State Crime: China Architect and Beneficiary of Global Racket

A recent report from the U.S.-China Economic and Security Review Commission (USCC), titled "China's Exploitation of Scam Centers in Southeast Asia" and published on July 18, 2025, reveals the alarming growth of industrial-scale scam centers operated by Chinese criminal networks in Southeast Asia. These centers steal tens of billions of dollars annually from victims worldwide, constituting a criminal enterprise that, in scale and sophistication, rivals the global drug trade. The report highlights how these operations are fueling corruption and violence in the region, undermining the sovereignty of local governments, and promoting human trafficking. Simultaneously, China is reportedly exploiting the problem to increase its leverage and security footprint in Southeast Asia, while American victims have become a primary target, with estimated losses of $5 billion in 2024 alone.

Creadit Extrema Ratio

Operational and Financial Details of Scam Centers

Chinese criminal networks, often with ties (some overt, some deniable) to the Chinese government through patriotic rhetoric and support for the Belt and Road Initiative (BRI), have expanded their operations across Southeast Asia. These organizations initially focused on illicit casinos and online gambling facilities before pivoting to scamming, following anti-corruption campaigns and crackdowns on online gambling in China starting in 2012. During the COVID-19 pandemic, they converted empty hotels and casinos into compounds specifically dedicated to "pig butchering" scams and other forms of online fraud, exploiting forced labor.

These scams are highly sophisticated and constantly evolving, employing advanced technologies such as translation software, generative artificial intelligence (AI) chatbots, and AI-powered face-changing technology to ensnare victims and evade detection. Scammers build personal relationships with victims, often through social media and dating apps, before convincing them to invest in fraudulent financial schemes. The illicit proceeds are then laundered through thousands of digital wallets and money laundering services advertised on encrypted messaging apps.

The report estimates that in 2023 alone, pig butchering scams generated $63.9 billion in global revenue. Burma, Cambodia, and Laos are currently the epicenter of these operations, producing approximately $43.8 billion in revenue in 2023, equivalent to about 40% of their combined official gross domestic product (GDP). The explosive growth of these centers has also fueled large-scale human trafficking; as of August 2023, the Office of the UN Commissioner for Human Rights estimated that 220,000 people from dozens of countries were being held as forced laborers in scam centers in Cambodia and Burma alone. These victims, often lured with fake recruitment ads, are forced to work long hours in conditions described as "modern slavery," guarded by armed personnel and subjected to brutal beatings if they fail to meet quotas or attempt to escape.

Focus: Chinese Government Support and Geopolitical Implications

The report emphasizes how Chinese criminal groups have promoted China's Belt and Road Initiative (BRI) and CCP propaganda to gain Chinese government support. Notorious syndicates have invested heavily in infrastructure projects branded under the BRI, helping to build the physical and digital backbone of their scamming operations. In turn, Chinese officials and state-owned enterprises (SOEs) have backed these projects despite their ties to transnational crime.

The case of She Zhijiang, a convicted criminal who launched the $15 billion "Yatai New City" project in Burma, is a prime example. Despite his criminal history, Chinese officials embraced the project, with the official Xinhua news agency and Global Times promoting it as a "model for deep economic and cultural cooperation between China and Myanmar" and an example of private entrepreneurs contributing to the BRI. Yatai New City subsequently became "the largest hub for sophisticated Chinese online scam syndicates" in Southeast Asia.

Similarly, Wan Kuok-Koi, known as "Broken Tooth," former head of the 14K triad, strategically rebranded himself as a patriotic pro-CCP businessman, founding associations that disseminate pro-Beijing propaganda. The Chinese government has not taken action against his criminal enterprises, suggesting a willingness to tolerate criminal groups that support Beijing's agenda.

Impact on Security and Corruption in Southeast Asia

Chinese criminal operations linked to scam centers are undermining security and fueling corruption in Southeast Asia. In Burma, scam centers have helped finance both the military and ethnic armed organizations (EAOs), with billions of dollars in annual revenue used to purchase weapons. Reports indicate close coordination between the military government and the criminal groups operating these centers.

In Cambodia, high-level government officials have deep ties to Chinese criminal networks operating scam centers. Hun To, a cousin of the prime minister, is on the board of directors of Huione Group, which has been accused of laundering hundreds of millions of dollars from online scams. Sar Sokha, the current Minister of Interior responsible for cracking down on scamming, previously partnered with a well-known China-born criminal to construct a notorious scam center.

Laos is also deeply affected by corruption linked to these groups. The Lao government holds a 20% stake in the Golden Triangle Special Economic Zone, fully operated by Chinese criminal boss Zhao Wei's Kings Romans Group, a hub for scam centers long associated with drug trafficking and wildlife smuggling.

In the Philippines, online gambling hubs (POGOs) often served as fronts for scam centers by paying off police and officials. Although the Marcos Administration banned POGOs in 2024, local government and police complicity have enabled some criminals to evade punishment.

Expansion of China's Security Presence

China has exploited the problem of scam centers to expand its influence and security presence throughout Southeast Asia. In the Philippines, scam centers have allegedly been linked to Chinese espionage efforts, with police raids uncovering sophisticated listening equipment and evidence of Chinese state-sponsored hackers operating from these compounds. The case of Alice Guo, a former mayor accused of being a Chinese national and spy, further underscores these concerns.

Beijing has used the issue of Chinese transnational criminal organizations in Southeast Asia as an excuse to pressure regional countries into agreeing to a greater role for Chinese security forces. For example, China and Laos agreed to strengthen law enforcement and security cooperation in May 2023. Similarly, Cambodia's Minister of Interior agreed to deepen joint law enforcement cooperation with China in September 2024. In January 2025, China hosted a meeting of the Lancang-Mekong Law Enforcement Cooperation mechanism, where parties agreed to strengthen intelligence sharing and joint operations.

China has also successfully pressured Thailand, a U.S. treaty ally, to permit Chinese security forces to operate within its borders. Following the abduction of a Chinese actor in Thailand in January 2025, Chinese tourist arrivals reportedly dropped significantly, prompting the Thai Prime Minister to vow to "strengthen law enforcement cooperation with China." This led to cross-border raids in Burma, resulting in thousands of Chinese citizens being turned over to Chinese personnel in Thailand for repatriation.

Countermeasures and Future Challenges

The report indicates that China's selective crackdowns on scam operations targeting Chinese victims have incentivized criminal groups to target Americans instead. In 2024, China reported a 30% decrease in money lost to online scams, while the United States saw a 40% increase. Criminal networks found it comparatively less risky to target Americans due to increased surveillance and stricter controls within China's banking systems.

Despite U.S. government efforts, such as the FBI's Operation Level Up and Treasury Department sanctions, the threat continues to grow rapidly. The report suggests that devices confiscated by Chinese security forces during raids likely contain sensitive personal data of American scam victims, which China has been unwilling to share.

The report concludes that current U.S. efforts are fragmented and under-resourced. Without a coordinated push to raise public awareness, equip law enforcement, and take aggressive action to expose and deter these scams, American losses will almost certainly escalate. It is crucial for the U.S. government to work with technology companies and financial intermediaries to develop systems and procedures to detect and stop sophisticated new scams. Furthermore, strengthening relationships with Southeast Asian countries and helping them build capacity to tackle scam centers is vital to prevent these countries from becoming increasingly reliant on China to address transnational crime.