Two Chinese nationals have been charged with espionage activities against the U.S. Navy, as revealed in a Department of Justice announcement. Yuance Chen, 38, and Liren “Ryan” Lai, 39, are accused of acting as foreign agents and attempting to gather intelligence, as well as recruiting others for the Ministry of State Security (MSS), China’s primary intelligence agency. The charges were presented in federal court on June 31 in the Northern District of California.
The allegations include facilitating a “dead drop” payment for sensitive information related to U.S. national security, gathering intelligence on Navy personnel and bases, and recruiting U.S. military members as potential MSS assets. Chen, a legal permanent resident in Happy Valley, Oregon, and Lai, who entered the U.S. on a tourist visa in April 2025, were arrested by the FBI on June 27 in their respective locations.
Details of the Espionage Activities
The FBI’s San Francisco office, in collaboration with offices in Portland, Houston, and San Diego, along with the Naval Criminal Investigative Service, led the investigation. According to Attorney General Pamela Bondi, “This case underscores the Chinese government’s sustained and aggressive effort to infiltrate our military and undermine our national security from within.”
After Lai recruited Chen in 2021, the duo began identifying U.S. Navy personnel to recruit for the MSS. In January 2022, they executed a dead-drop payment of at least $10,000, coordinating with U.S. individuals. Over the next two years, Chen visited a U.S. Naval installation in Washington and a Navy recruitment center in San Gabriel, California, gathering information on potential recruits for the MSS.
“These activities included facilitating a ‘dead drop’ payment of cash for information relating to the national security of the United States previously provided to the MSS,” the Department of Justice release stated.
International and Domestic Implications
The case highlights ongoing tensions between the U.S. and China regarding espionage and intelligence operations. Experts suggest this incident could further strain diplomatic relations. The U.S. has previously accused China of similar activities, which Beijing has consistently denied.
According to Dr. Emily Harding, a senior fellow at the Center for Strategic and International Studies, “Espionage cases like this are not uncommon, but they serve as a reminder of the persistent threat posed by foreign intelligence services. The U.S. must remain vigilant in protecting its national security assets.”
Legal and Security Ramifications
Chen and Lai face charges of operating as foreign agents without notifying the U.S. Attorney General, a violation of federal law. If convicted, they could face up to 10 years in prison and a $250,000 fine.
The Department of Justice also alleges that Chen traveled to Guangzhou, China, in 2024 and 2025 to coordinate with the MSS, while Lai misrepresented the purpose and duration of his travels within the U.S. in April 2025.
“Chen went so far as to contact a Navy employee on social media and provide specific information about that employee to the MSS,” the Department of Justice noted, highlighting the sophisticated nature of their operations.
Looking Ahead
This case is likely to prompt a review of security protocols within the U.S. military and intelligence communities. The FBI and other agencies may increase their efforts to detect and prevent similar espionage activities in the future.
As the legal proceedings unfold, the broader implications for U.S.-China relations and national security policies will be closely monitored. The outcome could influence future legislative measures aimed at strengthening defenses against foreign espionage.
The arrests of Chen and Lai underscore the ongoing challenges faced by the U.S. in safeguarding its military and intelligence operations from foreign interference.
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