Mexico, and build on existing cooperation mechanisms to establish a quadrilateral anti-drug cooperation working group.

The United States and China began cooperating on anti-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 illegal production and trafficking of precursor chemicals, and jointly carry out law enforcement operations to crack down on transnational crimes involving precursor chemicals. That same year, the Joe Biden administration established the U.S.-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 associated with the trade is only half of the solution, as it targets just the supply side of the problem. Washington needs to be realistic and honest about the real crux of the fentanyl crisis: the incredibly high demand. If the U.S. government does not attempt to fix the country’s addiction problem, there will be other synthetic drugs that fuel more overdose crises, even if international cooperation could eliminate fentanyl opioids.

Will Merrow created the map.

This work represents the views and opinions solely of the author. The Council on Foreign Relations is an independent, nonpartisan membership organization, think tank, and publisher, and takes no institutional positions on matters of policy.