The CCP Laying the Ground Work 1985-2011

Third in a series of six articles on the CCP’s Reverse Opium War

The Canadian intelligence report known as Project Sidewinder, officially titled Chinese Intelligence Services and Triads Financial Links in Canada, was a joint investigation by the Royal Canadian Mounted Police (RCMP) and the Canadian Security Intelligence Service (CSIS) in the 1990s. The report, issued in June 1997, alleged that the Chinese Communist Party (CCP) collaborated with Chinese organized crime groups, notably Triads, and wealthy Hong Kong tycoons to establish a network in Canada aimed at advancing Beijing’s strategic interests.

Key findings from the Sidewinder report included:

• Collaboration Between CCP and Triads: The report suggested that Chinese intelligence services and Triads worked together to conduct intelligence operations in Canada.

• Influence Through Financial Ventures: It alleged that financial ventures in Canada served to conceal criminal or intelligence activities, including money laundering and heroin trafficking.

• Political Influence: The report claimed that the CCP sought to gain influence in Canada by providing financial support to major political parties, thereby accessing influential figures in Canadian society.

Despite its findings, the Sidewinder report was met with resistance within the Canadian government, possibly due to pressure on Canadian officials from the CCP. It was deemed controversial, and efforts were made not only to suppress its contents, but to destroy all copies of the report. However, copies of the report were leaked to the media in 1999, bringing its allegations to public attention.

In subsequent years, investigations and reports have echoed concerns similar to those raised in Sidewinder. For instance, the "Vancouver Model" describes how Chinese organized crime groups launder drug money through Canadian casinos and real estate, with funds often originating from narcotics trafficked from China.

These developments suggest that the concerns highlighted in the Sidewinder report regarding the CCP's leveraging of Chinese organized crime in Canada for drug trafficking and money laundering have persisted and evolved over time.

From the mid-1980s to 2011, the People’s Liberation Army (PLA) of China increasingly viewed drug proliferation as a strategic tool in the broader context of asymmetric warfare against the West. As the PLA shifted its doctrine from Maoist "people's war" to "Local Wars Under High-Tech Conditions," military think tanks began identifying and exploiting U.S. vulnerabilities, including widespread drug addiction, social fragmentation, and reliance on global financial systems. Internal studies conducted during this period laid the groundwork for what would later be popularized in the 1999 book Unrestricted Warfare by Generals Qiao Liang and Wang Xiangsui. These studies explored the use of narcotics trafficking, economic destabilization, and psychological warfare as non-traditional means of weakening Western societies. While Unrestricted Warfare is often seen as a milestone, its core concepts—including the strategic use of drugs as a weapon—had already been under consideration within PLA and Ministry of State Security (MSS) circles more than a decade earlier.

During the 1980s and 1990s, the Chinese Communist Party (CCP), through the Ministry of State Security (MSS) and United Front Work Department, laid the groundwork for what can be interpreted as a "Reverse Opium War"—a long-term strategy to weaken Western societies through indirect means, including narcotics trafficking, infiltration, and societal destabilization. The MSS intensified its intelligence operations across overseas Chinese communities, particularly in Hong Kong, Taiwan, Southeast Asia, and major Western cities with significant Chinatowns. These operations were not merely about surveillance; they focused on mapping law enforcement vulnerabilities, understanding social tensions, and embedding agents within local organized crime structures.

Catalyst of the Covert War

One striking example of the convergence between organized crime and state protection is the case of Lai Changxing and the Fujian smuggling network. While officially portrayed as corruption and profiteering, the scale of Lai’s operations—and the high-level political cover they enjoyed—suggests they were a strategic trial run in weaponizing underground economies.

WideFontain’s read of the situation holds that Lai’s relocation to Vancouver in 1999 was not simply an escape from prosecution, but the result of a covert arrangement between the Ye-Xi clique and Jiang Zemin, forged amid internal CCP tensions between reformists and hardliners. In Canada, Lai helped establish the “Vancouver Model”—a fusion of money laundering, transnational crime, and political influence—that became a key front in the CCP’s long-term strategy known as the Reverse Opium War. Backed by powerful figures such as Ye Xuanning, Lai’s network served as more than a criminal enterprise—it functioned as a prototype for gray zone operations that combined elite corruption, diaspora infiltration, and global financial manipulation in pursuit of broader strategic objectives. For a deeper dive, see Ye-Xi Clique III – The Untold Story of Lai Changxing on this Substack.

