2006 INCSR Volume I: Drug and Chemical Control

I. Summary

The People’s Republic of China (PRC) continues to have a significant domestic drug abuse problem. China is also an important transit route for opiates and ATS (Amphetamine Type Stimulants) moving through Asia. China was removed from the list of Major Drug Transit Countries in 2005 because there was no evidence drugs transiting China affected the U.S. to a significant extent. Heroin use persists, particularly in southwest China. There continues to be an upsurge in the consumption of synthetic drugs such as ecstasy (MDMA) and crystal methamphetamine, otherwise known as "ice". Chinese authorities view drug trafficking and abuse as a major threat to national security, the economy and national and regional stability, but corruption in far-flung drug producing and drug transit regions of the PRC limit the accomplishments of dedicated enforcement officials. China has made great strides to integrate regional and global counternarcotics efforts. China is a party to the 1988 UN Drug Convention.

Cooperation with U.S. counternarcotics officials continued to improve over the past year. The signing of a Memorandum of Intent in February 2005 between DEA and the MPS (Ministry of Public Security) Bureau of Narcotics Control yielded a higher level of cooperation. In 2005, the Chinese Government also continued to provide U.S. counternarcotics officials with samples of drugs seized, on a case-by-case basis.

II. Status of Country

The major narcotics producing areas in Asia, Southeast Asia’s "Golden Triangle" and Southwest Asia’s "Golden Crescent", both border China. The "Golden Triangle" on China’s southwestern border is a longstanding problem; Chinese officials now believe that the "Golden Crescent" is an increasing source of illicit drugs trafficked into western China, particularly Xinjiang Province. According to the Chinese Government, drug abuse in China continues to rise and there were, as of 2004, 1.6 million registered drug addicts, double the number in 1995. Youths made up 74 percent of the registered drug addicts. The majority of registered drug addicts are heroin users. Illegal drug use was recorded in 2,148 cities, counties, and districts across China. The Chinese Government reports about 34,000 recent deaths from drug overdose, a significant increase from about 25,000 deaths as of the end of 2003.

China’s well-documented economic growth and increasing societal openness over the last decade has dramatically increased the disposable income and leisure time of millions of young urban residents. This phenomenon has led to a rapid increase in drug abuse among the country’s youth in large and mid-sized cities. Like large cities of relative affluence all over the world, Chinese cities have seen a significant rise in the urban culture of nightclubs and raves, and their attendant problems of drug abuse. These changes in China have increased abuse of recreational drugs, such as ecstasy and ATS. Officials have responded with several public awareness campaigns and increased enforcement, but abuse of synthetic drugs continues on an up-tick, as in the United States and Europe.

China has one of the largest chemical industries in the world. China is the world’s largest producer of certain precursor chemicals, including acetic anhydride, potassium permanganate, piperonylmethylketone (PMK) and ephedra. China monitors all 22 of the chemicals listed in the 1988 UN Drug Convention. Chinese authorities report they seized over 160 tons of precursor chemicals and prevented a further 3,514 tons from leaving the country in 2004. China continues to be a strong partner of the United States and other concerned countries in implementing a system of pre-export notification of dual-use precursor chemicals.

III. Country Actions Against Drugs in 2005

Policy Initiatives. In June 2000, the PRC issued a "White Paper" on drugs that articulated China’s strategy for combating drug abuse and trafficking. The document covers all the major goals of the UN Convention, emphasizing education, rehabilitation, eradication, precursor chemical control and interdiction. It continues as the basic strategy for the PRC’s approach to drugs. In November 2005 China passed its first administrative law on precursor chemicals aimed at preventing the illicit use of precursor chemicals. This law represents the first action by the PRC to control domestic sale of precursor chemicals; previous laws and regulations focused solely on imports and exports. In June 2004, the PRC published an authoritative five-year plan to tackle the drug problem, which provided the Ministry of Public Security (MPS) with a mandate to step up counternarcotics efforts. The national budget for counternarcotics efforts has seen regular increases. While the MPS’s National Narcotics Control Commission (NNCC), China’s counternarcotics coordinating body, received an annual budget of less than $1 million in the mid-1990’s, by 1998 this amount had increased to approximately $4.5 million and to about $17.5 million in 2003. The total narcotics budget, however, is significantly higher, because each province administers its own counternarcotics budget.

