‘Kidney Slicers’: The Nasty Business of China-Myanmar Telecom Fraud
Chaos on the southern border. “Pickup trucks full of men with guns, and no traffic lights. All I could think at that moment was that I was really done for.”
As the Burmese junta launches new campaigns against the ethnic militias of the Shan State, the flames of war in Myanmar have begun licking at China’s southern border, but tamping down chaos in the borderlands has occupied the Chinese state for most of its modern history. It was to the wilds of Burma that the Nationalists fled in the 1950s — the same destination for restless Red Guards in the 1960s and 1970s, as well as black-market entrepreneurs in the 1990s and 2000s.
Given the history of the region — replete with gun fights, CIA intrigue, and mule trains loaded down with heroin — the latest threat might seem a bit quaint: the de facto independent states that China shares its border with have become a center for telecommunications fraud.
this new trade have come lurid headlines about the gǎyāozi 嘎腰子 gangs — human traffickers whose alleged doings recall urban legends about gangsters that would cut out the kidneys of unlucky souls lured into their trap. Otherwise decent young people, persuaded by the promise of high salaries at white-collar jobs, migrate south of the border, only to be forced into indentured servitude to criminal scammers. Some of those luring Chinese citizens to work in Myanmar have become online celebrities through slick videos on Douyin 抖音. (The Myanmar scam business is even the subject of a 2023 crime flick called No More Bets 孤注一掷.)
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The phone scams themselves should be familiar, since they operate much the same as anywhere else. The usual pattern is this: someone — quite often an elderly person, less cynical than their descendants, perhaps, and likely with some money in the bank, or sometimes lonely middle-aged folks — picks up their phone and is alerted to a terrifying situation with their financial portfolio, personal computer, or family members, which can be remedied only with the transfer of a sum of money. Or: a lonely soul somewhere out there on the internet clicks open a messaging application or an email and finds themselves falling in love with a remarkable stranger, who suddenly needs quick cash.
This is big business in China. In 2021, a banner year for law enforcement, police solved close to half a million cases of telecommunications fraud. These ranged from run-of-the-mill scams like the one detailed above to more complicated identity theft and extortion operations. More than 600,000 individuals were charged that year.
It is hard to run phone scams out of China. Once law enforcement inside the country was given the mandate, the manpower, and the high-tech tools to wipe out domestic wire fraud, they were quite successful: the number of cases and arrests for telecommunications fraud has now fallen. Increasingly, anyone wishing to dabble in wire fraud, online gambling, or webcam pornography operations has rushed out of China and into jurisdictions around Asia.
The Chinese police went after them with vigor. The Ministry of Public Security organized a campaign in 2019 called Operation Cloud Sword 云剑行动, which provided a framework for cooperating with foreign police and intelligence services to snatch Chinese criminals abroad.
Beginning in 2019, headlines showed arrests of thousands of Chinese nationals around the region. 800 Chinese nationals — alleged fraudsters — were arrested in Ulaanbaatar in October of 2019, and then immediately deported to China. In September 2019, police rounded up hundreds of Chinese nationals in coordinated raids in the Philippines. In Malaysia, 680 Chinese nationals were arrested in a single sweep. More than 100 Chinese nationals alleged to be members of a fraud ring were deported from Laos. Before the year was up, 127 Chinese nationals were arrested in Cambodia for running telephone extortion scams and illegal online casinos.
That all provides only a snapshot of arrests related to Operation Cloud Sword: in a December 2019 press conference, the Public Security Bureau 公安部 announced that more than 2,000 individuals from fourteen countries were turned over to Chinese authorities and repatriated to stand trial. And the efforts of Chinese police were further aided by the onset of the pandemic, as it restricted the movement of people.
The top half of Myanmar, then, became the obvious choice for scammers: not only were the de facto states of the borderlands more generally receptive to gray- and black-market enterprises and seemingly beyond the reach of Chinese authorities, but they could be reached through established overland smuggling routes.
Much of the border between China and Myanmar doesn’t actually separate China from Myanmar — the Republic of the Union of Myanmar, run since its 2021 coup by the military junta known as the Tatmadaw — but rather from a number of de facto independent states. The northern stretch of the border is usually under the control of the Kachin Independence Army, which has been involved in a bloody war with the junta for the past decade. Further south, the main areas of cross-border transit nominally within Myanmar are Kokang 果敢 (run by an ethnic Chinese group descended from Ming- and Qing-dynasty migrants) and the Wa State 佤邦, where — through a peculiar legacy of Chinese Communist Party support for the anti-Tatmadaw Communist Party of Burma — the official language is Chinese.
