THE CHINA CONNECTION: GLOBALIZATION AND THE NARCOTICS TRADE

For all its global reach, there is something antiquated about the
drug trade. The story of a bag of cocaine peddled in an American
suburb, for instance, often begins in the Andes, where Quechua and
Aymara Indians have harvested coca for centuries.

Cooked in nearby labs and transported through Mexico into the United
States by Mexican cartels, cocaine's path to market is not unlike
that of a shirt - a straightforward chain from raw material in the
third world to finished product in the first.

Chemistry, and globalization, are changing this dynamic, however. The
unusual case of Zhenli Ye Gon, who was arrested in Maryland last week
following the discovery of $205 million of alleged drug money in his
house in Mexico City, underscores how the same process of global
sourcing that ripped apart the integrated industries of the 20th
century, replacing them with networks of production scattered around
the globe, is reconfiguring the drug trade, too.

Mr. Ye Gon, who was born in Shanghai, migrated to Mexico in 1990 and
became a Mexican citizen five years ago, is accused of illegally
importing into Mexico tons of pseudoephedrine and other chemicals
from China and other countries to supply methamphetamine labs run by
Mexican drug cartels in Mexico and American border states.

The new Mexican-made drug has virtually replaced American homegrown
meth, which used to be made by small producers that often sourced
their pseudoephedrine at the local pharmacy. Seizures of imported
meth along the southwest border increased from 2,706 pounds in 2003
to 4,346 pounds in 2005. The number of methamphetamine labs seized
nationwide plummeted from 10,212 to 5,846 over the same period.

This shift of the meth supply is changing the American market for
illegal substances. The National Drug Intelligence Center reports
that nearly 40 percent of state and local law enforcement officials
nationwide say meth now represents the greatest drug threat to their areas.

Stopping large-scale traffickers who can source raw materials
anywhere around the globe will make interdiction much more difficult
for law enforcement. Mexico has seen a surge in illegal imports of
pseudoephedrine from China and Germany. According to officials from
the United States Drug Enforcement Agency, India is another source.
These shipments are not easy to track. Mexican law enforcement
officials noted that many of Mr. Ye Gon's pseudoephedrine shipments
to Mexico passed unnoticed through United States ports with fake documents.

This pattern of global sourcing also points to big changes in the
economics of Mexican crime. Following Mr. Ye Gon's arrest, the head
of Colombia's national police warned that Mexico and Colombia would
have to prepare to do battle against Chinese and Russian organized
crime. Mr. Ye Gon is the first Chinese-born to be charged of drug
trafficking in Mexico in at least a decade, according to Mexican news
media reports.

But the irruption of Mr. Ye Gon into Mexican drug trafficking is also
emblematic of much broader changes as Mexico adapts to China's
emergence in the global economy.

For at least a century, successive Mexican governments have been wary
of China. Chinese immigration to northern Mexico in the earlier part
of last century was often met with violence. In 1911, troops loyal to
general Francisco Villa massacred 250 Chinese in Torreon. In 1921,
president Alvaro Obregon passed a law barring future immigration of
Chinese workers. In 1931, thousands of Chinese were expelled from the
country. Until recently, Mexico's economic ties to China were
tenuous, at best. A decade ago, Mexico imported merely $1 billion
worth of Chinese products.

Yet the bilateral links have grown. Last year, Mexico imported $24.4
billion in Chinese goods. Fears of competition from China, and its
enormous and inexpensive labor force, have grown apace. Reports in
recent years that some of the maquiladora plants along Mexico's
northern border have decamped to China have sent Mexicans into
paroxysms of economic anxiety.

The saga of Mr. Ye Gon suggests that this rivalry is now extending
into the most insatiable consumer market in the world.