For years, Myanmar’s borderlands functioned as a shadow economy where cyber fraud, human trafficking, and political power quietly converged. Scam hubs like Laukkaing and Shwe Kokko did not arise from state collapse alone—they were actively enabled by protection deals with militias, tolerance from military elites, and alignment with China’s regional priorities. This article argues that the scam economy was a political system, not a criminal aberration, tracing how Chinese syndicates transformed casino towns into global fraud factories generating tens of billions of dollars while enslaving hundreds of thousands of workers. While Beijing’s escalating crackdown has dismantled prominent families and forced Myanmar’s junta into visible compliance, it has disrupted personalities rather than structures. The fall of these empires marks a shift in who controls the borderland economy, not its end, and the industry is far more likely to adapt and relocate than disappear.

When a group of elderly men in blue vests were escorted off a plane in Beijing in early 2024, flanked by helmeted police officers, the images were meant to send a message. Among them was Bai Suocheng, the patriarch of one of Myanmar’s most notorious criminal families—a man who, for two decades, had ruled parts of the country’s northeast borderlands with near-total impunity.

In November 2025, that message was reinforced. A Chinese court sentenced Bai and four other senior figures of the Bai family syndicate to death, convicting 21 relatives and associates on charges ranging from fraud and homicide to human trafficking. The verdict marked one of the most severe judicial responses yet in Beijing’s escalating campaign against scam operations entrenched in Myanmar’s lawless frontier regions.

From casinos to cyber fraud

During the early 2000s, Chinese criminal organizations generated enormous profits through illegal casinos and online gambling platforms. As Beijing tightened oversight and began restricting cross-border gambling, many syndicates relocated operations to Southeast Asia—particularly Cambodia, Laos, the Philippines, and Myanmar—where weak governance, porous borders, and political patronage insulated them from Chinese law enforcement.

This outward shift accelerated after Xi Jinping launched his anticorruption campaign in 2012. Facing intensified scrutiny at home, criminal networks embedded themselves in loosely governed frontier zones abroad. In Myanmar’s Kokang region, families like the Bais transformed Laukkaing into a boomtown of casinos, nightclubs, and red-light districts, sustained by private militias and tacit alliances with Myanmar’s military elite.

But China’s crackdown on online gambling did not end these enterprises—it reshaped them. As Beijing restricted payment channels and imposed new enforcement tools, syndicates pivoted toward online scamming as a more flexible, deniable, and lucrative revenue stream. By 2018, the first “pig butchering” scams, long-con romance and investment fraud schemes, were reported in China. Between January and August 2019 alone, Chinese citizens reportedly lost over USD500 million to such scams.

COVID-19 and the globalization of scam centers

The COVID-19 pandemic marked a decisive turning point. Travel restrictions deprived Chinese criminal groups of both customers and voluntary Chinese workers. At the same time, Beijing banned cryptocurrency transactions and launched fresh crackdowns on online fraud. In response, syndicates adapted in three critical ways.

First, they repurposed empty casinos, hotels, and special economic zones into fortified scam compounds devoted entirely to cyber fraud. Second, they turned human trafficking into their primary labor supply, coercing workers from across Asia, Africa, and increasingly Latin America into what UN experts have described as conditions of “modern slavery.” Third, as targeting victims inside China became riskier, scam operations shifted their focus outward, defrauding victims in wealthy countries such as the United States, Japan, and Europe.

The scale of this transformation has been staggering. An expert working group convened by the US Institute of Peace estimated that pig-butchering scams alone generated nearly $64 billion globally in 2023. Scam centers in Myanmar, Cambodia, and Laos accounted for roughly $43.8 billion—equivalent to about 40 percent of their combined official GDP. By August 2023, the UN estimated that more than 220,000 people were being held as forced laborers in scam compounds in Cambodia and Myanmar alone.

According to Chinese authorities, the Bai family operated at least 41 such compounds, generating more than 29 billion yuan ($4.1 billion) in illicit revenue. State media say their operations led to multiple deaths, including six Chinese nationals, alongside widespread torture and abuse. One former worker interviewed in a Chinese documentary described being beaten, having fingernails torn out with pliers and fingers severed with a knife after failing to meet fraud quotas.

Political protection—until it wasn’t

For years, these operations thrived not despite politics, but because of it. In Myanmar, families like the Bais operated openly under protection arrangements with the military, particularly in the Kokang region. Min Aung Hlaing—now head of the junta that seized power in 2021—had backed Kokang-aligned clans after ousting a previous warlord, viewing local strongmen as stabilizing intermediaries in a contested borderland. Similar dynamics unfolded across Southeast Asia, where criminal syndicates cultivated relationships with state officials and armed groups, embedding illicit economies within systems of informal governance.