For years, many of the states and ethnic militias along the border have used legal and illegal cross-border trade to fund their fight against the Tatmadaw. Chinese entrepreneurs have also set up shop in the region, seeing an opportunity to make money with minimal red tape. Some of those businesses are involved in above-ground industries like logistics, telecommunications, mining, timber, hospitality, and retail. Some are plugged into darker sectors of the economy like narcotics, the smuggling of poached animal parts, human trafficking, prostitution, and underground gaming. Telecom fraud has joined this frontier economy in Myanmar.
The scam industry persists with the blessing of local authorities in these de facto states — as well as legitimate investors and inland Chinese criminal groups, who are the source of expertise, equipment, and manpower.
Over the past several years, as scam operations have moved into Myanmar, lurid headlines have frequented Chinese media, detailing not only the fraud operations themselves but also the people lured to take part in them.
Many of the stories involve criminal gangs in Kokang, a territory intermittently claimed by China and home since the sixteenth century to an ethnic Chinese population. Since the 1990s, they have become a center for entrepreneurial players from north of the border, who have made fortunes off of the sex trade and casino gaming. On top of its history of illicit business, it has the necessary communications infrastructure to service phone and internet scammers, and a mobile network provided by China Unicom and China Telecom.
“Pickup trucks full of men with guns,” one account of a human-trafficking victim of a town near Laukkai 老街 begins, “and no traffic lights. Everywhere I looked, it was either phone-fraud companies or entertainment complexes [yúlèchéng 娱乐城, associated with not only karaoke and dance halls but also prostitution]. All I could think at that moment was that I was really done for.”
The victim here — his name is given as Li Wei 李伟 — was marched to a dormitory in a nine-story office tower and locked in for the night. As he tells it, he had been kidnapped on the way to taking a legitimate position in Yunnan 云南 and sold to the scam firm:
On that first day, the person in charge of the phone scam company provided the captives with several hundred sheets of A4 paper loaded with scammer lingo to serve as “training material,” and then gave them an ultimatum: “If you’re willing to work, you’ll get 500 yuan [about US$70] every ten days, and if you don’t want to work, your family can send us a ransom of 200,000 yuan [about US$27.5k].” After scanning the documents, Li Wei realized that the company specialized in romance scams. He was required by the script to refer to his target as “baby.” No matter if the target was in a good mood or a bad mood, he was to stick to the script. “For example, let’s say ‘baby’ isn’t feeling good today: you need to ask for a 520-yuan hóngbāo 红包 [a WeChat feature, now replicated by competitors, which allows the exchange of cash gifts].”
Another account by someone tricked into a high-paying job in Myanmar describes how things operate in the Wa State. Unlike Kokang, the Wa State has a reputation for being fairly stable. Run by the United Wa State Party and the United Wa State Army, it has until recently been spared (relatively speaking) from the violence that followed the attempts to end the independence of the ethnic militias and incorporate them into a unified force. One article published last year on Chinese blog Sohu 搜狐 described the scene this way:
The local warlords prepare the [high-tech] park and then recruit technology companies to operate in it. Of course, the high-tech park is only a front, with most of the companies operating there being online gambling or fraud operations. The park is sealed off to outsiders. [The military] deals only with collecting taxes and dividing up profits.
Xiao Luo [the pseudonym for the victim] said that [the Chinese workers] worked from ten in the morning to ten at night, every day. The internet connection was very poor at first — it was difficult to even open a website and conduct their scams. Later, management invested hundreds of thousands of yuan into network equipment, after which their work proceeded more smoothly.
Xiao Luo’s work was mostly romance scams, too. He calls them shāzhūpán 杀猪盘 — the hog-slaughtering game. The targets were older gay men and middle-aged women. The usual practice was to download all the content from a Douyin or WeChat account, then send out messages to active accounts with low engagement and some signs of disposable income and loneliness (he advises to watch out for cars and expensive dinners-for-one, and skip anybody that grouses about public transit, lovers, and convenience food). The scammers would adopt the persona of the account whose content they lifted, play on the insecurities of Mr. or Mrs. Lonely Heart, and wrangle out of them personal information and money shifted through WeChat or Alipay.
