NEWS AND ANALYSIS:
The FBI has arrested two Chinese nationals who are charged with operating as part of a clandestine spy ring for the Ministry of State Security, the civilian intelligence service.
Chen Yuance, 38, and Lai Liren, 39, were arrested Friday in what a criminal complaint said was operating in a network that conducted “various clandestine intelligence taskings in the United States” for the MSS.
The operations included placing cash in a “dead drop” — a secret location used to pay and communicate with agents; spying on Navy members and bases; and working to recruit members of the U.S. military to spy for China.
The case was set in motion by intercepted communications from the MSS to an agent in the U.S. who was not identified by name and who coordinated payments to spies who supplied U.S. national security information, the complaint said.
Mr. Lai recruited Mr. Chen in 2021 to work for the MSS and communications quoted in the complaint said Mr. Chen knew people in the Navy, Army and Air Force who could be targeted for espionage recruitment.
FBI Director Kash Patel said the two alleged agents were caught spying on the Navy and attempting to recruit U.S. service members for the Chinese intelligence service.
“Our FBI won’t stand for it. We tracked them, we stopped them, and we’re not done yet,” Mr. Patel said on X. “Espionage on U.S. soil will be met with full force.”
Mr. Chen was arrested in Happy Valley, Oregon, and Mr. Lai was arrested in Houston as part of an ongoing counterintelligence operation.
“This case underscores the Chinese government’s sustained and aggressive effort to infiltrate our military and undermine our national security from within,” said Attorney General Pam Bondi.
“The Justice Department will not stand by while hostile nations embed spies in our country — we will expose foreign operatives, hold their agents to account, and protect the American people from covert threats to our national security,” she said in a statement.
Mr. Patel said, “The Chinese Communist Party thought they were getting away with their scheme to operate on U.S. soil, utilizing spy craft, like dead drops, to pay their sources.
“The FBI will continue to vigilantly defend the homeland from China’s pervasive attempts to infiltrate our borders,” he said.
The Justice Department said in announcing the case that the MSS is seeking information on political, economic and security policies regarding China and gathering military, scientific and technical information.
“The MSS and its bureaus are tasked with conducting clandestine and covert human source operations, of which the United States is a principal target,” the statement said.
According to the complaint, Mr. Chen was tasked by the MSS with visiting a Navy base in Washington state and a Navy recruitment center in San Gabriel, California.
From the recruitment center, Mr. Chen obtained personal information on Navy recruits that apparently were sent to an MSS officer in China.
The two men are charged with conspiracy to act as an unregistered foreign agent and acting as an unregistered foreign agent.
FBI Deputy Director Dan Bongino said eight search warrants were executed as part of the investigation in San Francisco, Houston, Portland and San Diego.
The goal is the “disruption of a sophisticated ring of Chinese government agents trying to recruit U.S. military service members to betray their country by committing espionage.”
“We are mission-focused on keeping our nation’s secrets, technology, and data out of the hands of foreign intelligence agents,” he said on X.
Mr. Bongino said since the beginning of this year, 51 foreign intelligence agents have been arrested for a variety of activities, including spying, harassing dissidents, stealing secrets, proliferating technology that helps adversaries build better missiles, drones and bombs and evading sanctions.
Chinese agents also recently were arrested for smuggling biological pathogens that threaten human health and put agriculture at risk, Mr. Bongino said.
“We’re moving quickly to arrest or disrupt enemy agents, because we know this heightened global threat environment means we need to be hypervigilant in protecting our Homeland,” he said.
IG: Poor FBI countersurveillance threatens agents and operations
The FBI has failed to adequately mitigate threats to its sources, employees and investigations posed by new technical surveillance techniques that the Justice Department inspector general describes as an “existential threat” to its probes and people.
The IG stated in a declassified 78-page report containing redactions that the FBI, as the lead law enforcement and counterintelligence agency, faces risks from what is called ubiquitous technical surveillance, or UTS, defined as the widespread gathering of data and the use of analytical methods to connect people to things, events or locations.