Simultaneously, the United Front expanded its influence by integrating with Hong Kong triads and Macanese underworld networks under the guidance of leaders such as Ye Xuanping and Ye Xuanning. These networks were instrumental in intelligence gathering, influence operations, and potentially narcotics distribution. By embedding the CCP’s interests within organized crime structures and diaspora institutions, the United Front created a shadow infrastructure capable of destabilizing target societies through covert influence and drug proliferation. Taken together, these activities reflect a calculated and long-term strategy—what could be described as the preparatory phase of a "Reverse Opium War" aimed at turning Western vulnerabilities into strategic assets for China.

In the late 1980s, Chinese Communist Party (CCP) think tanks and internal research bodies closely studied the U.S. drug epidemic as part of a broader effort to understand how narcotics could be used as tools of destabilization. By translating and analyzing RAND reports, DEA case studies, and academic work on the crack cocaine crisis, the Iran-Contra scandal, and CIA-linked drug operations, Chinese strategists gained insight into how narcotics could undermine institutions, fuel corruption, and erode public trust. This research was not merely observational—it informed planning for potential asymmetric offensives. At the same time, heroin and methamphetamine production in China’s Yunnan province and the Golden Triangle was tolerated or quietly facilitated by local PLA units. Far from being purely a matter of corruption, this may have represented a form of strategic hedging, preserving the option to direct narcotics westward as a weapon against Western societies in a future confrontation.

CCP Revenge Narrative

In elite Chinese Communist Party (CCP) circles, a deeply embedded revenge narrative—rooted in the national trauma of the Opium Wars—has shaped long-term strategic thinking, particularly since the 1980s. The CCP’s portrayal of the Opium Wars as a deliberate Western assault using narcotics to cripple China culturally and politically has created a historical justification for asymmetrical retaliation. This mindset, intensified by patriotic education campaigns after the 1989 Tiananmen crackdown, reframed nationalism as a moral obligation to "reverse the tide" of Western domination. Elite military and intelligence figures, such as Ye Xuanning, have advocated for a “Reverse Opium War” strategy that weaponizes narcotics, propaganda, and criminal networks to erode Western societies from within—actions framed not as aggression but as righteous payback. Institutions like the PLA’s National Defense University embraced this through doctrines on “cognitive warfare” and “silent counterattack,” while organized crime operations in Hong Kong, Macau, and Canada became covert tools of strategic revenge, enabled by state-linked networks and protected figures like Lai Changxing and Ng Lap Seng.

Historical Context

Three things happened within six months of each other that created a mindset within the CCP that may have helped encourage the revenge narrative. The first event, in June 1989, was Tiananmen, the second, in November 1989, was the Fall of the Berlin Wall and break up of the Soviet Union; both events represented existential threats to the CCP. However, the third event may have had the greatest impact on CCP elites, perhaps enough to put the revenge narrative into action. In May 1990, Xu Jiatun, China’s top official in Hong Kong, defected to the United States. Xu, who had been posted in Hong Kong for seven years at the time of his defection, was so highly regarded in the CCP that many saw him as the next General Secretary. Xu had already served as governor of the Jiangsu Province, one the largest and richest provinces in China, he was known as one of the least corrupt and most liked officials in the Party. The elite within the CCP assumed the worst in Xu’s defection – that he was wooed by the U.S. and that he shared all China’s secrets with American intelligence experts. However, Xu Jiatun’s defection had little to do with politics and had more to do with personal reasons. He reportedly gave very little in the way of intelligence to the U.S. Unfortunately, the impact of his defection seemed to have pushed hardliners clear over the brink and they adopted the U.S. as their arch nemesis.

Taken together, the events from 1985 to 2011 reveal not an isolated pattern of corruption or opportunistic criminality, but a deliberate and evolving strategy by the Chinese Communist Party to turn narcotics, organized crime, and diaspora influence into instruments of state power. From Project Sidewinder’s early warnings to Lai Changxing’s protected role in Canada, from PLA-linked narcotics production in the Golden Triangle to the intellectual groundwork laid by Unrestricted Warfare, the evidence suggests a long-term effort to undermine Western societies through covert, deniable means. This “Reverse Opium War” strategy—rooted in historical grievance, weaponized through criminal syndicates, and shielded by elite political networks—signals a chilling shift in geopolitical conflict, one where fentanyl and financial manipulation are deployed with the same intent as tanks or missiles: to weaken, disorient, and ultimately control the adversary without firing a shot.