At the regional level, Chinese criminal networks learned to align themselves with Beijing’s broader geopolitical priorities. Syndicates invested heavily in infrastructure projects branded under the Belt and Road Initiative (BRI), helping construct the physical and digital backbone—roads, power supplies, fiber-optic cables—that sustained scam operations. In several cases, Chinese state-owned enterprises and local officials backed these projects, prioritizing visible BRI progress over scrutiny of criminal ties. The cases of She Zhijiang, the developer of Myanmar’s Shwe Kokko, and Wan Kuok-koi (“Broken Tooth”), a former Macau triad leader turned BRI promoter, illustrate how criminal actors gained tacit political cover by presenting themselves as partners in China’s overseas development agenda.

That equilibrium began to unravel in the early 2020s as the scale of the scam industry—and its human costs—became impossible to ignore. Beijing grew increasingly alarmed as Chinese citizens were trafficked into Myanmar and Chinese victims became primary targets of fraud, generating domestic outrage and reputational risks for the Chinese state. Diplomatic pressure mounted, and in 2023 Chinese police issued arrest warrants for leading figures across multiple Laukkaing families. By early 2024, Myanmar authorities handed over Bai Suocheng and other once-untouchable warlords to China—a striking reversal for men who had long controlled territory, militias, and local administrations. In September 2025, another major Laukkaing clan, the Ming family, saw 11 of its members sentenced to death by a Chinese court.

The Shwe Kokko model

While Kokang has become emblematic of the scam hub phenomenon, it is not unique. Hundreds of kilometers south, along the Thai-Myanmar border, a different but equally infamous project has drawn international scrutiny: Shwe Kokko.

Marketed as a gleaming “resort city,” Shwe Kokko was developed by Yatai International Holdings, a company linked to Chinese businessman She Zhijiang. According to US authorities, the site was purpose-built for gambling, drug trafficking, prostitution and large-scale fraud. Scam factories housed there reportedly generated billions of dollars annually, often using trafficked labor.

In November 2025, Thai authorities extradited She to China after years of legal battles. Arrested in Thailand in 2022 after more than a decade on the run, She faced charges tied to online gambling and fraud and was the subject of an Interpol red notice. Both the United States and the United Kingdom had already sanctioned him and his company.

That same month, Myanmar’s military announced a highly publicised raid on Shwe Kokko and nearby compounds, claiming to have arrested nearly 350 foreign nationals and seized almost 10,000 mobile phones used in online gambling operations. State media blamed armed opposition groups for allowing scam centres to operate under their protection, portraying the raids as evidence that the junta was finally confronting transnational crime.

Yet analysts remain skeptical. Rights monitors and regional experts argue that these operations are largely performative, designed to relieve pressure from Beijing without dismantling the deeper political economy that sustains the scam industry. Many of the arrested workers were described as being “under scrutiny” rather than freed, reinforcing concerns that trafficked victims are being treated as criminals rather than exploited laborers. Observers argue that such raids are largely performative—designed to appease Beijing without dismantling the patronage networks that sustain the scam economy.

A regional problem, a Chinese-led response

Despite these contradictions, China has emerged as the most aggressive actor confronting the problem. Its response combines diplomatic pressure on neighbouring states, cross-border policing, and exceptionally harsh domestic sentencing. Executions and extraditions are intended not only to punish individual syndicates, but to deter others operating beyond China’s borders.

Myanmar’s junta, long accused of turning a blind eye to scam hubs that enriched militia allies, has increasingly aligned its public posture with Beijing’s priorities. Since February 2025, it has announced successive raids in areas such as KK Park and Myawaddy, arresting thousands and seizing satellite equipment, including Starlink terminals. Whether these actions represent a genuine crackdown or a recalibration of criminal patronage remains an open question.

What comes next

The future of Myanmar’s scam hubs remains uncertain. While Beijing’s campaign has dismantled some of the most prominent families, the structural drivers—civil war, economic collapse and fragmented sovereignty—remain firmly in place. As long as armed groups control territory and enforcement remains selective, new actors are likely to fill the vacuum, shifting operations deeper into contested borderlands or relocating to weaker jurisdictions such as East Timor.

For now, the downfall of figures like Bai Suocheng and She Zhijiang marks a turning point. It signals the end of an era in which borderland warlords could operate scam empires openly, shielded by guns and political connections. Whether it also marks the beginning of a sustained regional solution—or merely a reshuffling of criminal networks under intensified Chinese pressure—is a question that remains unresolved.

Image credits: Wikimedia Commons / Angshu2193

Alice Quan
Alice Quan is an undergraduate student at the University of Toronto currently based at the University of Tokyo for exchange. Majoring in International Relations, her deep interest in human intelligence, espionage, warfare analysis, and security relations drives her academic pursuits.