Pentagon builds a deep-cover economic spy program aimed at China

The Pentagon is looking to build a more robust deep-cover spying program to confront China, according to people familiar with it^1,5. The effort is described as an economic intelligence programme targeting China⁷. It would use US operatives working undercover⁴.

Tom Rakusan is overseeing the program⁸. He is a senior adviser to Deputy Defense Secretary Steve Feinberg and spent 39 years at the CIA⁸. Rakusan previously worked on matters related to Russia’s alleged interference in the 2016 US presidential election^3,7.

After leaving the CIA, Rakusan joined Cerberus Capital Management, the private equity firm co-founded by Feinberg⁶. He followed Feinberg from Cerberus to the Pentagon in 2025^3,4.

Separately, the Pentagon is quietly building an elite new tech sabotage agency, which has been described as a new Pentagon power centre around Feinberg².

Why it matters to investors

The program extends the Pentagon’s move into economic warfare. Some of the department’s economic-warfare activities have been overt: Feinberg announced the formation of an Economic Defense Unit this year¹. The deep-cover effort would add a covert layer to that work^1,5.

The people running it come from finance as well as intelligence. Feinberg co-founded Cerberus Capital Management, and Rakusan worked there after his CIA career before joining the Pentagon^3,6. That background places private-equity experience at the centre of the department’s economic contest with China^6,8.

For companies with Chinese exposure, a Pentagon unit focused on economic intelligence and a parallel tech sabotage agency point to a wider set of tools aimed at Chinese firms and technology^2,7. The sources describing the program spoke on condition of anonymity⁵.

What to watch

Key details remain unclear in the coverage, including the program’s budget and the specific targets of its operatives^1,4. Its relationship to the new tech sabotage agency has also not been spelled out².

Feinberg’s Economic Defense Unit is the public face of the Pentagon’s economic-warfare push, and further announcements from it would show how far the department intends to go¹. Rakusan’s role as overseer ties the covert effort directly to Feinberg’s office⁸.

Investors will also watch for any reaction from Beijing to the reports of a deep-cover program aimed at China^1,7. The program’s reliance on operatives working undercover makes it distinct from the overt sanctions and economic-defence work the department has announced so far^1,4.