Beijing’s Poison Pipeline: The CCP’s Role in the Fentanyl Crisis

the subcommittee on east asia and the pacific will come to order This hearing will focus on the ongoing synthetic opioid crisis in the United States. Specifically, witness expertise will help assess the Chinese Communist Party's role in the synthetic opioid crisis and how the United States can address this very important issue. Uh, let me now recognize myself for an opening statement. Good afternoon, and welcome to the East Asia and the Pacific sub-committees' hearing titled Beijing's poison pipeline, the CCP's role in the fentanyl crisis. Today, we mark the thirty-seventh anniversary of the Tiananmen Square massacre, when the Chinese Communist Party brutally murdered thousands of innocent civilians who dared to demand freedom. Few events more clearly expose the CCP's ruthless disregard for human li- life when it stands in the way of the party's interests. Today's hearing will examine how that same region has shown a similar indifference to American lives. The People's Republic of China is the primary enabler of the fentanyl epidemic that kills tens of thousands of Am- Americans every year. While Mexican cartels manufacture and traffic the final product, the deadly supply chain starts and is engineered in China. Chinese companies produce the precursors that are required to make fentanyl and other synthetic opioids. Those chemicals are then shipped to Mexico, where cartels turn them into deadly narcotics and flood American streets with poison, leaving devastation, addiction, and death in their wake. This is not happening without Beijing's knowledge. The Chinese government subsidizes the export of at least seventeen deadly chemicals that have no legal use. Shanghai provided expert credits to one opioid producer, and at least two fentanyl producers are owned by the PRC government. Chinese criminals have become the defective bankers and money launders of choice for Mexican cartels, to which Beijing has turned a blind eye. And despite US indictments of six fentanyl traffickers in March, the PRC authorities have not arrested those involved. Whenever Beijing announces restrictions on one precursor chemical, manufacturers simply pivot to another. This is not a shadowy operation hidden in underground laboratories. In China, much of this activity is carried out by legitimate companies in broad daylight. Why does Beijing allow these factories of death to remain open? Because the Chinese Communist Party sees strategic value in Americans' suffering, it has repeatedly chosen geopolitical leverage over human life. I applaud President Trump and his administration for forcing Beijing to the table, and refusing to accept empty promises while Americans continue to die. The president has demonstrated a willingness to impose real consequences when the CCP refuses to negotiate in good faith, and Congress must ensure he continues to have the tools necessary to confront this crisis. That is why I'm leading an effort to reauthorize fentanyl sanctions, which are set to expire this year. If we let these sanctions expire, China would have no reason to negotiate with the United States over this critical issue. I look forward to working with my colleagues and the Trump administration to end the state-sponsored trafficking network and ensure Beijing can never profit from the loss of American lives again. Under President Trump, I'm confident we can cut off this poisoned pipeline. Now, the chair recognizes the ranking member from California, Representative Barra, for your opening statement.

Thank you Madam Chairwoman, um and thank you to the witnesses for being here. Um I'm a physician by training and you know i i think about this issue pretty deeply from life before congress um when you know helped a close friend whose daughter became addicted to to fentanyl and and to drugs through pill popping parties um and as a young member of congress sat with parents who lost children and so mister yates i'm glad that you're dedicating your life to the legacy and and um memory of your daughter, Christina, um to help prevent that um next family from having to go through that that suffering. Um and I'm glad that we are, you know, looking at the initial stages of, you know, where some of these precursor chemicals come from, but um it's gonna be an all of the above approach, you know. I'm on the intelligence committee, I've gone down to um to Mexico City to, you know, talk to our DEA agents down there and what we're doing down there. And this is a vexing and challenging problem, so we've got to certainly address the supply side of things, use all the tools that we have. But these chemicals and these precursors are readily available, both coming in through um through China, through Southeast Asia, through Mexico, but also through legitimate means. Yeah, where they're coming through Europe into the United States, perhaps getting shipped south of the border and then coming back up north of the border. And this is a a So we've got to address the supply side, but we've also gotta put an adequate amount of resources into the demand side, to early on getting to our young people, getting t- into our high schools, getting to our physicians who may um serendipitously accidentally get someone addicted to medications and I've talked to too many young people who you know, started on Vicodin. Maybe they had a a a high school injury. Um got addicted to vicodin and then moved on to to other things. So, you know, both from addressing the issues, um, within Beijing and within China, but I also wanna make sure we're adequately providing support, um, rehabilitation, education on, um, the demand side of things. And it's gotta be a whole of of effort to to make sure we can at least save that next life and and and all these lives. So This is not a partisan issue, it's um an issue that is impacting tens of thousands of Americans' um lives every day. And again, I'm glad that you're holding the this hearing. Um, I do look forward to the various strategies, you know, I've traveled through Southeast Asia, you know, you do have um the criminal enterprises along the Mekong River. You c- you can follow some of the chain of flows of um the the precursors. again very very difficult to to address because it is very easy to have pill presses get those chemicals and and and make those pills so again i'm looking forward to the testimony of the witnesses um very interested in thinking through what strategies we may have in mind certainly sanctions and making sure this is central to any negotiations that we're having with beijing but also um other strategies here domestically that we could do to again address this issue. So with that, I'll yield back.

Thank you. Other members of the committee are reminded that opening statements may be submitted for the record. And we are pleased to have a distinguished panel of witnesses before us today on this very important topic and I will in uh introduce them. First, Mr. David Luckey, the Director of REN, Rural America Partnership Initiative. Thank you for joining us. Mister Steve Yates, the Senior Research Fellow on China and National Security Policy at the Heritage Foundation. Thank you. Miss Zhongwen Zouilu, the Maurice R. Greenberg Senior Fellow for China Studies at the Council on Foreign Relations. I want to thank all three of you for joining us today. The committee recognizes the importance of the issues before us, and is grateful to have you here speak with us. And your full statements will be made part of the record. And I will ask each of you to keep your spoken remarks to five minutes in order to allow time for member questions. So let me now recognize Mister Lucky for your opening statement.

