Scoop: House ramps up China crackdown over fentanyl trade

Driving the news: Some members of the House Select Committee on the Chinese Communist Party are forming a new policy working group, Chairman John Moolenaar (R-Mich.) and ranking member Raja Krishnamoorthi (D-Ill.) told Axios first.

• The seven-member group will seek to boost sanctions, target money launderers, and explore trade reforms to cut off supply from China, the lawmakers say.

The big picture: The working group, led by Reps. Dan Newhouse (R-Wash.) and Jake Auchincloss (D-Mass.), will build upon the select committee's report earlier this year detailing the ways the Chinese government subsidizes the manufacturing of fentanyl materials.

• Reps. Neal Dunn (R-Fla.), Ro Khanna (D-Calif.), Dusty Johnson (R-S.D.), Ritchie Torres (D-N.Y.) and Michelle Steel (R-Calif.) will also serve in the group.

What they're saying: "From funding the manufacturing and export of illicit fentanyl precursor chemicals to holding ownership interest in companies tied to drug trafficking, the CCP is not only an active participant in the drug trade — they are directly incentivizing it," Newhouse said in a statement.

• The CCP "is essentially the central culprit behind the opioid epidemic," Torres told Axios last month. "97% of the fentanyl precursors are made in China."

Zoom in: The group will work to strengthen existing sanctions on entities involved in the fentanyl trade and draft legislation for new sanctions.

• Those entities include Chinese financial institutions "that launder drug proceeds for illicit chemical manufacturers and cartels," a committee spokesperson told Axios.
• The group will also target China-based apps "involved in money laundering and the fentanyl trade, such as WeChat Pay," by making them register as money services businesses.
• The lawmakers will focus on changing trade laws as well. They'll seek to lower the de minimis threshold that allows shipments under $800 to enter the U.S. with less scrutiny after the committee found fentanyl precursors often reached the country that way.

Context: The U.S. overdose death rate involving fentanyl almost quadrupled between 2016 and 2021.

• Chinese President Xi Jinping and President Biden made a pledge in November to curb the flow of chemical precursors to fentanyl. They also discussed the issue in April.
• Despite these overtures, Torres said he's "convinced that the CCP is stringing us along and we have to get tough."

Between the lines: Cracking down on China may not make the fentanyl epidemic disappear entirely.

• The production of fentanyl and its precursors is neither particularly technologically complicated or expensive, says Jonathan Caulkins, a professor at Carnegie Mellon University who studies the drug trade.
• "I don't know what would stop other companies or individuals in other countries or parts of the world from stepping in to start to take over the supply," Caulkins said.
• The U.S. also needs to strike a balance between pushing China to act without prompting unwanted retaliation, such as new sanctions on U.S. companies, says David Luckey, a senior international and defense researcher at RAND.

The bottom line: Still, while "there's no silver bullet" that will solve the fentanyl crisis, the U.S. should do everything it responsibly can to reduce deaths, Luckey said.

• "Disease, gun violence, car crashes, military operations — nothing is killing more Americans under the age of 50 than fentanyl," he said.

Go deeper: China's government is helping fuel the U.S. fentanyl crisis, House panel reveals