Washington: The United States has halted plans to impose sanctions on China’s Ministry of State Security (MSS), opting instead to preserve the delicate trade truce agreed upon with Beijing, according to a report citing U.S. officials familiar with the decision. The move marks a significant pause in Washington’s response to a series of major cyber-espionage operations attributed to Chinese state-linked hackers.
For months, U.S. intelligence agencies have warned that China’s MSS was behind a wide-ranging cyber campaign known as “Salt Typhoon,” which allegedly infiltrated telecommunications companies, foreign infrastructure systems, and even a U.S. Army National Guard network. The scope of the operation had prompted senior security officials to advocate for strong retaliatory measures, including targeted sanctions.
However, sources said the White House stepped in to delay punitive action, concerned that economic retaliation could unravel the trade agreement reached in late October between U.S. President Donald Trump and Chinese President Xi Jinping. That accord aimed to reset deteriorating commercial ties by easing tariffs, reducing restrictions on technology flows, and stabilizing rare-earth supply chains.
The paused sanctions package, originally drafted by security agencies, would have targeted individuals and entities connected to the MSS, including state-affiliated contractors believed to support cyber-operations. A separate batch of proposed export controls, which would have further limited American technology shipments to China, has also been placed on hold.
Officials familiar with the discussions said the administration feared that implementing the measures could provoke a strong backlash from Beijing, jeopardizing ongoing negotiations and risking a renewed cycle of trade warfare. Instead, Washington has opted to focus on consolidating progress on tariff reductions and economic cooperation.
Despite the diplomatic push, the MSS remains under heavy scrutiny by Western intelligence for its alleged role in coordinated cyberattacks targeting critical infrastructure and private-sector communication networks. Analysts warn that delaying action could embolden further cyber intrusions, complicating the United States' long-term national security strategy.
Security experts say the challenge for Washington will be balancing the urgent need to respond to foreign cyber threats while maintaining economic stability during a period of geopolitical recalibration with China.
With both nations committed to a temporary de-escalation of trade tensions, the U.S. decision is widely viewed as a calculated gamble. While the suspension of sanctions may safeguard the trade truce in the short term, it raises questions about how and when Washington will respond to state-backed cyber aggression moving forward.
For now, the U.S.–China relationship enters a cautious phase, as both sides navigate a fragile balance between economic cooperation and national security imperatives.