California authorities uncover 4-year Chinese espionage operation targeting U.S. Navy

San Francisco, California – In a case that federal officials say underscores the intensifying contest between U.S. intelligence agencies and their foreign counterparts, two nationals of the People’s Republic of China were arrested last month in Oregon and Texas for allegedly acting as unregistered agents of the Chinese government while carrying out covert intelligence operations on U.S. soil.

Yuance Chen, 38, a legal permanent resident of the United States living in Happy Valley, Oregon, and Liren “Ryan” Lai, 39, who entered the country on a tourist visa in April, were each charged with operating under the direction of the Chinese Ministry of State Security (MSS), the country’s primary civilian intelligence agency. Both men made their initial court appearances this week in Portland and Houston, respectively. The criminal complaint was unsealed in the Northern District of California.

According to prosecutors, the two men were tasked with conducting a variety of covert intelligence-gathering operations targeting the U.S. military and national security infrastructure. These included attempts to recruit military personnel as assets for Chinese intelligence, surveillance of U.S. Navy facilities, and the transfer of classified or sensitive information using traditional spycraft, including “dead drops” of cash payments.

The complaint details a years-long operation that began in 2021, when Lai is said to have recruited Chen as a collaborator. In January 2022, while both men were in Guangzhou, China, they allegedly coordinated the delivery of a backpack containing $10,000 in cash to a day-use locker in Livermore, California, to pay for information previously delivered to the MSS. Federal investigators say this was only the beginning of a wider effort.

Between 2022 and 2025, Chen is accused of scouting U.S. military installations in Washington and California, collecting data on recent Navy recruits—many of whom were of Chinese origin—and using social media and in-person contacts to assess and approach potential assets for the MSS. Prosecutors allege that the MSS provided Chen with both detailed talking points and training in methods to avoid exposure. Chen also reportedly traveled back to China multiple times for meetings with intelligence officers.

In April 2025, Lai arrived in Houston, allegedly under the guise of visiting for business related to an online retail operation. But instead of returning home after two weeks, he embarked on a multi-state road trip, ultimately reaching Southern California before returning to Texas.

Both men now face charges under a federal statute that prohibits individuals from acting as agents of a foreign government without notifying the U.S. Attorney General. If convicted, each faces up to 10 years in prison and a $250,000 fine.