Pentagon Weighs Deploying Spies for Economic Warfare Against China

The Pentagon is considering an expanded network of deep-cover spies to support economic warfare against China and other U.S. competitors.

Operatives would pose as businesspeople or other private-sector personnel, concealing their government ties, The Washington Post reported, citing six people familiar with the plans.

The initiative would add a clandestine element to the Pentagon’s broader use of economic tools against foreign rivals.

The effort remains at the planning stage and has not begun operating, according to people cited by the newspaper. Its organizational structure has yet to be settled.

The Pentagon denied the report. “This query appears to be built on information that is simply not true,” deputy press secretary Jacob Bliss said.

Former CIA Chief Oversees Planning

Tom Rakusan, a senior adviser to Deputy Defense Secretary Steve Feinberg, is overseeing the proposed expansion, according to the report.

A 39-year CIA veteran, Rakusan became deputy director of operations in 2017 and later directed the agency’s response to Russian interference in the 2016 U.S. presidential election.

After retiring in 2021, he joined Cerberus Capital Management, the private equity firm Feinberg co-founded. He followed Feinberg to the Pentagon in 2025.

Personnel from the military services and the Pentagon’s intelligence leadership, alongside retired CIA officials, have been brought into the planning, the newspaper reported.

Options include establishing a separate unit or enlarging existing military capabilities for clandestine human intelligence collection.

Congressional committees do not appear to have received briefings on the initiative.

The CIA declined to comment. Rakusan did not respond to a request for comment.

Economic Warfare Expands

The proposal comes as the Trump administration places greater emphasis on economic competition through tariffs, export restrictions, strategic investments and intelligence gathering.

Feinberg established an Economic Defense Unit this year, assigning another former Cerberus executive, George Kollitides, to lead it in February.

The office has announced investments worth hundreds of millions of dollars in mining and refining projects.

One transaction committed $750 million in Pentagon funding to help secure a large Brazilian rare earth deposit.

The unit was considered as a possible organizational home for the deep-cover initiative.

That option was subsequently dropped as media and congressional scrutiny of its investments intensified, one person familiar with current planning told the newspaper.

At the CIA, Deputy Director Michael Ellis said in September that espionage against China was expanding to cover companies working in artificial intelligence, biotechnology and advanced semiconductors.

His predecessor, David S. Cohen, has separately advocated allowing intelligence agencies to share economic secrets with U.S. advanced-technology companies to strengthen their competitive position.

Cohen said safeguards would be needed to prevent favoritism or corruption, and that he knew nothing of the Pentagon proposal.

CIA Resistance and Operational Risks

The Pentagon initiative has drawn resistance from some former CIA officials and a cool response within the agency, according to a former senior official cited in the report.

“Rakusan just wants to build his own CIA down in the Pentagon,” the former official said.

The CIA has historically sought to keep other agencies’ overseas human intelligence operations coordinated through its local station chiefs.

Deep-cover officers, known as nonofficial cover officers or NOCs, operate without the protection available to diplomats.

They cannot claim diplomatic immunity if detained or base their work in U.S. embassies and other government facilities.

The Pentagon’s proposed expansion also comes as former officials describe a sharp contraction in the CIA’s own deep-cover ranks.

An internal assessment produced during the pandemic found that roughly 75% of those officers would qualify for retirement by the middle of the decade, one former official said.

Departures have outpaced replacement training, leaving few deployed officers, according to former agency personnel.

Previous expansion drives have also faltered.

A major CIA recruitment effort in the 2000s collapsed amid inadequate training and oversight, forcing many recruits into headquarters roles or out of the agency.