Chairwoman Kim, Ranking Member Barra, and distinguished members of the committee and subcommittee, thank you for inviting me to testify on the Chinese Communist Party's role in the fentanyl crisis in America. This dire issue directly affects Americans' lives, health, prosperity, and national and homeland security. RAND researchers found that forty-two percent of Americans know someone who died from an illegal drug overdose, most most of which involving fentanyl. As background, I led RAND's research and analysis for the Commission on Combating Synthetic Opioid Trafficking and drafting its report, which was released in twenty twenty-two. And more recently, I led a RAND team that helped inform the twenty- twenty-six national drug control strategy, which the White House Office of National Drug Control Policy The United States continues to face a severe crisis from illegal drugs, with synthetic opioids primarily fentanyl generally detected in the nearly forty-five thousand overdose deaths in twenty twenty-five alone. Despite recent declines, this threat remains crucial to our social welfare and national security. To continue this decline, the President's twenty twenty-six national drug control strategy was built upon two, mutually reinforcing pillars. A relentless whole of government campaign to attack the illicit drug supply, and a whole of society public health effort to reduce demand and consumption. Cooperation with China as well as with Mexico and multilateral partners across the international community is essential to achieving these pillars and reducing deaths from illegal synthetic opioids, such as fentanyl. I'll be summarizing my written testimony to focus on the global fentanyl supply chain and efforts to secure it. Additionally, I'll briefly discuss reducing overdose fatalities and the flow of illegal drugs across US borders, as well as some prevention, treatment, and data issues related to illegal drugs and their use. I'll conclude with some final thoughts concerning the importance of US-China cooperation for reducing the flow of synthetic opioids and their precursors. Considering this problem holistically, the United States should aim to reduce the sup supply of, demand for, and harms from synthetic opioids by focusing on aspects of the with the greatest return on investment. I suggest it can do that by disrupting the supply chains of transnational criminal organizations and their financing, improving port of entry and state and local level interdiction efforts and expanding evidence-based treatment and prevention efforts. For this subcommittee specifically, reducing fentanyl trafficking requires coordinated and prioritized unilateral, bilateral, and multilateral diplomatic and economic actions. The global supply chain for synthetic opioids is robust, diversified, and begins with China as the primary source of precursor chemicals. And while Mexican transnational criminal organizations produce and traffic the overwhelming majority of illicit fent fentanyl entering the United States China's role remains strategic using their precursor chemical supply as leverage against the United States. In attempts at disrupting fentanyl supply, I recommend the following actions. Strengthen bilateral and multilateral relationships to target precursor supply chains that primarily but not exclusively emanate from China. Anticipate shifts in supply chains if there is a reduction in Chinese-produced precursor chemicals. Mandate international reporting of all synthetic opioid precursor exports. Enhance international cooperation on chemical scheduling and global surveillance of the entire synthetic opioid chemical supply chain. And develop trustworthy law enforcement partners in Mexico to improve port and border oversight before precursors re- reach transnational criminal organizations. As China is the primary node in the global supply chain for synthetic opioid precursors, the President has designated China as a major drug transit or major illicit drug-producing country. Persistent gaps in regulatory oversight, enforcement, and export controls, however, enable illicit production and export. The US government should consider the following actions to address these gaps. First, elevate the issue of Chinese fentanyl precursor trafficking to the highest level of US-China engagement to focus on greater enforcement through increased investigation indictment and sanctions of known PRC traffickers. Second, establish a US policy framework to prioritize direct engagement with PRC central authorities, specifically Politburo standing commi- committee members and ministerial and presidential level officials. Create incentives and disincentives for criminal enforcement and reporting of non-compliance. Third, press the PRC for clear regulatory improvements, specifically increase inspection rigor, implement regulatory best practices such as tracking chemical movements, inventory records and lab logs, and publicize Chinese violations to shame and deter illegal activity. And finally, incentivize the PRC to improve detection at Chinese ports of exit. China claims to have enhanced detection and security at To the extent that China has and employs these capabilities, the impact on the flow of precirc- precursor chemicals is unclear at best, or not being employed to reduce the flow of these precursor chemicals at worse. Regardless, the PRC should be pressed on this and the world made aware of it. I thank the subcommittee for the opportunity to present this testimony on such an important topic, that concerns American lives, our society, and our national security. I look forward to any questions that you might have.

Thank you, Mr. Luckey. I now recognize Mr. Yates for your opening statement.

Good afternoon, subcommittee chair Kim, ranking member Berra, distinguished members of the subcommittee. My name is Steve Yates. I serve as senior research fellow for China and national security at the Heritage Foundation. The views I express today are entirely my own and do not reflect the r- the views or positions of the Heritage Foundation. I deeply appreciate the subcommittee leadership for inviting me to testify on this urgent issue of both national policy and profound personal importance. For nearly four decades, I have worked on US national security policy and challenges posed by the People's Republic of China. Never did I imagine that one of these policy challenges would strike my own family so directly. In October of twenty twenty-three, our family joined the growing circle of American families devastated by fentanyl. Our daughter, Christina Marie, was just shy of her twenty-fifth birthday, when she ingested an off-market Xanax laced with fentanyl. From the trauma center to intensive care unit to then hospice, we spent twelve agonizing days fighting to save her. Ultimately, we had to accept her loss and the hole it left in our lives. In twenty twenty six, there is no other issue in no other country that touches the heart of families in every single congressional district represented in this house. I thank you for making this a priority in discussing the full range of tools needed to provide for the common defense for our nation and our families. The questions framing the hearing today are essential. What is China's role in this ecstatic opioid supply chain? What is Beijing's diplomatic strategy for dealing with this? What and what can the United States do to sharpen our strategy and tools to reduce the flow? Before I dive in, I wanna note an important context from my colleagues at the Heritage Foundation. In their twenty twenty four backgrounder, they made clear the heart of this crisis is a global partnership between America's top geopolitical adversary and the transnational criminal organizations. Chinese precursor chemicals form the backbone of the supply chain killing Americans. Since then, America's taken several important steps. An executive order designating cartels as foreign terrorist organizations, tariffs on China, Mexico, and Canada explicitly tied to fentanyl flows, the Halt Fentanyl Act that permanently scheduled fentanyl analogs, enhanced treasury sanctions on Mexican banks, Chinese chemical networks, and an executive order designating illicit fentanyl and precursors as weapons of mass destruction. On the PRC side, they have responded with some actions, releasing a white paper, scheduling additional precursors, announcing export licensing controls, and holding bilateral meetings. Yet despite these steps, the PRC remains the primary global source of precursors and pill-pressing equipment for the Mexican cartels. China's role in the supply chain is central and ongoing. Chinese precursor chemicals continue to flow to Mexican cartels, Beyond chemicals, Chinese money laundering organizations play a critical role in moving cartel proceeds back to Mexico. Beijing's diplomatic strategy has consistently been one of minimum effort. For years, Chinese officials claimed they lacked information or control asking United States for detailed intelligence. This is difficult to accept in the world's most sophisticated surveillance state. In public diplomacy, at times they accuse Americans for blaming China to hide from our own domestic problems. Despite promises made to multiple US presidents, the PRC has not taken strategically significant steps to verifiably stop the flow. This is a choice, not a coincidence. In a country that tightly controls less sensitive matters, they are doing just enough to deflect stronger pressure, while signaling this is not a real priority for them or for us. To achieve meaningful change, the United States must target China's strategic vulnerabilities. Access to the American consumer market, access to US financial system, and access to imported energy. The tariffs and sanctions issued in twenty twenty five proved effective in bringing China to the table. Congress should consider legislation to refine and strengthen strengthen these tools for the fentanyl fight. With the designation of fentanyl precursors as weapons of massive destruction, we should fully utilize the broad legal, financial, and operational authorities this provides. We should also explore leverage through China's energy dependence, including potential taxes on energy purchases that could fund enforcement and treatment of victims. Finally, we must dramatically reduce America's dependence on China's pharmaceutical supply chains. Our reliance on China for legitimate medicines creates the very infrastructure that enables the illicit trade. Reshoring and diversifying production will both protect public health and create genuine leverage to demand action on the illicit side. This crisis has claimed the lives of over half a million Americans in the last decade. It's not simply a drug issue, it's a national security emergency. I thank you for the honor to testify today and I look forward to your questions.