The practice is currently being used by foreign governments and criminal organizations in five areas, including visual and physical identification of people or objects linked to an operation through surveillance cameras or physical surveillance.
The report did not mention China. However, China’s intelligence services have increased the ability to conduct electronic spying in the United States in recent years, according to intelligence officials.
Electronic signals are also being intercepted through mobile phones and financial transaction records are being spied on, and travel records such as information on hotel stays, borders crossings and airline reservations. Last is information obtained online through advertising data from web browsers and social media.
“The FBI is aware of prior and ongoing UTS compromises that have impacted FBI operations, threatened the safety of its sources, and are currently being used by adversaries to challenge the United States government on a global scale,” the IG report said.
“Some within the FBI and partner agencies like the CIA have described the threat as ‘existential.’”
The FBI has struggled with compromises, including in its counterintelligence operations, in all five areas, the report said.
Only one example of a compromise was made public in the report.
In 2018, during an FBI investigation into the El Chapo drug cartel case, a person linked to the cartel contacted an FBI case agent and said the cartel had hired a hacker capable of penetrating mobile phones and other electronic devices.
The cartel member said the hacker spotted people going in and out of the U.S. Embassy in Mexico City and identified people of interest to the cartel, including the FBI assistant legal attache.
Once identified the cartel used the attache’s mobile phone to obtain calls made and received and geolocation data related to the phone. The hacker also used the Mexico City camera system to follow the FBI agent through the city and identify people who met with the agent.
“According to the case agent, the cartel used that information to intimidate and, in some instances, kill potential sources or cooperating witnesses,” the report said.
The report said the FBI told the IG that, unless fixed, the problem of poor countersurveillance would lead to significant compromises of the Bureau’s national security and criminal operations.
Air Force revives hypersonic missile
The Air Force is requesting $387 million in its current budget request to begin building the first of its version of a hypersonic missile system that has experienced several testing failures in the past.
Funds for the new missile, known as the AGM-183A Air-Launched Rapid Response Weapon, were disclosed in a document listing weapons in the service’s $301.1 billion total funding request for fiscal 2026, which begins Oct. 1.
No details on the number of ARRWs to be built in the procurement and production.
The ARRW, pronounced “arrow,” will be a conventionally armed strike glider that will travel at speeds of between Mach 6.5 and Mach 8 — 6,138 mph — with maneuver capability. Its range will be about 1,000 miles.
After several test failures, the Air Force requested no funds for the ARRW program in fiscal 2025 and listed the program as “completed.” Officials said they considered canceling the program last year.
In addition to ARRW, the Air Force is also pursuing a second high-speed missile, the Hypersonic Attack Cruise Missile (HACM).
ARROW is a glider that can be launched from bombers.
Air Force Chief of Staff Gen. David Allvin told the House Armed Services Committee last month that ARRW is now one of two hypersonic programs that would be reflected in the budget.
Gen. Allvin described ARRW as “more strategic and long-range” than the cruise missile HACM.
Funding for HACM, the second type, in the budget includes $802.8 million.
Building hypersonic weapons is a priority for the Pentagon, which in the past rejected developing the high-speed systems.
Deployment of hypersonic missiles by China and Russia, however, prompted the military to close a perceived hypersonic missile gap.
Unlike both China and Russia, which are arming their hypersonics with nuclear warheads, U.S. hypersonic weapons are not being designed for nuclear payloads and will be armed with conventional warheads.
As a result, U.S. hypersonic weapons will likely require greater accuracy and will be more technically challenging to develop than nuclear-armed Chinese and Russian systems.
The Navy is building a hypersonic missile called the common hypersonic glide body that will be deployed on guided-missile destroyers.
The Army’s Long-Range Hypersonic Weapon, known as Dark Eagle, is the most advanced system with an expected first operational deployment before the end of the year.
The Army glider will have a range of over 1,725 miles, the service says, and will be used to attack anti-access, area denial forces, attack enemy long-range weapons and strike significant or time-sensitive targets.
• Contact Bill Gertz on X @BillGertz.
