Illicit drugs generate numerous threats to national security and social stability as more and more countries face how to handle these drugs. Geographers are motivated to raise critical questions about geographical factors and socioeconomic problems that underpin the widespread problems brought by illicit drugs. Nowadays, China has become a major market for illicit drugs produced in northern Myanmar, the core area of the notorious Golden Triangle. The Chinese state complies with the Five Principles of Peaceful Coexistence, particularly the non-intervention policy, and thus cannot crack down on drug lords dwelling in northern Myanmar. In this sense, the Chinese state falls into what Agnew calls a “territorial trap.” How can the Chinese state launch effective narcotics control in northern Myanmar without jeopardizing Myanmar's national sovereignty? The ultimate goal is to maintain border security between China and Myanmar and weaken the damage brought by illicit drugs to Yunnan and even the whole country. Built upon policy report analysis and in-depth interview, this article explores illicit drugs as a non-traditional security challenge and analyzes China’s narcotics control practices in northern Myanmar—coercive crackdown and opium substitution. It is found that coercive crackdown targets drug lords and transitional drug cartels while opium substitution aims to help ex-poppy farmers to plant licit economic crops. These two practices focus on different groups to cope with the chain of drug plantation and trafficking. By doing so, these practices achieve a balance between Myanmar's national sovereignty and the China-Myanmar border security. Through these practices, the Chinese state evades territorial trap by an effective transnational governance regime for narcotics control. This article furthers our understanding of territory, geopolitics, and border security in the context of transnational regionalization, and generates some theoretical implications for building the “belt and road” between Yunnan and mainland Southeast Asia.