Thank you, Mr. Yates. Now, Miss Liu, I would like to recognize you for your opening statement.

Chairwoman Kim, uh, Ranking Member Barra, and the members of the subcommittee, thank you very much for the opportunity to testify. I'm Zongyuan Zouilio. I'm the Maurice R. Greenberg Senior Fellow for China Studies at the Council on Foreign Relations. CFR does not take any institutional position. The views here today are my own. Every overdose death is a family tragedy. Overdose deaths fell sharply in twenty twenty four, and according to provisional federal data, the decline consistent in twenty twenty five. But there seventy thousand Americans still died. That is progress, not victory. The death tolls have fallen, but at the supply chain that make illicit fentanyl easy to scale, remain adaptive, and cross-border. The point is not that China created Am- American demand. The problem is that China linked to chemical, logistics, and the financial networks, helped make illicit fentanyl easier to produce, cheaper to skill, and harder to stop. The key shift came in two thousand to twen uh twenty uh nineteen. China imposed class-wide controls of fentanyl-related substances, rather than chasing individual analogs one by one. That made direct finish the fentanyl export from China, But it pushed the risk upstream towards fentanyl precursors and the commercial and the financial ecosystem around them. That shift changed the policy problem. Precursor control is not like stopping Finnish narcotics. Many chemicals have legitimate use and move through commercial channels. Traffickers do not rely on one fixed recipe. When one precursor is controlled, they can shift to another input, another synthetic route, or another synthetic opiate. Congress therefore needs adaptive enforcement, not static checklist. A senior State Department official has publicly stated that the United States has no evidence Beijing deliberately direct illicit drug shipment into the United States. That distinction matters. But the problem is not proven central direction. It is a serious supply chain governance failure in China. China has not consistently policed the illicit edges of its chemical, online, logistics, and financial systems. The question then is how the United States can turn that responsibility into measurable Chinese measures. So the Biden administration and the Trump administration used different tools, but not on separate tracks. Biden rebuilt the counter-narcotic channel after San Francisco, giving Washington a way to press Beijing on chemicals and enforcement. But that channel had limited time to prove durable result. Trump added leverage through tariffs and trade bargaining, which elevated urgency and may have accelerated visible Chinese steps. But pressure alone cannot identify suppliers, brokers, shippers, or money-launderers. The lesson is that channels and the leverage must work together. Diplomacy must produce enforcement, and the pressure must be tied to implementation. My written testimony provided eight recommendations, but for the time available I'll focus on three congressional levers. Oversight, multilateral enforcement, and financial diff disruption. First, Congress should require regular inter-agency reporting on proof of reinforcement, not just a proof of announcement. When Beijing adds chemical controls, Congress should ask whether those controls have changed behavior. Did they block shipments, shut down bad actors, remove online vendors, and disrupt payments? Second, Congress should fund multilateral enforcement, not just bilateral pressure. Because the supply chain crosses borders, Pressure on Beijing will work best when it is connected to a standing operational channel among United States, Mexico, Canada and China. Third, Congress should follow the money. FinCEN reported about one point four billion US dollar in sus- suspicious FinCEN-related transactions in twenty twenty four. Anti-money laundering enforcement should be central to FinCEN-al enforcement, especially where high-risk chemical suppliers buyers and the payment channels intersect. Congress should insist not on promises from Beijing, but on measurable disruption of the networks that make illicit fentanyl scalable. Thank you for the opportunity to test to testify. I look forward to your questions.

Thank you to all three witnesses for your very comprehensive uh testimony. I think there were very good uh recommendations also for Congress as well. Let's dive into those. Uh, my first uh Uh, I'll give myself five minutes of questioning too. Uh, first on the topic of illicit financing caused the fentanyl crisis. You know, China isn't just creating the precursor compounds at the heart of the fentanyl trade. PRC entities have also become the go-to money launderers of choice for the cartels. Uh, China has done nothing to stop that though. And we talked about that. You also mentioned that in your testimony. So, Mister Yates? Uh, why hasn't the PRC government cracked down on domestic criminals that undertake these activities?

Well, I think that the short answer that it has to be because it doesn't matter enough to them. Uh, they don't stand to lose enough in lack of enforcement. Uh, we have taken all of the pain, uh, and they have taken all the patience. Uh, I think that the going for the finances is vital. Uh, in the post-nine eleven environment when we were looking at counterterrorism strategy, going after finances was one of the key tools put in place. And that's why I think the labeling of illicit fentanyl precursors as WMD opens up a range of tools that uh should uh should be used uh they can be used as leverage at different points was used as leverage in the North Korean uh negotiations to try to push back on their nuclear weapons program we designated two Chinese banking entities as primary ma- money laundering concerns, that struck enough of a dependency cord that China brought North Korea to the negotiating table. Leaving aside where those negotiations went, it proved that leverage can work to force a conversation. It also proved that it mattered enough to us to use what is essentially a financial nuclear weapon uh and uh that I think is what we feel like we have faced.

Mm-hmm.

And they don't feel like they have had to face that. Uh, now when it comes to can they find things in their own country? Again, this is the most modern tech advanced surveillance state known to mankind. They can find images of Winnie the Pooh on a protester in Hong Kong. They can find these things. This is one hundred percent an issue of will, and have we made it cost them enough to have to do these things in a verifiable way? They have designated a handful of people and a few companies. We lost half a million lives. Those six people and those few companies couldn't have been responsible for it alone.

