Obama Approaches Chinese Cybersecurity Issue With Carrot, Not Stick

But Chinese President Xi Jinping is told continued hacking will sour relationship with the U.S.

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KEVIN LAMARQUE / REUTERS

U.S. President Barack Obama meets Chinese President Xi Jinping at the Annenberg Retreat at Sunnylands in Rancho Mirage, Calif., on June 7, 2013

Under bipartisan pressure to take steps to address rampant Chinese economic hacking, President Barack Obama has carved out a careful path to avoid souring his relationship with Chinese President Xi Jinping.

As the two leaders’ informal two-day summit concluded in the California desert, American officials asserted on Saturday that the cyber-enabled economic threat is now at the core of the U.S.-China relationship. With members of Congress of all stripes calling for aggressive action against hacking, Obama took a more reserved path, telling Chinese leaders that the practice is now one of the main impediments to expanding relations between the two countries.

Chinese officials have long refused to acknowledge the widespread and well-documented hacking. Xi declined to answer a U.S. reporter’s question on Friday asking whether he had acknowledged to Obama his country’s role. He noted a sharp uptick in news coverage of cyber issues, saying, “This might give people the sense or feeling that cybersecurity as a threat mainly comes from China or that the issue of cybersecurity is the biggest problem in the China-U.S. relationship.”

(MORE: Hack Attack: China and U.S. Trade Barbs Over Cyberwarfare)

“He was remarkably dismissive,” says Christopher Johnson, a former China analyst for the CIA and the Freeman Chair in China Studies at the Center for Strategic and International Studies.

But National Security Adviser Tom Donilon, the Administration’s China point man who delivered the U.S.’s first public rebuke of China on economic hacking earlier this year, said regardless of the statements of Chinese leadership, it is now clear to Chinese leaders that they can’t evade the issue. “It’s quite obvious now [that] Chinese senior leadership understand clearly the importance of this issue to the United States and the importance to the United States of seeing a resolution to this issue,” he said. Donilon told reporters after that Obama laid out his concerns about the theft of U.S. intellectual property in specific terms to Xi.

(MORE: Putting China’s ‘Hacking Army’ Into Perspective)

The issue is of increasing concern for American corporations. Scott Paul, president of the Alliance for American Manufacturing, told USA Today last week, “There has to be some consequence for China’s pervasive cyberhacking and theft of commercial and military secrets.” General Keith Alexander, the director of the National Security Agency, said last year that China’s attempts to steal corporate intellectual property has led to “the greatest transfer of wealth in history,” citing the computer-security firm Symantec’s estimate that U.S. companies lose roughly $250 billion annually because of IP theft.

In February, the cyberintelligence firm Mandiant published a report detailing extensive hacking by a unit of China’s People’s Liberation Army that had gathered proprietary information from more than 100 major companies. Senior Administration officials said Obama would hold China accountable for attacks emanating from its borders.

But Obama didn’t threaten any specific penalties against China for continuing the practice, other than weaker diplomatic and economic ties. U.S. and Chinese officials have agreed to hold regular working-group meetings to deal with the cybersecurity issue, though American officials admit there is no quick fix to the problem. Johnson tells TIME that American officials can’t truly hope to bully Chinese leaders into dialing back the practices. “It would blow up the summit,” he says. “This can only be solved over the long term.”

Obama and Xi met for nearly eight hours over two days, including a 50-minute stroll on Saturday morning around the pristine 200-acre (80.9 hectare) Sunnylands estate hosting the summit. Later the pair, joined by aides, extensively discussed cybersecurity issues as part of a wider discussion about economic interests and the potential for cooperation between the two nations, officials said.

(MORE: Inside Sunnylands, the Luxe California Estate Where Obama Met Xi)

Donilon said Obama made it clear to Xi that the cybersecurity issue threatens their pursuit of a “new model of major country relationship” with the U.S. One of Xi’s priorities at the summit was to earn recognition for China as a superpower while developing deeper ties to the U.S. Xi’s domestic economic reforms would be great aided by American investment and assistance, which Obama said would suffer if China didn’t control its cybertheft.

