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U.S. says it may target Chinese entities linked to spy balloon

By Humeyra Pamuk, Michael Martina and Patricia Zengerle

WASHINGTON (Reuters) -The United States will explore taking action against entities connected to the Chinese military that supported the flight of a Chinese spy balloon into U.S. airspace last week, a senior State Department official said on Thursday.

Washington is confident that the manufacturer of the Chinese balloon, shot down by the U.S. military last weekend off the U.S. East Coast, has a "direct relationship" with the People's Liberation Army (PLA), the department official said in a statement.

The FBI, which is leading efforts to analyze recovered remains of the balloon, was more circumspect, telling reporters in a briefing that it had obtained only limited physical evidence and did not yet have enough information to assess its capabilities.

"It's very early for us in this process, and the evidence that has been recovered and brought to the FBI is extremely limited," a bureau official said.

FBI officials said they still did not have access to the majority of the balloon's "payload" where most of the onboard electronics were likely carried, and that much of it remains underwater.

Separately on Thursday, speaking at a Senate Foreign Relations Committee hearing, Deputy Secretary of State Wendy Sherman highlighted the flight of the Chinese balloon as another sign of Beijing's efforts to reshape the international order.

"This irresponsible act put on full display what we've long recognized: that the PRC (People's Republic of China) has become more repressive at home and more aggressive abroad," Sherman told the hearing.

Sherman said Washington would continue to block China from using U.S. technology to advance its military modernization.

"The PRC is the only competitor with the intent and means to reshape the international order," Sherman said, adding that the balloon's violation of U.S. sovereignty and international law was the "latest example of that reality."

Nevertheless, Sherman said she hoped Washington and Beijing would be able to continue to work together on issues of shared concern such a climate change "at this difficult time."

POLITICAL OUTRAGE

The spectacle of the Chinese balloon drifting over the United States last week caused political outrage in Washington and brought into sharp focus the challenge posed by China to the United States and its allies.

It prompted Secretary of State Antony Blinken to cancel a trip to Beijing that both countries had hoped would patch up frayed relations. Blinken would have arrived in Beijing Sunday.

Instead, Thursday's slew of briefings and hearings highlighted the political pressure that President Joe Biden's administration remained under to address the incident.

Democratic and Republican U.S. lawmakers sharply criticized the U.S. military and the Biden administration for failing to shoot down the balloon when it first entered U.S. airspace, and instead waiting a week to do so.

The U.S. Air Force downed the balloon off South Carolina on Saturday, a week after it entered U.S. airspace. China's foreign ministry has said it was a weather balloon that had blown off course and accused the United States of overreacting.

On Monday, the United States briefed 150 foreign diplomats in Washington and sent information to its missions around the world to share details about the balloon incident.

On Thursday, Chinese foreign ministry spokesperson Mao Ning dismissed U.S. charges that the balloon was part of a worldwide spying fleet, saying that allegation could be part of a "U.S. information war against China."

PLA-LINKED MANUFACTURER

In the statement released by the State Department, the senior official said the United States "will ... explore taking action against PRC entities linked to the PLA that supported the balloon's incursion into U.S. airspace."

"We are confident that the balloon manufacturer has a direct relationship with China's military and is an approved vendor of the PLA, according to information published in an official procurement portal for the PLA," the official said.

The company also advertises balloon products on its website and hosts videos from past flights, which appear to have overflown U.S. airspace and the airspace of other countries, the official said, without naming the business.

The official said the United States has collected high-resolution imagery of the balloon from U-2 aircraft flybys that revealed it was capable of conducting signals intelligence collection operations.

China had conducted similar surveillance flights over more than 40 countries on five continents, the official said.

Separately on Thursday, U.S. Senate Democrats issued a report saying Washington must commit more diplomatic and security resources to the Indo-Pacific to push back against China, as Beijing seeks to create a regional sphere of influence and become the world's most influential power.

Japan said on Thursday it was exchanging information with the United States after confirmations of suspected balloons flying over Japan, including in the open waters off the southwestern region of Kyushu in 2022.

(Editing by Daniel Wallis)