MCDONELL: We're told China's off the boil - well here's a trade that's going absolute gang-busters.

[at arrest of female] "She's successfully brought drugs across the border before and this is the second time she's done it".

The drug trade - flooding in to propel China's party scene and chasing all that new money. Methamphetamine, ecstasy, heroin - tons of it, as drug culture spreads like wildfire.

[holding a bag of drugs] "If you can get these drugs to Australia, you can imagine how much more profit there would be".

This week and next we're heading to seldom seen corners of this dramatically changing place as Foreign Correspondent investigates the other China boom, one that leads all the way to our own front door.

This is remote dramatic territory. A river forming part of a border that runs for thousands of kilometres between China and its emerging neighbour, Myanmar - what we used to call Burma. You might expect large fences and guards on patrol but here the official borders of countries mean little to people who've travelled and intermingled for centuries.

[standing on a boat] "Well this is a pretty porous border. As you can see there are lots of people moving back and forth across the river. We've just walked down here, jumped on the first boat there was, paid the guy, come along and here we are, now I'm in Burma!"

There's a brisk trade here. Myanmar has been opening up and China has an ever growing affluence. Yet to buy Chinese goods, poor Burmese farmers need money and in order to get money some are prepared to transport a very dangerous cargo to the north. With not an official in sight, the potential to ferry illegal drugs across points like this is clearly substantial.

"None of the people here speak Chinese so I can't ask them how busy it is down here normally but it seems like it's just boat after boat coming through and the trucks are bringing goods from Burma across to China and also back in the other direction".

The home of the Golden Triangle, Myanmar has long been a major source of the world's heroin. Now, on top of that, there are new drugs coming out of here and via China they'll end up as far away as Australia. So we've come here to follow the drugs and to gauge the size of a problem considered so serious it's recently led to joint operations by Australian and Chinese police.

PROFESSOR WU JIANG: "The factories which produce drugs have increased. In other words they once produced heroin but now they've changed to produce ice-type drugs, amphetamine-type drugs".

MCDONELL: Former police officer Professor Wu Jiang is now one of China's foremost experts on the drug trade. We ask him if Myanmar's increased ice production is in direct response to Chinese consumption.

PROFESSOR WU JIANG: [Yunnan University] "That's correct. It's because of supply and demand. The key point is they must know there are so many people in China who are selling drugs. They've established networks with them. There are also a lot of unspotted drug users... so many invisible drug users. There's a market, otherwise they wouldn't produce them".

MCDONELL: Yunnan Province is a lush green corner of China. Its remote location has spared it the excesses of development. Here you can find the bustling border town of Ruili. Part of it has been given special economic zone status to try and boost commerce between China and Myanmar. Here Burmese workers can be seen in droves looking for work in local factories. Others come to do business. There are plenty of visitors with all the right paperwork but countless numbers without.

The border fence in the middle of town is dotted with large holes so we sit across from one of these illegal entry points and watch. Through they come, one after another. Some pause first to check - others just race through. This is only 100 metres from the main official entry point and in broad daylight, they cross and they cross and they cross.

We decide to approach the young men on the Myanmar side of the border for a chat and speak to them through a translator.

"I want to know, have a lot of people come through here lately in order to sell drugs? [men shake head] Aren't any? Aren't any here?"

MEN VIA INTERPRETER: "They're not coming through this actual door".

MCDONELL: "I'm not talking so much about this particular entrance but crossing this border. Could you ask them where along the border?"

It seems they want to defend the credibility of this particular illegal entrance to China.

MEN VIA INTERPRETER: "Ah... you have to go 105 yards that way".

MCDONELL: "Another place".

MEN VIA INTERPRETER: "Another place".

MCDONELL: "How many people do they think would cross the border here every day?"

MEN VIA INTERPRETER: "There are many. Every day two or three hundred".

MCDONELL: If anything, a few hundred daily crossings would be an under estimation. Dozens come through in just the short time we're here. If drug trafficking is sky rocketing as suspected, then it must hit these border communities first as it winds its way north. So we go looking for someone who knows the local trade.

We meet a young man who's prepared to talk about the drug situation in Ruili on condition of anonymity.

"Drug usage here... is it becoming more serious?"

RUILI MAN: "The number of drug dealers doesn't seem to change much but there are many more drug users".

MCDONELL: "How many more than before? Twice as many?"

RUILI MAN: "Right, nearly two times more".

MCDONELL: He tells us that those using drugs regularly in the town vary from Chinese to Burmese, some are students, some are business people.

"Where are the drugs sold? In a secret place?"