Thank you. You know, the Department of Justice in March indicted citizens and two PRC-based pharma companies for their involvement in the fentanyl trade. Uh, China, however, does not, have not taken any legal action against those citizens or companies and continues to feel that crisis. So, Mister Luckey, can you talk about how the United States can carry out legitimate law enforcement actions against fentanyl smugglers without PRC government?

Thank you for the question, Madam Chair. Um, first I would suggest designating money laundering networks as strategic corruption infrastructure using the International Emergency Economic Powers Act. Second, I would recommend establishing a review body for money laundering linked trade based on or similar to uh the Committee on Foreign Investment in the United States. Leverage economic state craft to pressure China to cooperate. Conduct cyber-enabled disruption of money laundering organization infrastructure. Explore alternative mechanisms to the one dollar conversion to displace demand for illegal funds. And finally, tailoring cryptocurrency tracing and enhanced analytical capabilities to counter the illis- illegal financing of the transnational criminal organizations.

Thank you. You know, last year, uh, treasury department sanctioned multiple PRC firms and drug traffickers for their role in the uh fentanyl supply chain. Actions like these communicate clearly to Beijing that synthetic opioids are weapons of mass destruction and they must be treated as such. So I wanna ask uh both of you, um, Mister Yates, first, can you describe to us the the role that sanctions are playing in punishing and enforcing against fentanyl traffickers and Mr. Lucky. What would happen if the discretionary sanctions from the Fentanyl Sanctions Act were to expire? We don't have much time, so if you can be succinct, please.

Very briefly, if it's the broad scope uh d- designation of mu- primary money laundering concern, those entities can no longer access the US financial market. It is one of the big three dependencies that China has. They can't function without access to US dollars in our financial system. And so, uh, that designation opens up a whole different level of priority for them to engage. The targeted ones at companies and individuals, it is important signal, but all oftentimes what it results in is like when you turn the lights on or off in a room, cockroaches go to a different room.

Mm.

And so it's an endless effort to go after those.

Okay. Mr. Yates.

Thank you, Madam Chair. Um, in addition to just renewing those sanctions, I would recommend s- recommend strengthening the sanctions. and forcing the sanctions, uh, tie those sanctions to enforcement of efforts that the Chinese claim they're making. Let's force Ch- China to take action on these by enforcing the rules that they claim they they have in place.

Thank you very much. Um, I now recognize ranking member, Vera, for your five minutes questioning.

Thank you, Madam Chairwoman. Um Complicated and very difficult challenge, cuz a lot of these precursors are used for legitimate purposes as well and then can be used um illicitly. Um I agree with all of you that you know follow the money, disrupt the money, um go after the criminals, um and then use the tools that we have to to hold the Chinese accountable for addressing those individuals. Miss Liu um you talked about a reduction in the number of over death deaths. One death is still one too many, as as you um we all point out. Um, I I think it's my understanding that we are starting to see an increased impact in Europe and Australia and other parts of the world is that an accurate statement?

Uh, yes, but so far we do not really have uh concrete evidence directly connected to causality.

OK. And as we increase the penalties and we go after the criminals or we go after the cartels. Um, I guess to either Mr. Yates or Mr. Are we seeing those cartels starting to diverse? And and I guess the gist of my question is, this has to be a multilateral coalition, an effort of multiple nations working on this. Are you saying um

Well certainly, uh, when enforcement at our border in the to the south increased, there was a migration of some of these floes to Canada. And then we began to see a little bit more of the flow down from Canada in the United States. And when we uh started enforcing the transport by air, it moves to sea in other ways. It's a constant effort. That part I think we just have to accept as part of the challenge of illicit narcotics and sort of organized crime operating in a modern world. I still think that there is value in pressing very, very hard at the source. Uh, and I think that there's uh, it's definitely the case uh that this has begun to move to other societies. It was very conspicuous for the first several years of this crisis, that it was almost entirely in the United States, overwhelming our health care system, overwhelming any kind of treatment, overwhelming law enforcement, uh but it has started to show up in other countries of Asia, other parts of Europe, uh and we also need to get at an issue of how it is counted. Someone can go to the emergency room or trauma unit for a lot of different reasons. A little bit like COVID, that it can, there can be multiple factors. And it's only if there was a crime scene that a medical examiner's report is required. And so we're probably undercounting in a lot of different ways. And so how we factor this is important, but also we would probably know more in other countries if they were accounting more effectively too.

And, and again, the intent of my question is, if we're gonna use sanctions, the sanctions will be much more effective. our European allies, other Asian allies, others are with us applying the same pressures and point. Um, is, are we seeing fentanyl utilization in China, um, increasing or you know, are are they feeling the pain that so many American families are feeling?

Uh, representative Vera, um, while I haven't done research specifically on that, and as we all know, China is a very closed society, and we don't have that information, uh, what we uh think we're seeing is a very limited use of fentanyl within China. Um, getting back to your previous question though, uh, again we haven't done specific research on this, but what I'm seeing is the transnational criminal organization starting to diversify. And one of the main challenges of synthetic opioids is the ability to produce novel substances very quickly and very easily. As we've had this fentanyl crisis in the United States, Uh, to this point it's largely past Europe. Europe might be uh in the next phase of this with Nidazine's. That might be the next stage of this problem. And then what we're on the very leading edge of is a class of drug called Orphine's, which sounds very much like Morphine and other opioids that we've heard about. But it's a different class of drugs and that might be the next challenge that we're facing.

Um And then just again thinking about the prevention education treatment side of things um i do wanna make we should do everything we can to address the the front-end and supply side but we should also do everything to on the prevention side i do worry a lot about the um counterfeit um medications that may be legitimate medications that are coming across that are now laced with fentanyl on the accidental that's that are that are taking place i don't have a lot of time but if there are strategies and things that that we should be thinking about that.

Uh, sir, that's a great question, and and our view at RAND is we view this uh wicked problem as an ecosystem made up of three main components in the equation reducing the supply, reducing the demand, and reducing the harms from these illegal substances. And we need action across all three aspects of that to have the greatest effect on the problem.

Gentlemen, time's up. I now recognize the gentleman from Guam, Representative Moylan, for your five minutes of questioning.

