New Zealand’s intelligence service says it disrupted an effort by a Chinese state-linked observatory to install satellite-tracking infrastructure in the country, as officials warn that Beijing is conducting espionage in New Zealand on a scale unmatched by other states.

The New Zealand Security Intelligence Service said Purple Mountain Observatory, a China-based organization with close government links, worked with a local company to establish ground-based space infrastructure. The New Zealand company was likely unaware that the equipment could collect intelligence of military value or who would receive the data, the agency said.

NZSIS said it and other government agencies disrupted the effort. It did not identify the local company or explain how authorities stopped the project. The agency also said Purple Mountain Observatory had previously tried to install similar infrastructure in New Zealand and is likely to try again.

The case was disclosed in New Zealand’s Security Threat Environment 2026 assessment, released Thursday. The report says China is the only country New Zealand has detected conducting espionage “at scale” and describes Chinese intelligence services as the country’s most active espionage threat.

New Zealand’s location in the South Pacific makes it valuable for ground stations that can track satellites passing over the Asia-Pacific, including areas with limited coverage. Such equipment can support scientific work and monitor space debris, but NZSIS warned that the data can also aid military and intelligence operations.

The agency said foreign states are increasingly targeting New Zealand government agencies, businesses, universities and researchers for sensitive information and technology. New Zealand is also part of the Five Eyes intelligence alliance with the United States, Britain, Australia and Canada.

China rejected the accusations Friday. Its embassy in Wellington said the NZSIS report was driven by a “Cold War mentality” and accused the agency of making false claims that damage relations between the two countries. Beijing said normal trade and cooperation were being wrongly portrayed as espionage or foreign interference.