Key insights
- China's crackdown on fentanyl networks, a move long sought by the US, signals potential easing of trade tensions. Arrests of traffickers could lead to reduced tariffs and improved US-China relations, indirectly benefiting US equities by reducing trade war uncertainty. However, the impact is limited as the summit is postponed and the direct economic effect is small.
By Antoni Slodkowski
BEIJING, March 19 (Reuters) - China has arrested seven people and subjected 12 more to "criminal compulsory measures" in a campaign targeting traffickers in fentanyl precursor chemicals, state media said on Thursday, a move long urged by the United States.
For years Washington had pressed China for measures such as arresting the sellers of chemicals used to make the deadly drug behind thousands of U.S. overdose deaths each year, but it only issued industry notices and took down websites trading in them.
The official Xinhua news agency said a special campaign in the central province of Hubei resulted in 22 cases of crimes involving precursor chemicals for fentanyl.
The operation, targeting the entire supply chain, from production to storage and export of such chemicals, was launched in December after a directive from the public security ministry, the agency added.
After taking office, U.S. President Donald Trump cited China’s inaction when imposing tariffs of 20%, halved since he met counterpart Xi Jinping in South Korea last year, in exchange for a crackdown on the fentanyl networks.
News of China’s first widely-publicised legal action in years leading to arrests of traffickers follows weekend trade talks with the United States to prepare for a March-end summit of the leaders in Beijing, postponed for now by the war in Iran.