Uh, thank you Madam Chairman. Uh, thank you to the panel. Uh, I pr- appreciate your testimonies, uh, and a lot of our conversation deals with the, uh, these bad drugs coming into CONUS. But as you know, for Guam we're on the Indopaycom side, even closer, uh, to China and uh we still get those drugs there i'm wondering on with your interest and your understanding is there something you can help us with being so far from conus with the uh protection against the first island chain especially the second island chain uh we are seeing these drugs uh have a great effect on our uh communities uh and it's doing what the i guess the prc wanted it to do uh so i appreciate your all all your in inputs If you'd like to start first or to the left.

Sir, while I don't have specific recommendations for Guam, I think the recommendations that uh I would suggest regarding this problem for the rest of the United States and the rest of the world apply equally to Guam to Guam, uh as elsewhere.

I think it's vital to increase the state to state to territory uh collaboration on the homeland security kind of challenges. uh, trying to keep, uh, the information sharing about how these things are transported is, uh, ever-changing. It's gonna be a constant, uh, effort to try to keep up with what are the dominant lines of trafficking of these different kinds of substances. Uh, you definitely are on the front-end of tourism and other kinds of things that will connect the the region. And you are also a throughput into US sovereign territory that gets used by these places. But whether it's DEA uh and homeland security collaboration, I think that there are lessons at the state and territory level where people are closer to where the action is happening, closer where the families are, that you might actually have some best practices shared better there. And you would know better than I what venues would improve that kind of collaboration.

Yeah, thank you for the question. Um, I visited Guam last year myself, and the route that I took was surprisingly convenient, I have to say. The route that I took was from Beijing, jumping on airplane, to Seoul, Korea. And if I didn't get on the plane from Beijing, I could have get on the plane from Yantai. And that plane go to Korea only took less than an hour. So the point I'm trying to make is that the supply chain dynamic from China to Guam is surprisingly close and short. This is why I recommend con- Congress to uh, conduct inter- request inter-agency information disclosure, and more importantly, trying to follow up whenever China put out something under control, try to say if it has changed the behavior or not. And secondly, I think it's very important to increase supply chain transparency, especially multilateral cooperation effort. Thank you.

Thank you, all of you. Thank you, Madam Chair.

Great. Let me now recognize the gentleman from Rhode Island, Representative Amo.

Thank you, Madam Chair. Thank you, Ranking Member. Uh, thank you to our witnesses for being here. Mister Yates, thank you for sharing your very personal story and thank you for your work. Uh, the scourge of the opioid crisis has stolen far too many lives. Across my home state of Rhode Island, too many families have an empty seat at the dinner table. Too many high school reunions have a classmate missing. Too many children are growing up without a parent. and too many communities are carrying the weight of a preventable loss. Over a hundred and fifty Rhode Islanders died of opioid overdoses last year. While we're making headway, there's still more work to do. Thanks to the work of Rhode Island's Overdose Task Force, first responders, health care providers, and harm reduction organizations, overdose deaths have declined. We have also expanded the use of overdose reversal medications like Naloxone to save lives. Just last December, Quick thinking Providence firefighters used Naloxone to save seven college students who overdosed at a house party. I'm leading the bipartisan having overdose protection equipment or hope act with Congressman Addison McDowell to ensure that these life-saving medications, are readily available in public spaces. But, expanding access to Naloxone alone is not enough to end this crisis. If we're serious about ending this crisis, we also have to stop these drugs before they reach our communities, a sentiment I've heard echoed. in this hearing today. That means confronting the flow of precursor uh chemicals used to manufacture synthetic opioids. China remains a major source of the precursor chemicals fueling this epidemic. While progress has been made in disrupting supply chains, traffickers continue to adapt faster than governments. The drugs entering our communities today are more potent, more unpredictable, and more deadly than ever. In the last few months, Rhode Island has seen a spike in opioid deaths from these new drugs, which are ten times more potent than fentanyl. Uh, sy- syclorophen and spy- uh, spiroclorophen, drugs that can require multiple doses of overdose, uh, reversal medications to survive. We need stronger international cooperation, better intelligence sharing, and sustained pressure on criminal networks, moving precursor chemicals and synthetic opioids around the world. Now historically we've worked with China to combat the flow of precursor chemicals from China, but the Trump administration has derailed our bilateral efforts in cooperation. The Trump-Xi summit in Beijing last month was an opportunity for uh the president to make progress, uh but we haven't seen any changes or updates on this urgent matter. So, Doctor Liu, what steps should the United States have pursued during the summit with China And what can we do going forward with them and other international partners to disrupt precursor chemical supply chains and prevent these substances from reaching the Western hemisphere?

Thank you very much for your question. I just say the most important thing, number one recommendation I just say is to um strengthen targeted sanctions, uh in addition to just broad sanction. I just say Congress should support the targeted sanctions against not just the Chinese, but foreign chemical suppliers in general. Part of the reason is because Even if we cut off suppliers from China, there are other places such as India that are remain to be major suppliers to international uh API market. And then, uh, to directly answer your question with regard to what happened during the Trump Xi summit, uh, I just say, um, that has been a following at at least in in May up so far, there have have been two announcement against announcement. Nothing proven uh to in terms of action yet. but two announcement coming from Chinese authorities with regard to tightening control of uh chemical materials flowing outside for flowing from China. But it's again, this is why I think Congress should ask, not just about proof of announcement, really following up with regard to actions.

Thank you. Well, we're what we're also seeing from the Trump administration is harmless programs aimed at combating the opioid crisis. Uh, the the administration has cut grant programs and fired expert working to combat the opioid crisis and respond to new synthetic drugs at the CDC and SAMSA. And they're proposing cuts to the international narcotics control and law enforcement grant programs that target the fentanyl supply chain by funding training, equipment, and other investigative capabilities in partner countries. So, uh, Doctor Liu, how would the cuts to these programs, uh, uh, and the firing of our expert staff impact the US ability to counter the flow of fentanyl uh precursors?

Unfortunately, funding cut directly reduce not just the expertise that can identify the flow of fentanyl trafficking but also, just the human power that can, we can afford to literally put people on the ground, put people in the lab, put people in the hospital, put people staffing schools to educate the children. And this funding cut directly affect how we can educate our children, in terms of the danger of early drug effect. uh addiction. And this is what where I want to address um uh Representative uh Vera, your question with regards to what extent China is suffering from fentanyl crisis. I have to say uh China, this is where China has a comparative advantage relative to America. They have in within China's education system, counter-narcotic start from kindergarten level. And this is why I think the Congress should fund not just funding program for hospitals, for preventative cares, but also fund school programs that can make sure our children are aware of the danger.

Thank you. I appreciate that sentiment and our work to protect our children and people of all ages from uh this terrible uh drug is so important. So I am grateful for your work and I yield back.

Thank you. I now recognize the gentlelady from South Carolina, Representative Bix.