RUILI MAN: "It's not necessarily a secret place - just a place where police don't show up".

MCDONELL: "So you can see drug dealing on the street?"

RUILI MAN: "Yes, you can".

MCDONELL: "Could you show me where?"

RUILI MAN: "Yes".

MCDONELL: He guides us through Ruili, down this town's small vibrant streets to a particular little corner. And soon after we arrive, the customers are turning up. This man walks across the street to a doorway which will be very busy tonight. He indicates the quantity and in front of a small child, he hands over cash in exchange for drugs. Then he goes off to find somewhere safe to take them.

This is a humming part of town and many will go through this doorway. We can't see what's going on inside but there's plenty of movement in the street. A man in green waits outside. Eventually a woman in white emerges and approaches him. Again it's money going one way and drugs the other. She counts his change and then hands it over. As soon as the coast is clear, he walks away.

Given the ease with which we've spotted these transactions, it's hard to imagine that the local authorities are not fully aware of this situation. The man in green likes what he's seen so he comes back for more. These are only small purchases but Chinese police statistics cast them in a much bigger light.

Nearby, Burmese poppy cultivation was up by 33.8% last year, the equivalent of 60 tons of heroin. In 2012 local Yunnan police seized 9 tons of ice coming out of Myanmar - 26% more than the year before. And the deals keep coming.

In full public view the drugs are prepared. The preferred method of consumption here is smoking - even for heroin and methamphetamine. Yet, increasingly, in what was once a heroin zone, this is now becoming an ice town.

PROFESSOR WU JIANG: "Comparatively speaking, it's easier to access. It's easier to buy from the market. It's comparatively cheap. The consumers are many young people. Among them it can form a kind of culture - a smoking subculture".

MCDONELL: The roads out of Ruili are all heading north and for drugs being smuggled into China, there is a well-trodden path. For most, the first stop is the regional capital where onward distribution will be organised.

"I'm here at the Kunming Narcotics Bureau. There are more than a 160 police here. Apparently this is the largest drug squad in China and we've been invited here to come and have a chat.

Wang Zheng Long is a young intelligence officer and to give us an idea of how busy they've been, he shows us some of the drugs police have confiscated lately.

[looking at bags of drugs] "These are real drugs that you've seized. Am I correct?"

WANG ZHENG LONG: "That's correct. They are real. This is opium".

MCDONELL: "Opium? So people have secretly brought this in from overseas - or produced the drugs in China?"

WANG ZHENG LONG: "No. These drugs are all from overseas. We've seized them in China".

MCDONELL: "So they are from Myanmar?"

WANG ZHENG LONG: "Right, yes".

MCDONELL: "They've come from Myanmar to be sold in China?"

WANG ZHENG LONG: "Right, right".

MCDONELL: We see Ketamine, also known as Special K and a pillow case of morphine. There's heroin cut into blocks for convenient concealment and in smaller pieces to fit into a condom for internal body secretion. Chinese police seized 7.3 tons of heroin last year but methamphetamine was double that. In 2012 ice seizures went from 14 to over 16 tons and we're shown large bags of it in various levels of purity.

"So, if I wanted to sell these here, how much would they be worth?"

WHANG ZHENG LONG: "Sell them all?"

MCDONELL: "Yes".

WHANG ZHENG LONG: "At once?" They sell for around 50 Yuan a tablet".

MCDONELL: "50 Yuan for one. Ten thousand tablets at ten bucks a pop so I'm holding a hundred thousand dollar's worth of drugs here. It's quite a bit".

Of course that's the price in Yunnan Province. The further these narcotics are transported from the border, whether it be inside machine parts, hollowed out shoe heels or wooden artefacts, the more profit there is to be made as the price doubles and triples upon arrival in China's mega cities.

Shanghai is the gleaming citadel at the heart of China's booming East coast. It's a massive port town, a thriving business centre, a magnet for foreigners and home to some 23 million people. If you were going to build a city to promote the drug trade in China, it'd probably look like Shanghai. This metropolis is an affluence factory - to the point where it's mocked by the rest of China for having such a superficial and greedy outlook.

But, when it comes to drug taking, many analysts think a much more important factor than disposable income is a new found social acceptance of drugs and not only here. There was a time not so long ago when it was hard to find a young person in China who'd taken illegal drugs. Their friends would have thought they were freaks, but in many circles now, it's seen as a totally normal and acceptable practice.

SHANGHAI MALE EX USER: "When I arrived at a friend's home they put several kinds of stuff on the table. They told me, "It's fine to take this - it's different from heroin - you won't get addicted to it"... etcetera. So I started taking it".