Accomplishments. China continued to cooperate with regional and international partners, including the U.S., to stem the flow of drugs. China has completely eradicated opium poppy cultivation and PRC authorities have increased efforts to destroy illicit drug laboratories within China’s borders.

Law Enforcement Efforts. The Chinese Government has increased its counternarcotics efforts through several highly publicized campaigns, including a nationwide "People’s War" on Narcotics campaign. The counternarcotics efforts at the national level and those at the provincial level have grown substantially, with increased training and exchange programs with other Asian law enforcement agencies. Some of their successes include: the April 2005 seizure of 26 kilograms of heroin in Xinjiang, the May 2005 seizure of 102 kilograms of methamphetamine in Yunnan, the June 2005 seizure of 41 kilograms of ketamine (a veterinary pain killer widely abused in Asia), in Sichuan, the September 2005, seizure of 1,010 kilograms of ketamine in Shandong and Guangdong and the November 2005 seizure of 110 kilograms of methamphetamine in Yunnan. Additionally, in September 2005, a joint investigation conducted by China, Laos, Thailand and Burma resulted in a combined seizure of 426 kilograms of heroin in Burma. The ringleader of this shipment was a Chinese national who was arrested in Laos and eventually deported to China. The case is an indication of China’s increased law enforcement co-operation with its neighbors.

In order to increase its effectiveness in law enforcement, the NNCC reorganized its enforcement operations, establishing separate heroin and amphetamine-type stimulants (ATS) enforcement groups at both the ministerial and provincial levels. Prior to 2003, enforcement was handled by one organization and focused primarily on heroin. With this reorganization, the NNCC can better address ATS enforcement.

U.S.-Chinese law enforcement cooperation continued to improve throughout 2005. The MPS continues to provide strategic and concrete information to its DEA counterparts to actively target drug rings. In addition, the MPS routinely facilitates travel of U.S. law enforcement personnel based at the U.S. Embassy in Beijing. In part due to international cooperation with its neighbors in the Golden Triangle, the MPS reports that poppy cultivation in Laos and Burma has been reduced by 44,000 hectares in recent years, which amounts to a 27 percent decrease in the total area of production since 1995.

Corruption. Official corruption in China is a serious problem. Anticorruption campaigns have led to arrests of many lower-level government personnel and some more senior-level officials. However, most corruption activities in the PRC involve abuse of power, embezzlement and misappropriation of funds, but payoffs to "look the other way" when questionable/illegal commercial activities occur, including drug smuggling, are clearly another major source of official corruption in China. Chinese officials reported that in 2005 there were more than 32,000 people investigated for alleged corruption and that over half were found to be guilty.

While narcotics-related official corruption exists in China, it is seldom reported in the press. The MPS takes allegations of drug-related corruption seriously, launching investigations as appropriate. Most cases appear to have involved lower-level district and county officials. Although there is no substantive evidence indicating senior-level corruption in drug trafficking, the quantity of drugs trafficked within the PRC raises suspicions that official corruption is a factor in trafficking in certain provinces bordering drug-producing regions, such as Yunnan, and in Guangdong and Fujian, where narcotics trafficking and other forms of transnational crimes are prevalent. Official corruption cannot be discounted among the factors enabling organized criminal networks to operate in certain regions of China, despite the best efforts of authorities at the central government level. Narcotics-related corruption does not appear to have adversely affected on-going law enforcement cases in which the U.S. is interested. China is engaged in an anticorruption dialogue with the United States through the Joint Liaison Working Group process. China ratified the UN Convention Against Corruption on January 13, 2006.

Agreements and Treaties. China actively cooperates with other countries to fight drug trafficking. In 2000, China and the United States signed a Mutual Legal Assistance Agreement (MLAA), which entered into force March 8, 2001. In February 2005 DEA and MPS Bureau of Narcotics Control signed a Memorandum of Intent on counternarcotics cooperation. China is a party to the 1988 UN Drug Convention, as well as to the 1961 UN Single Convention as amended by its 1972 Protocol and the 1971 Convention on Psychotropic Substances. In January 2003, the United States and China reached agreement on the Customs Mutual Assistance Agreement (CMAA.) The PRC continues to cooperate with DEA’s chemical control initiatives, "Operation Purple," "Operation Topaz," and "Operation Icebreaker." China strictly regulates the import and export of precursor chemicals, but chemical diversion from China has been a major problem, despite these efforts.