Thank you, Madam Chair. And I'm grateful for our witnesses for being here today. So many families across the nation and across my district have lost loved ones because of fentanyl the fentanyl crisis. I was sitting here, um, Mister Yates, when you were talking about your personal story and thinking of people that I knew personally that have lost children or children that have lost parents or um as late as Saturday, I was at an event and talked to a gentleman who had just lost his wife, who I had recently met within the past year. And the stories are heart-wrenching and they're real, and they're happening in our own backyard. And it's, it's critical that we do something about it. Um, many American biotech and pharmaceutical companies, they're operating clinical trials in China. And to me that raises concerns about whether those trials operate with the same oversight over safety and ethics standards as trials that we hold here in the United States. If the FDA then approves these products, despite safety and ethics concerns, they should enter the United States. They could enter the United States and cause harm to the individuals that we've been discussing already. So, Mister Yeats, should the FDA tighten the requirements for approving chemicals that underwent clinical trials in China in your uh professional opinion?

Well, I do think that having uh better standards, better transparency, better accountability across the board is gonna matter in anything that has to do with exchange from China. Quality control is a major concern of having China as the dominant supplier of a lot of medical goods. Uh, I lived through the irony of my daughter being put in the ICU by illicit fentanyl. and the primary pain relief treatment for the brain swelling due to oxygen deprivation was legal fentanyl. Uh, and so we have these dual use areas, and so having the standards for the legal system doesn't protect you from the illicit supply chain. And that's why to me, the most important strategic move has to be strategic decoupling from China on the pharmaceutical supply chain, at least minimizing over-dependence. If we have a diversity of dominant supplies, we'll have a diversity of enforcement mechanisms, it will make Beijing's lack of enforcement, lack of standards on this illicit supply chain stand out better, and it's less of a US versus China issue as its best practices by many countries versus one that is not a responsible stakeholder.

Thank you for sharing that. Um, my background is in health care. I'm also a psych, mental health practitioner. So I've seen these um stories, real life stories up close and it is very personal to me. And given that and the focus of today's hearing, I wanna highlight a bill that I'll be introducing very soon to counter the biotech threats from China. As someone still serving in uniform, I know we can't afford to wait until the threat is already on the battlefield in our own communities, as we've already discussed, and China isn't waiting. It's racing ahead in the biotech field, and I think we can all um see that. It's very relevant. So, in order to collect um genetic data and s- strengthen its military or create diseases that are harder to to detect and to treat. Um, the National Security Commission on emerging biotechnology warned that if America does not act quickly we could fall behind in ways that we may never recover from. So, I would like input from all the witnesses. Do you believe that Congress needs to act now to make sure that America is prepared for this actual threat?

Thank you, Representative Biggs. Uh, I absolutely think that the United States should do everything it can now to get ahead of that problem and all other associated problems in this space. With the looming uh approach of artificial intelligence and artificial general intelligence and the likelihood that there will be far more synthetic opioids, uh, coming to the scene, everything that we can do now to pr- prepare for that, and mitigate problems associated that we should take.

Thank you.

I strongly support that line of thinking. Uh, I think if you look at what uh has been proposed with this PACS-SILICA collaboration on high-tech issues, I think that there's a similar logic that should follow biotech. And ultimately the logic behind it is getting the world's most advanced responsible stakeholders to accentuate cooperating among each other, to set sort of the rules of the road, be transparent and accountable, with one another and if China wants to rise to meet those standards then maybe you consider having China on the inside but you need to earn your way in to the circle of trust by performance. And that there's enough gravity among the wealthy, developed, strategically and technologically advanced countries to move this along. And I think we have new interests among our Arab allies in the Middle East, parts of Europe, and other key countries in Asia that could form a bedrock for this. And hopefully that positive agenda of setting standards and effective performance is a way of inducing China to behave better together with the stick that we have with penalties for failure.

I support uh the idea that a Ch- Congress should act now and act take all the measures possible to reduce our vulnerabilities in the context of prom- pro- protecting American lives but ho- but uh the caveat here is that drug development um does not only happening here in the United States, unfortunately. And what we our vulnerability, not just because we are not necessarily losing, you know, innovative's edge, is also because in the current context of AI enabled drug development, China simply has way much more data, way much more industrial power, uh, industrial capacity, industrial policy capacity than than us. So from that point of view, um, I do think this is a very urgent ma- However, we do not necessarily, we cannot completely cut China out of this entire supply chain. Now, I wanted to highlight uh a report.

Thank you. I'm I'm sorry, but I'm out of time. So I'll I'll yield back.

Yeah.

Thank you. Thank you.

Thank you. Um, so we're gonna go for a second round of questioning, and uh I'd like to talk about China. You know, they already know they are facing tremendous uh legitimate criticism for their role in the fentanyl supply chain. But you will hear Chinese propagandist, uh, they say that they have listed certain specific chemicals and precursors to block their sale abroad but they make those announcements like every now and then, every few months, often following diplomatic meetings like you, miss Liu, you mentioned uh when President Trump met uh Xi in San Francisco, they even organized uh I think it was Biden time, they had a working group on fentanyl i don't know what progress we've made but you know in the last uh shortly after trump and president xi uh summit in china last month beijing uh controlled an additional three precursor chemicals so what we wanna hear is what is the next step that beijing should take to show it is in good faith working with the united states on this issue uh you asked that we should be asking for inter-agency information or even demand real action instead of just making announcements uh in you mentioned the two summits uh since uh announcement that made since the two uh summit uh took place but i think there is much more that pr c could be doing to crack down on fentanyl trade from creating the like know your customer requirements closing down the uh known fentanyl producers preventing pr c illicit financing of the cartels and more so could you talk to us all three of you can talk about this uh couldn't china close these precursor factories anytime that it wanted to why isn't beijing doing it and just because china is incrementally banning certain precursors does that mean china is responsibly cracking down on drug trade i There are many out there, so any one of you can address those issues.

Yeah, thank you.

Thank you very much for the question. Theoretically speaking, yes, Beijing can. But in practice, there is this old Chinese saying, uh, wherever there is a policy from top, there is always a countermeasures from bottom. And this is why I say a fentanyl crisis, especially with regard to the supply chains, is really a governance failure inside China. China hasn't been consistently policing the entire supply chain. And on top of that, because of uh biotech as well as a pharmaceutical industry, it's a key area of industrial policy. As a result, you have local government incentivized industrial firms at local level. They compete against each other. From that point of view, it's very hard for the local government to police their own companies, period. So from that point of view, I'd conclude by saying that this is why we need to demand a follow-up. to demand um change in behaviors. Thank you.