“The President … asked that the Chinese government engage on this issue and understand that if it is not addressed, if there continues to be this direct theft of the United States, then this was going to be a very difficult problem in the economic relationship and was going to be an inhibitor to the relationship really reaching its full potential,” Donilon said.

It’s hard to have “a comprehensive partnership at the same time that you have large-scale theft under way,” he added.

15 comments
southmost
southmost

It would be interesting to know what the US is offering in this "new model of major country relationship".  Like maybe withdrawing the US spy planes that currently patrol the Chinese coastline to listen in on private communications?  Or ending the admitted CIA policy of intercepting internet communications of non-US persons?  And so on...

In other words: Countries spy on each other.  They always have.  Clutching our pearls and saying "How dare you!" is rightfully seen as hypocrisy and does not advance the conversation.

ChikuMisra
ChikuMisra

If Obumbly is not going to close gbay like he promised, at least he could stand up to china on human rights. He is definitely the person to do it since nobody has ever really figured out where he is from, so the normal ethnic tensions would be absent.

theOracle
theOracle

I am a doctor, wife and mother. I can tell you that wasn't his carrot. lol

RamonRoman
RamonRoman

This is sooo peachy and hypocrisy is rampant. It is like trying to block the sun with transparent paper. Both of these leaders start the conversation as if SPYING doesn't exist at all. The CIA and the electronic geniuses that work for the government in the security of the country don't spy on China, at all. The same for China. When the USA realizes that somebody, someone, is using cyber technology to spy or to actively fight with it, the screams hit the roof. But when this is done by the USA and its putative daughter, against a supposed enemy, as IRAN,  then everything is peachy and correct. OBAMA=BUSH.

alfonso.carrino
alfonso.carrino

We have borrowed trillions from China and need to pay it back. For each documented incident of cyber hacking we should , as is done in many businesses for varying reasons, issue a "back charge". Each attempt or attack; $1,000,000; each successful attack $10,000,000; any manager can build a scale from this point. Our time to monitor should carry a hefty price; our cost to implement counter measures should bear a very dear price since we could be doing something productive instead of defensive. Debit memos and back charges should be issued in writing and sent to China each and every time. It doesn't make any difference if they admit it or not. It makes no difference if they agree with the DM. We are the ones writing the check and it gets deducted. After a while, a million here a million there, you actually start to talk about real money. Hit them hard in the pocket and its amazing how things change. Stop dancing around and attack the situation. China has come to represent greed in all its ugly mannerisms.

Lastly, we are worry about "damaging" relations. What relations? Your significant other is cheating on you and you still want to hang around. Does not make any sense at all.

jacke13
jacke13

China and the United States willing to peaceful coexistence, friendship for generations!

helmetbreaker
helmetbreaker

It's funny Obama didn't apologize to the Chinese leader for making our computer barriers so complicated!  Or maybe he offered full access to all public and private computers in the United States as a gesture of friendship! The President doesn't have the stomach for conflict.  If he had been President at the time of Reagan's presidency, we would all be speaking Russian!

ChikuMisra
ChikuMisra

I am sure your patients, husband and kids are proud of your dirty and racist joke about the nations leader. Just because he is a black man.

ChikuMisra
ChikuMisra

It is like when your significant other is a child beating, heroin addicted monster, but you don't care. Why? Cuz she a good cook. That is china.

mantisdragon91
mantisdragon91

@helmetbreaker Funny you should mention a criminal that illegally sold arms to Iran to finance Death Squads in Nicaragua. And if Reagan was so tough why did he run like a scalded dog when those marines were killed in Beirut in 81?

ChikuMisra
ChikuMisra

Yes, Obumbly is a gentle man, in the truest sense. That is part of why he is the president. Bc people sense he is a nice person. He is not like your arrogant cowboys of the 1960s, 1970s, 1980s.....well every decade actually. He understands we all equal.