China poses biggest military, cyber threat to US, intel chiefs say

By Michael Martina, Patricia Zengerle and Erin Banco

WASHINGTON (Reuters) -China remains the top military and cyber threat to the U.S., according to a report by U.S. intelligence agencies published on Tuesday that said Beijing was making "steady but uneven" progress on capabilities it could use to capture Taiwan.

China has the ability to hit the United States with conventional weapons; compromise U.S. infrastructure through cyber attacks; and target its assets in space, the Annual Threat Assessment by the intelligence community said, adding that Beijing also seeks to displace the United States as the top AI power by 2030.

Russia, along with Iran, North Korea and China, seeks to challenge the U.S. through deliberate campaigns to gain an advantage, with Moscow's war in Ukraine affording a "wealth of lessons regarding combat against Western weapons and intelligence in a large-scale war," the report said.

Released ahead of testimony before the Senate Intelligence Committee by President Donald Trump's intelligence chiefs, the report said China's People's Liberation Army (PLA) most likely planned to use large language models to create fake news, imitate personas, and enable attack networks.

"China's military is fielding advanced capabilities, including hypersonic weapons, stealth aircraft, advanced submarines, stronger space and cyber warfare assets and a larger arsenal of nuclear weapons," Director of National Intelligence Tulsi Gabbard told the committee. She labeled Beijing as Washington's "most capable strategic competitor."

"China almost certainly has a multifaceted, national-level strategy designed to displace the United States as the world's most influential AI power by 2030," the report said.

CIA Director John Ratcliffe told the committee that China had made only "intermittent" efforts to curtail the flow of precursor chemicals fueling the U.S. fentanyl crisis because it was reluctant to crack down on lucrative Chinese businesses.

Trump has increased tariffs on all Chinese imports by 20% to punish Beijing for what Trump called its failure to halt shipments of fentanyl chemicals. China has denied playing a role in the crisis, the leading cause of U.S. drug overdose deaths. The issue has become a major point of friction between the Trump administration and Chinese officials.

"There is nothing to prevent China ... from cracking down on fentanyl precursors," Ratcliffe said.

The Chinese foreign ministry said it "advised the U.S. not to use its own hegemonic logic to mirror China, and not to use outdated Cold War thinking to view China-U.S. relations," when asked about the report on Wednesday.

The ministry urged Washington to stop "condoning and supporting Taiwan independence separatist activities," ministry spokesperson Guo Jiakun said.

The spokesperson for China's embassy in Washington, Liu Pengyu, said the United States has long "hyped up" the China threat as an excuse to maintain U.S. military hegemony.

"China is determined to be a force for peace, stability and progress in the world, and also determined to defend our national sovereignty, security and territorial integrity," Liu said, adding that "fentanyl abuse is a problem that the United States itself must confront and resolve."

INTELLIGENCE LEAK FUROR OVERSHADOWS HEARING

The committee hearing was overshadowed by Democratic senators grilling Ratcliffe and Gabbard over revelations that they and other top Trump officials discussed highly sensitive military plans in a Signal messaging app group that accidentally included a U.S. journalist.

Numerous Republican senators focused their questioning on undocumented immigrants in the U.S.

The intelligence report said large-scale illegal immigration had strained U.S. infrastructure and "enabled known or suspected terrorists to cross into the United States."

The intelligence agencies said Iran was committed to developing surrogate networks inside the U.S. and to targeting former and current U.S. officials.

While Iran continued to improve its domestically produced missile and UAV systems and arm a consortium of "like-minded terrorist and militant actors", they said, the U.S. continues to assess that Tehran "is not building a nuclear weapon."

U.S. concerns about China dominated about a third of the 33-page report, which said Beijing was set to increase military and economic coercion toward Taiwan, the democratically governed island China claims as its territory.

"The PLA probably is making steady but uneven progress on capabilities it would use in an attempt to seize Taiwan and deter - and if necessary, defeat - U.S. military intervention," it said.

The intelligence agencies said another one of China's long-term goals was to expand access to Greenland's natural resources and use it as a "key strategic foothold" in the Arctic.

U.S. Vice President JD Vance said he would visit Greenland this week with a high-profile U.S. delegation. Trump has angered NATO ally Denmark and Greenland with renewed calls for the U.S. to take over the semi-autonomous Danish territory, calling the proposal a U.S. national security imperative.

Still, the report said, China faces "daunting" domestic challenges, including corruption, demographic imbalances, and fiscal and economic headwinds that could impair the ruling Communist Party's legitimacy at home.

China's economic growth probably will continue to slow because of low consumer and investor confidence, and Chinese officials appear to be bracing for more economic friction with the U.S., the report said.

(Reporting by Patricia Zengerle, Michael Martina and Erin Banco; additional reporting by Liz Lee in Beijing; editing by Mark Heinrich and David Gregorio)