Mr. Yates.

Well, I think to a certain extent, we often impose our logic on our counterparts when we're engaged in negotiation. Uh, I think it's useful to remember that President Obama, President Trump, President Biden, now President Trump again have all interacted with Xi Jinping about this topic. Uh, he has lied to all of them about enforcement. Uh at some point we have to draw the conclusion that we're dealing with essentially a mafia that's not getting out of the business. Uh and so it's only going to change if we are making it have to adjust its behavior. Uh the president I know has raised it at a at a personal level with Xi Jinping. We've had inter-agency groups that have worked back and forth. There is some cooperation that happens. Usually it will be intelligence that China will provide us. to enforce in our country. But it's odd that they can provide the intelligence to find these individuals in the United States, but are somehow not able to find factories that have to operate at a scale to kill half a million people. Uh, so these these cannot be things that are hiding underground.

Mm.

They are findable. And so it's a question of will. Uh, you know, there's for any of us that have been dealing with China for a long time, and the bad old days, and maybe still to today, uh when you were in you were engaged in a political crime you could be put to death and your family was forced to pay for the bullet.

Mm.

Who has been forced to pay for the bullet in China for what they've done to us? And if they did it, they would publicize it. They would want to be seen doing good. The people that have been designated so far haven't even been convicted. So to me it all comes down to will, and maybe we keep thinking we can negotiate a way out, but we can't.

Thank you. Mr. Luckey, you have final words.

Thank you Madam Chairwoman. Uh, first of all, I think it's very easy or much easier to change regulations or change laws than it is to enforce these laws. Uh, I'd like to add that the chemical production in China is the largest in the world. It's about four tenths of the entire chemical production on the planet, larger than the combined chemical production of the United States and the European Union. Um, with that, uh that uh chemical industry is roughly two trillion dollars uh of of business uh and I'd like to note that these illegally diverted chemical precursors make up only tens of millions of dollars or about one one hundred thousandth of the total amount of these chemicals that are produced so we sh need to be realistic about our expectations, yet with that a single fifty five gallon drum of chemical precursors can make perhaps millions of doses of illegal fentanyl, that can kill Americans. And uh, additionally, while we're concerned about fentanyl and fentanyl precursors now, we don't know what's coming next. And I'll just add where I started. Uh, the proof is in the pudding, we need to see enforcement on these actions if we're to believe that China is taking steps that we expect them to take.

Thank you very much. Ranking member Barra.

Thank you. Um, s So, Mister Luckey talked about where the majority of the chemical industry in the world exists. And we know a vast majority of the precursor chemicals for fentanyl are are coming out of China. Um, a lot of these chemicals have dual use, uh, as well. So, um, I guess I would ask each of the the. It's not my impression that there was a initial intent as they were building this industry to say, OK, these precursors are going going to fentanyl and fentanyl's gonna intentionally, um, cost American a number of lives. Criminals are very, um, creative. They realize the profit margin in this was great, um, because intent ma- matters. But now that we know the impact of what these chemicals do, we do have to compel them to say, maybe that wasn't your intent, but this is what's happening these chemicals are originating within china and we have to do everything we can to stop or at least um disrupt the flow of those chemicals to the extent possible um i do worry about you know legitimate companies legitimate american companies or european companies buying these dual use chemicals and then those chemicals getting diverted so i'd be curious about strategies on we've gotta go to the source and we've got to make sure they do the enforcement and hold them accountable for doing those enforcements especially if they're aware of quote-unquote legitimate chemical companies that are doing illegitimate actions. We've gotta go after those folks. How do we track those? And uh um we haven't talked a lot about the the pill presses as well. Is that another strategy of who's creating these pill presses? Who's buying these pill presses? Is there, I think the the chairwoman or Um, alluded to, you know, who's the, the, the end purchaser, are they a legitimate purchaser, how do we make sure? Are the, to me those are also strategies I think, um, we ought to think about. And then Miss Liu, you touched on just going after China, in and of itself may not solve this because you're starting to see industry prop up in India and elsewhere that, you know,

Well, we

so it's gotta be a, a whole, you know. government fair i guess i'd i'd ask any of you to are we thinking about that correctly

yeah thank you very much for the question i completely agree with your assessment uh on the one hand there is not no uh coherent grand strategy inside of china saying that i'm going they they are going to develop the world's largest chemical industry and pharmaceutical industry in order to poison american mines however their lack of acknowledgement their aloofness to not just their industrial policies impact on American industries, but also on the illicit uh fentanyl supply chain, that matters a lot. So this is why uh Congress should pressure China in terms of not just giving us promises, but also act. Now, the problem becomes how to act. If China can impose export controls and demand and user license verification on rare earth material, they can probably do that as well. Now, the problem of going down that route is that it's probably going to trigger a lot of negative consequences across the entire pharmaceutical supply chain, precisely for the reason you mentioned, because a lot of these chemical ingredient, they are not just APIs, they are input to other materials. So from that point of view, I think we should be very careful in terms of what are the chemical ingredient that is most critical and the very la very unlikely, very hard to be substituted to make synthetic fentanyl.

And just to follow up on that, um, I assume we can identify two or three very critical elements, as opposed to targeting forty elements, two or three that are critical to the the the chemical nature of uh of fentanyl, and target those.

Well, I think that the the answer to that today is yes, but that's gonna be a moving target, and that's why I think trying to build up the infrastructure to be able to monitor the flow of the material, but also to monitor the interaction with finances and other tools are going to be vital because there will be a fentanyl two point O, so to speak. Uh, and so it's vital that we f- we solve some of these issues in this current stage, because there will be more. But ultimately, I think we have to begin at the beginning, we have an over-dependence, there is a monstrously large manufacturing supply chain in one country. That by itself creates a number of challenges. You don't have to be for or against China, China good or bad, it's a bad idea no matter what. Uh and uh I still though think that beginning to address the problems does begin there because they are so large. Yes, there will be ancillary markets that pop up elsewhere. But if you demonstrate seriousness and effect with China as it is now, that will shape the behavior of the governments in the other jurisdictions about working with us and enforcing in the early stages before it gets too big.

May I ask a slight follow- follow-up question? Um, you know, one of the things I worry about, and I've, mister H, you alluded to it, um, you know, in the the methamphetamine space, we went after Sudafed, right, and clamped down on Sudafed. the chemical nature of meth has changed dramatically in terms of how the, and and it's become more toxic, um, in terms of neurocircuitry and everything else. And I do worry about that component of it. And, Mister Luckey, you've alluded to some of that as well, that, you know, if we go after the fentanyl today, you will then get fentanyl two point O or three point O. And I think we're seeing some of that, um, in our own streets. You know, I've read about in Philadelphia, a much more addictive um, and destructive form of fentanyl starting to pop up.