MCDONELL: "What kind of drugs were they?"

SHANGAHI MALE EX USER: "It was ice".

MCDONELL: We meet a Shanghai woman who, at one time, got into methamphetamine. And why not? The feelings were great, she was with her friends and having the time of her life.

SHANGHAI WOMAN EX USER: "We thought it was fun and fashionable to take drugs - so we wanted to keep up with the trend. Most of all, we didn't see the harm in it. We thought it was different from heroin and we wouldn't get addicted. So I took it again and again".

MCDONELL: It's Friday night in Shanghai so naturally the kids are heading out to play. It was probably inevitable that as China opened up to all things foreign, illegal drugs would eventually spread through cities like this in larger numbers. And as this is a country that doesn't know how to do things in half measures, when you're into it, you're into it!

What's more, Chinese people are early adaptors. According to police research the new trend is to order drugs over the internet. Some dealers even use official fast couriers to make a drop.

[at night club] "Compared to Sydney, London or New York, the level of drug use in places like this is still pretty small. The important thing is the trajectory and it's only going in one direction - up".

And according to some experts, while economic growth may have fanned Chinese drug use, a really big expansion might be in the wings if the economy actually falters.

PROFESSOR WU JIANG: "If China keeps up a normal, stable level of economic growth strengthening drug control systems and education, drug use will not expand so widely. But if our growth halts with bad social management, and we have social instability, then the drug problem in China will dramatically increase. It could be ten times or twenty times bigger.

MCDONELL: That's not just because some might turn to drugs when times are tough to dull the pain. It's also because people might see the narcotics trade as a potential replacement for lost business opportunities in other areas.

PROFESSOR WU JIANG: "It just brings in so much profit. If someone wanted to break into our system, it is very easy. The easiest and the quickest way to make a fortune is to deal drugs - to sell drugs here.

MCDONELL: Yet, as with all highs, there's the comedown. Our woman hit rock bottom when her son, who was once a good student, was nearly thrown out of school. She was picked up by police and sent to rehab. These days she's clean, has a new job and her son has made it into university. Yet the old times still linger in her memory.

SHANGHAI WOMAN EX USER: "My life is great. My family, myself, my career and my parents are all great. I am back to how I felt before I had taken drugs. But deep in my heart there's a small place reminding me that I took drugs before".

MCDONELL: For many in China, trying to kick it is not only tough but it's compulsory and while ice may be on the rise, a much more traditional drug casts a long shadow here. There are one thousand ex-heroin addicts working at the Yulu complex. Work camp style rehabilitation centres like this one in Yunnan's Kaiyuan City were set up in the 1990s for drug users who'd been picked up by the authorities and today there are 678 of them across China housing 300,000 ex drug users.

But now the police who run Yulu say people choose to come and choose to stay, but when they're here, the rules are strict.

"Normally if a foreign camera crew came into a Chinese factory there'd be smiles and giggling and 'Oooh, what are they doing in here?' Not in this place, listen... nothing... just the sound of the machines. People are head down, working. I don't know if it's because they're sad or embarrassed about their past but it's definitely the way it is".

Lu Jianghuai says it was only possible for him to give up heroin because of the discipline here. Now he's been promoted to manage this floor of the factory complex.

[looking at production on factor floor] "What about over here"?

LU JIANGHUAI: "From there and there they glue them and over there we sew them together.

MCDONELL: "Ah... put them together".

MCDONELL: "He introduces the work they do with 15 companies investing in a network of factories making everything from purses to solar water heaters, door frames to cigarette lighters. I asked him what's become of the friends he used to take heroin with.

LU JIANGHUAI: "Most of them are dead following an overdose".

MCDONELL: Lu Jianghuai has found a woman to marry him at the factory but as for those who were once closest to him, well he doesn't see them very much.

LU JIANGHUAI: "Dad and mum got divorced because of my addiction. Because I was taking drugs they scolded me but I couldn't stop. My family started to... ah... what can I say? I feel very sorry for what happened to my family".

MCDONELL: This rehabilitation complex is rolling out a massive attempt at healing in response to an industrial sized problem in China. Yet, if you think this is of concern, well it could even hit you closer to home.

Next week, unprecedented access to China's drug cops. Singing their way to their stings, shaking down travellers they suspect are smuggling so-called party drugs into China any way they can.

"He's actually inserted the drugs inside and in through his anus in obviously condoms or something like that".

And learn how the joint operations between China and Australia are trying to stop the new flood.