In October 2005 China hosted the Second International Congress of the "ASEAN and China Cooperative Operations in Response to Dangerous Drugs (ACCORD)." More than 200 delegates from ASEAN law enforcement agencies and the UN Office of Drugs and Crime (UNODC) attended. China, along with its ASEAN partners, held meetings in order to map out a regional counternarcotics cooperative mechanism in pursuit of making the region drug-free by 2015. In June, Burma, China, India, Laos and Thailand signed the Chiang Rai Declaration pledging to implement cooperative counternarcotics programs and exchange counternarcotics information. The PRC also continues to participate in UN Office for Drugs and Crime (UNODC) demand reduction and crop substitution efforts in areas along China’s southern borders. China regularly participates in counternarcotics education programs sponsored by the International Law Enforcement Academy (ILEA) in Bangkok, Thailand. The PRC actively participates in the annual International Drug Enforcement Conference (IDEC) and Regional Targeting Meetings, which boost regional law enforcement cooperation against drug trafficking. China has signed over 30 mutual legal assistance agreements with 24 countries, but the U.S. and China have been unable to agree on a narcotics cooperation agreement.

Cultivation/Production. The PRC has effectively eradicated the production of drug-related crops within China. Opium, coca and other drug crops are not produced in China in significant quantities. The PRC is a main cultivator of natural ephedra, which is used in the production of amphetamine. China is also one of the world’s largest producers of synthetic ephedra, which is used for medicinal purposes but can be diverted for the production of methamphetamine. The Chinese Government tightly controls exports of this key input for ATS, but like other dual-use chemicals, China remains a significant source of chemicals diverted to illicit uses, some diversions to countries as far away from China as Europe.

The Chinese Government continues to make shutting down illicit drug laboratories a top priority. The MPS seized 198 drug processing laboratories between July and August 2004 (seeking update for 2005).

Drug Flow/Transit. China continues to be used as a transshipment route for drugs produced in the "Golden Triangle" to the international market, despite counternarcotics cooperation with neighbors such as Vietnam, Thailand and Burma. Drug transportation and infiltration in Yunnan and Guangdong Provinces has been especially pervasive; drugs also move along and back and forth between China’s border with the Democratic People’s Republic of (North) Korea. While China’s southern and southwestern provinces constitute the PRC’s primary drug flow and transit areas, Chinese authorities acknowledge that western China is experiencing significant problems as well. Drugs such as heroin, methamphetamine and ketamine are being smuggled into Xinjiang Province and then distributed throughout China.

Domestic Programs (Demand Reduction). According to the MPS, China had 1.6 million illegal drug users registered by law enforcement departments. The majority of registered drug users are addicted to heroin. The Ministry of Education (MOE) and the NNCC have expanded drug education and prevention programs, aimed at preventing children from ages 12 to 18 from getting involved in drugs. Chinese officials report the distribution of 25,000 counternarcotics posters in 2004. In 2004, 100,000 drug awareness pamphlets were distributed and 100,000 special action committees were formed to carry out drug control publicity and education activities. The NNCC, Ministry of Health and the State Food and Drug Administration jointly established 34 clinics in 10 provinces to provide treatment to heroin addicts.

IV. U.S. Policy Initiatives and Programs

Bilateral Cooperation. Counternarcotics cooperation between China and the United States continues to develop in a positive way. The information shared by China is leading to progress in attacking drug-smuggling rings that have an impact on the U.S. and is yielding significant operational results.

Road Ahead. The most significant problem in bilateral counternarcotics cooperation remains the lack of progress toward concluding a bilateral Letter of Agreement (LOA) enabling the U.S. Government to extend counternarcotics assistance to China. Reaching agreement on the LOA is a major U.S. goal that, if achieved, would greatly increase counternarcotics cooperation between the two countries. While China has provided the DEA on a case-by-case basis with some samples of drugs seized in the PRC intended for U.S. markets, the U.S. Government would welcome routinely receiving samples of all drugs seized by Chinese authorities. Despite these issues, bilateral enforcement cooperation remains on track and is expected to continue to improve over the coming year.