Obama warns Xi that continued cybertheft would damage relations

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RANCHO MIRAGE, Calif. — President Obama confronted Chinese President Xi Jinping here Saturday with specific evidence of China’s widespread theft of intellectual property from U.S. companies and warned the newly minted Chinese leader that continued *cybertheft would undermine economic ties between the rival nations, U.S. officials said.

The discussion came near the end of a high-stakes and unusual summit, where Obama and Xi reached breakthroughs on other critical issues, including an agreement to work together to denuclearize North Korea and to confront global climate change.

Yet in eight hours of private talks during two days at an expansive desert estate here, the most tension between Obama and Xi seemed to surround the contentious issue of cybersecurity.

“It is now at the center of the relationship; it is not an adjunct issue,” Thomas E. Donilon, Obama’s national security adviser and a participant in the discussions, told reporters.

Obama, presenting detailed examples of cybertheft, told the Chinese delegation that the United States has no doubt that the intrusions are coming from within China, according to Donilon.

“The president went through this in some detail,” Donilon said, adding that Obama told Xi that “if there continues to be this direct theft of United States property that this was going to be a very difficult problem in the economic relationship and was going to be an inhibitor to the relationship reaching its full potential.”

Obama and Xi also discussed mutual security concerns, chiefly North Korea’s nuclear provocations, and arrived at what Donilon described as a “shared threat analysis.” Donilon said Obama and Xi agreed that neither China nor the United States would accept North Korea as a nuclear armed state.

“The bottom line is, I think we have quite a bit of alignment on the North Korean issue and absolute agreement that we will continue to work together on concrete steps,” Donilon said.

And on climate change, a sensitive issue for the Chinese that has long bedeviled leaders from both countries, Obama and Xi agreed to work together to phase down the production of hydrofluorocarbons, a highly potent greenhouse gas used in refrigerators, air conditioners and other industrial items.

U.S. officials and advocates for China toughening its environmental regulations hailed the agreement as a significant step toward reducing pollution and responding to the threat of global warming.

For the United States and China, the two-day summit at California’s historic Sunnylands retreat was significant and unique because of its informal atmosphere and extended discussions. The meetings, which come at an important juncture for U.S.-China relations, were carefully orchestrated to help the two men forge a deeper personal relationship.

Obama and Xi held eight hours of talks — including roughly 50 minutes one-on-one, with no aides other than interpreters, as they took a leisurely stroll through the bucolic estate and then sat to chat on an inscribed bench that Obama had gotten carved from a California redwood tree. Xi is taking the bench with him to China as a souvenir.

On Friday night, the presidents and their delegations enjoyed what Donilon described as a lively dinner. The menu was decidedly American — lobster tamales, porterhouse steak and cherry pie — and was prepared on site by celebrity chef Bobby Flay.

For the United States, a top objective heading into the summit was to press the Chinese on cybersecurity. U.S. officials have grown increasingly alarmed about China’s hacking into private records of U.S. companies and theft of intellectual property.

When Obama and Xi addressed reporters late Friday, Obama said the two countries must arrive at a “firm understanding” of how to regulate cyberattacks. Obama said these were “unchartered waters” because, unlike on military or arms issues, there are no protocols for what is appropriate.

Publicly, though, Obama stopped short of accusing Xi of cybertheft. And when a U.S. journalist pressed Xi on his country’s cyberspying, the Chinese leader asserted that China, too, is a victim of such attacks. Xi faulted the news media for leaving what he said was a misleading impression that the threat comes mostly from China.

“This matter can actually be an area for China and the United States to work together with each other in a pragmatic way,” Xi said.

Obama warns Xi that continued cybertheft would damage relations, U.S. officials said - The Washington Post

 

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American intelligence officials have told Mr. Obama that the cyberattacks on American companies emanating from China, which have swept up billions of dollars’ worth of intellectual property, are caused by the increasing desperation inside China to keep its economy growing at 7 or 8 percent a year. Chinese leaders consider that rate necessary to create enough jobs for the millions of young Chinese who flock to the coastal manufacturing centers each year.

American and Chinese officials appear to finally be on the same page about how to contain a nuclear North Korea. During the talks at Sunnylands, according to two officials, the Chinese spoke in unusually specific terms about how they might use their leverage as the North’s economic savior and energy provider to bring its young leader, Kim Jong-un, to heel. “They made clear they would not be engaging with him directly until there is a change in action,” one official said.

But there has been no such agreement on cyberissues. Mr. Obama spent much of Saturday morning describing to Mr. Xi specific episodes involving Chinese theft of intellectual property — an exercise intended to make clear how seriously the United States takes the issue. Computer attacks have never before been the subject of discussions between Chinese and American leaders.

“It is now really at the center of the relationship,” Tom Donilon, Mr. Obama’s departing national security adviser, told reporters after the meeting.

Still, he said, China’s leadership has yet to acknowledge that sections of the Chinese government — including People’s Liberation Army Unit 63198, which has been linked to many of the attacks on American corporate and government sites — are at all responsible for the wave of hacking. In the talks, Mr. Donilon said, Mr. Obama “underscored that the United States did not have any doubt about what was going on here.”

So far, Mr. Obama’s approach has been to try to get China to agree to what the president calls “norms” of behavior, akin to trade rules. But with Mr. Xi at his side, Mr. Obama observed that “these are uncharted waters” because “you don’t have the kinds of protocols that have governed military issues, for example, and arms issues, where nations have a lot of experience in trying to negotiate what’s acceptable and what’s not.”

Nor is there trust: the Chinese point out that the United States has used cyberattacks as an offensive weapon against Iran while the Pentagon warned in a recent report that China was pouring huge resources into a cyberarsenal of its own.

China’s military sees American techonological power as one more form of pressure to be countered, just like the American naval presence in the Pacific. That is zero-sum cold war thinking — but China and the United States are far more economically interdependent than the United States and the Soviet Union ever were.

http://www.nytimes.com/2013/06/10/w...a-cold-war-mentality.html?pagewanted=all&_r=0