Thank you, Ranking Member Barra. Uh, interestingly enough, throughout Southeast Asia, China is the leading producer of precursors for methamphetamines as well. So, the chemical industry in China is obviously not just producing precursors for synthetic opioids, but precursors for other illegal drugs. Uh, and while we need to press uh China on enforcing the regulations and that it has in place, uh we also need to be working with uh international bodies such as the United Nation Office on Drugs and Crime and the International Narcotics Control Board, to assist them in getting ahead of the next crisis that we might be facing. Because for example, the chemical industry in India while not nearly as large as that in China is even less regulated than that in China. So what comes next could be in fact worse than what we're seeing now.

Thank you.

Great. Let me recognize Representative Moylan for your additional questions.

Thank you, Madam Chair. Um, I'm just reviewing this report here, the Chinese uh uh according to China Committee report, the Chinese government directly subsidized the export of at least seventeen illegal narcotics that have no legal use. Um, the PRC government even owns multiple fentanyl exporters. And this, of course, is not the behavior of a state that's working in good faith with the United States to crack down on fentanyl trade. So we're talking here about a government that is directly supporting a supply chain of death that kills tens of thousands of Americans per year. And the State Department reported in September that this support is still ongoing. So, mister Lucky, um, do you see any signs of China discontinuing this activity in support of fentanyl trade?

Thank you for the question, Representative Moylan. Uh, I I'd just uh focus on the fact that while I haven't done specific research on this recently it's perceived that most of the traffickers of these precursor chemicals that are being used to produce illicit fentanyl are not large organizations. It's not um major org uh criminal organizations and in fact it's likely very small, single person or single family run organizations. Uh, so the the the challenge is far greater than uh it might first appear, which makes redoubling the efforts even more important. On the other hand, regarding criminal money laundering, Chinese money launderers uh are perhaps the largest money launderers in the world, and so uh that would be a larger body of uh criminals that would be more easily affected by sanctions.

Uh, thank you. Uh, Mister Yates, when most picture the drug trade, they think of secret drug labs in the dark corners far away from law enforcement. But in China, factories producing fentanyl, a precursor, appear from the outside to be perfectly legitimate businesses. Uh, they have open doors, receptionists, and the like. Couldn't you say Beijing is allowing the trade that is killing so many Americans to happen in the open?

It's hard for me to judge that fairly because I feel personally affected. Uh, I feel an intent where others may not see the intent, but I think the net effect is the same. Uh, the what the Select Committee on Strategic Competition with China found was an immense amount of evidence that the government had written into its own regulations to reimburse the value-added taxes that were related to these transactions. And so when you have illicit gangs engaged in something, that's one thing. But when you have the actual government writing code that gives tax rebates to the companies that are involved in something that is illegal in China and illegal to export it gets back to that fundamental question are you negotiating with a government counterpart in good faith and my answer is no.

Thank you. Uh, Doctor, what specific indicators would you demonstrate that Guam is at an elevated risk due to our strategic geographic location as a destination or transit point for the flow of precursor drugs.

Thank you for the question. Uh, number one measurement is purely geographic distance. Guam is simply very close to the PRC homeland. And number two, just looking at the not the condition of ho- hospital facilities on Guam, And that literally makes Guam vulnerable. And thirdly, looking at human trafficking as well as the flow of people, even not just talking about human trafficking, just the natural flow of people. If Chinese people were able to walk the line and then go across Mexican border, come to US mainland, then there is another possible route. If they could potentially get a visa and then land in Guam through transit hubs like, uh, Seoul, and then The natural consequences could be imagined if that tourist visa holder turned out to be a drug trafficker. So from that point of view, geography, the condition of a hospital, and healthcare, um, as well as the visa or the mer- the blurred boundary between illegal and illegal uh immigrant makes Guam vulnerable.

Uh, thank you. What do you think we can, how can we deter possible exportations by transnational criminal organizations.

There are two perspective I'd say. One is from counter uh money laundering perspective, uh and this is where I think the PRC would have a strong incentive to work with America,

Oh.

because money laundering uh and directly related to a Chinese capital flight. And then secondly is about uh pressuring China to reduce their industrial subsidies to the chemical industry.

Thank you, all of you. Thank you, Madam Chair.

Thank you. You know, recognizing how deadly fentanyl is, you would think in a normal scenario, um, China could do more to block a broader list of these chemicals, which obviously can be used for fentanyl production. So do you think, um, it should be something that United States negotiators should be doing?

Thank you for the question. Um, I think China would not want to change. It simply will not change because of external pressure. China will change only if it realized that there is a cost for not just the Chinese people, but also for Chinese policymakers as well as for the Communist Party of China.

Mm-hmm.

And that cost would come from not just uh negotiation, but also pressure and the leverage. Now pressure and the leverage comes uh not just from tariff, but also through targeted sanctions. And the reason I emphasize targeted sanctions is because China has been actively building an alternative payment system that is based in renminbi. If China were able to broaden its renminbi-based fi- financial system, that is going to make China very hard to, uh, be deterred and very hard to be sanctioned. I'm not saying that an renminbi-based financial system is going to make China immune to US sanctions, but it's going to significantly weaken our sanction power.

Absolutely.

Do you wanna add to that?

I strongly support the idea of expanding the list. I think that it al- allows for uh some discipline to be imposed upon the legitimate industries. Uh, and if there's accountability there, it's the ultimately the legitimate industries that the illicit networks are parasitical beneficiaries. And so we might have a better chance of having people who are in the legitimate business having more power and will to enforce than talking to a government negotiator.

Thank you.

Thank you, Madam Chairwoman. I would recommend, first of all, scheduling uh illicit drugs and all precursors that are known to uh be used in the manufacture of those illicit drugs. And secondly, to the point of China's geostrategic interests, we need to provide incentives to make them want to comply and disincentives if they don't.

Thank you very much for those wonderful responses to all of our questions. I wanna thank the members for participating. And I wanna thank the witnesses for your valuable testimony. Thank you so much. The members of this subcommittee may have some additional questions for the witness, and we will ask you to respond to those in writing. Persuading to committee rules, all members may have five days to submit statements, questions, and extraneous materials for the record, subject to the length limitation so without objection the committee now stands adjourned thank you again for joining us.

good job guys thanks so much