US lawmakers and state security officials sounded a sharp alarm on 17 July over China's escalating use of espionage, cyber intrusions, influence operations, and economic coercion against American states and critical infrastructure, telling a House Intelligence Committee hearing that local governments have become central to the country's counterintelligence effort.

Key Developments at the Hearing

Members of the House Permanent Select Committee on Intelligence, alongside witnesses from state fusion centres and legislatures, testified that foreign intelligence threats have expanded far beyond Washington, making states, cities, universities, and private businesses the new frontline of US national security.

Committee Chairman Rick Crawford said the People's Republic of China (PRC) had adopted 'a whole of society strategy' that goes well beyond traditional spycraft. 'Beijing leverages legal investments, supply chains, research partnerships, cyber intrusions, influence operations, and economic coercion to position itself for advantage, long before any traditional conflict ever begins,' Crawford said. He warned that China's activities are deliberately designed to remain below the threshold of armed conflict, adding that 'our homeland is becoming increasingly contested domain.'

Crawford specifically cited the Volt Typhoon cyber campaign as evidence that adversaries had already 'pre-positioned capabilities inside our critical infrastructure and telecommunications networks that could be activated at a time of their choosing.'

States on the Front Lines

Ranking Member Jim Himes said counterintelligence can no longer remain the exclusive domain of federal agencies. 'The title of this hearing captures the fundamental reality that states truly operate on the front lines,' Himes said. He also urged policymakers to balance foreign intelligence countermeasures with protections for civil liberties, stressing that citizens, legal permanent residents, and visitors must be treated fairly regardless of race, ethnicity, or national origin.

Mike Sena, President of the National Fusion Center Association, told the committee that foreign intelligence services — 'most prominently the PRC,' along with Russia, Iran, and others — are increasingly targeting state and local governments, universities, critical infrastructure operators, and private industry. 'As a result, state and local partners are often the first to encounter indicators involving espionage, cyber activity, foreign influence, supply chain compromise and economic targeting,' Sena said.

Gaps in the Current System

Sena noted that more than 3,200 personnel across 80 fusion centres provide intelligence analysis and information-sharing with federal, state, and local partners. However, he argued that the current system remains hampered by classification barriers, disconnected databases, inconsistent funding, and delays in security clearances. He urged Congress to establish a national counterintelligence information-sharing framework, embed more federal personnel in fusion centres, and improve training and resources.

Jay Mosley, Director of the Alabama Fusion Center, reinforced that counterintelligence 'is no longer confined to Washington,' stressing that trusted relationships among local, state, and federal agencies are essential to identifying suspicious activity before it escalates into a broader national security threat.

State-Level Legislative Response

Florida state Representative Daniel Alvarez declared that states must take a more assertive role in homeland security. 'Florida will not wait for the federal government to defend our people, period,' he said, adding that state-level counterintelligence efforts must protect constitutional rights and focus on behaviour rather than political views, ethnicity, or religion.

Nebraska state Senator Eliot Bostar described legislative efforts to restrict telecommunications equipment deemed national security risks and reduce vulnerabilities linked to foreign adversaries. He called for closer coordination between Congress and state governments to strengthen America's overall counterintelligence posture.

This hearing reflects a growing consensus in Washington that the US counterintelligence architecture must be rebuilt from the ground up — with states as active participants, not passive recipients of federal guidance.