Out of any money collected, a third went to the local military authorities, with the rest divided up between the supervisor and management, with a more modest cut to the scammer themselves. Xiao Luo described rampant corruption in the organization, with individuals routinely being cheated out of their cut of the profits. Anyone who complained risked being sent to spend a couple days in a shuǐláo 水牢 — a water cell — in which the victim is lashed to a beam in a submerged room, their head just above the waterline. Videos circulating online show other punishments, with victims being forced by supervisors to kneel in stress positions, or electrocuted and beaten by them.
Mirroring popular American opinion on cartel violence and the narcotics trade in northern Mexico, Chinese commentators most often place the blame on Myanmar itself and call for robust measures to defend the homeland.
The journalist who reported the story of Xiao Luo editorializes at the end of the piece:
It comes down to Myanmar being unable to deal with the warlords, resulting in the formation of rival factions. The warlords need to make money to feed their armies — they do whatever can turn a profit the quickest, whether that's in gambling, drugs, or prostitution. They have no interest in patiently developing the region, leading to a situation where law and order are not equally distributed across the nation; this leads to deformed social phenomena.
Fraud is but one of the disfigured faces of this country. When a country cannot even unify and is overrun by warlords, there is no way that it can bring order and security to its citizens.
A pseudonymous writer for the nationalist outlet Guancha 观察者 has this to say:
Criminals in northern Myanmar use the border as a shield to execute their illegitimate schemes, brazenly harming the personal and financial safety of Chinese citizens. I believe that, with regard to such illegal activities, we should not simply sit by our hearths waiting for the criminals to boot down the door — by which point their plans will have come to fruition and it will be too late to do anything.
As the saying goes, thieves have all the time in the world to carry out their schemes, but nobody can devote their lives to keeping them out [or, in other words, it’s easier to attack than to defend]. To take injury passively is absolutely not the correct way to handle the situation. In fact, to do so might harm the social governance of our own country. Chinese state power must take the initiative in resisting the enemy at the border — and in particular, special efforts to achieve breakthroughs in cross-border law enforcement and institutional international law enforcement cooperation.
It is certainly true that chaos over the border is down in large part to the misrule of the Burmese junta and the criminal enterprises with which local ethnic militias have cooperated, but there is a long history of symbiotic disorder. The Nationalists threw the northern half of Myanmar into an uproar beginning in the late 1940s and early 1950s that only ended when the Americans ordered Chiang Kai-shek to begin airlifting his men back to Taiwan. Official Chinese assistance for the Communist Party of Burma, enemies of the Tatmadaw, fueled conflicts in the Shan State, and looking the other way on Chinese patronage of the casino business let the industry balloon into a monster.
It seems the same is true with telecom fraud. While local authorities take their cut, these operations are run by entrepreneurs from up north. The Chinese are scamming the Chinese, even if the Wa State and Kokang are content to let them do it.
And conditions inside contemporary China — especially in underdeveloped southern provinces like Yunnan and Guizhou 贵州 — are part of the story, too. However one parses official and estimated figures for youth unemployment in China, one thing is clear: there is a steady supply of young people who are willing to take the chance on running across the border to Myanmar, even as horror stories fill the press. Some young people have even returned to Myanmar after they’ve been rescued. (The scammers, meanwhile, may feel justified in what they do: to put it generously, they are young, impoverished strivers expropriating the wealth of generations of urban residents who enjoyed benefits they did not.)
In the end, it will likely not be Chinese cross-border law enforcement efforts that bring about the end of telecom fraud in northern Myanmar. There is not much appetite in China for intervening more thoroughly in Kokang or the Wa State. Although China has official and unofficial connections to the ethnic militias (indeed, they usually fight with Chinese rifles), there are risks to openly supporting or attacking them: China seems to have wagered on the junta clearing up their restive borderland and appears to be counting on them to deal with the scammers, so they are still — with some restrictions on and tension in the relationship — publicly on the side of the military government.
For now, until one side gains more complete supremacy in the conflict, the Chinese goal is apparently to keep their citizens out, either through publicizing the dangers of travel to Myanmar, or fortifying the border fence. The most likely turn of events now seems to be the chaos becoming overwhelming.
The outbreak of fresh fighting in the borderlands and the likelihood of the conflict between ethnic militias and the central government continuing for years to come could succeed in driving the scammers out to some more distant frontier — and perhaps carving out space for bolder criminals, whose business can be conducted with bullets whizzing overhead.