Ellen Nakashima and Steven Mufson
September 26, 2015
U.S., China vow not to engage in economic cyberespionage
President Obama and Chinese leader Xi Jinping pledged Friday that neither of their governments would conduct or condone economic espionage in cyberspace in a deal that sought to address a major source of friction in the bilateral relationship.
But U.S. officials and experts said that it was uncertain whether the accord would lead to concrete action against cybercriminals.
The agreement, reached in talks Thursday night and Friday morning between Obama and Xi, has the potential — if enforced — to confront one of the most significant threats to U.S. economic and national security and an irritant for American corporations trying to protect their intellectual property. The pact also calls for a ministerial or Cabinet-level process aimed at ensuring compliance.
Speaking alongside the Chinese president in the Rose Garden, Obama said that the two had reached “a common understanding on the way forward,” but he added that more needed to be done.
“The question now is,” Obama said in the joint news conference with Xi, “are words followed by actions?”
The two leaders agreed on a raft of other matters, including “nearly complete bans” on the ivory trade; measures to avoid “miscalculation” and unintended collisions of military planes or ships; and an adoption by China of a cap-and-trade system to limit greenhouse emissions and a $3.1 billion pledge by China to help poor nations grapple with climate change.
Wildlife groups said that the ivory measure would pressure Hong Kong, which is the hub for 90 percent of the world’s ivory trade, much of it destined for the Chinese mainland. Poachers are killing an estimated 33,000 elephants annually.
But cybertheft went to the top of the summit agenda. China has long denied such activity — and Xi at the news conference said, “China strongly opposes and combats the theft of commercial secrets and other kinds of hacking attacks.”
American officials have said that the United States does not conduct cybertheft for the benefit of American companies. The disclosures of a former National Security Agency contractor, Edward Snowden, about extensive U.S. cyberspying overseas have given Beijing ammunition to counter such assertions.
Nonetheless, apparently rattled by the threat of sanctions — a threat that Obama reiterated in his meetings with Xi — China agreed to affirm that it was against economic cyberespionage.
“I raised, once again, our rising concerns about growing cyberthreats to American companies and American citizens,” Obama said at the joint news conference. “I indicated that it has to stop.” Obama added that the two sides made “progress, but I have to insist that our work is not yet done.”
The formulation reached, and reiterated by the two leaders, said that “neither the U.S. or the Chinese government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information for commercial advantage.”
The two sides also said they would set up a high-level joint dialogue on cybercrime in which officials from both countries would be able to investigate and review allegations of cyber-
intrusions. They agreed to establish a hotline to discuss issues that might arise in that process.
The U.S. secretary of homeland security and the attorney general will co-chair the dialogue on the American side. The Chinese side will be represented by ministers of public security, state security, justice, and the State Internet and Information Office.
“The significance of this agreement is in China, for the first time, publicly committing that it will not conduct” economic cyberespionage, said Kenneth Lieberthal, a senior fellow in foreign policy studies at the Brookings Institution. “In the past, they have simply denied that they have engaged in these or other cyberactivities and that they’re the victim and not the perpetrator.”
Lieberthal added: “Only a great optimist will say that now we’re home-free on this. But [the agreement] at least provides a very high-level, agreed-upon way to engage on this issue and a public [acknowledgment] that this is an issue of genuine consequence.”
Sanctions are not off the table, Obama administration officials said. Obama said he described to Xi the “tools” the administration has to deter and punish cybercrime and cyberattacks. They include criminal indictments, such as those issued against five Chinese military officials last year for economic cyberespionage. Obama said that while they did not discuss specific cases of alleged Chinese cybertheft, he mentioned the executive order he signed in April that authorized the imposition of economic sanctions for malicious cyber-acts.
“I did indicate to President Xi that I would apply those and whatever tools we have in our tool kit to go after cybercriminals, either retrospectively or prospectively,” Obama said.
The agreement does not address traditional espionage, such as China’s alleged theft of personal information of more than 22 million current and former federal employees through the hacking of a computer system used by the Office of Personnel Management.
While the agreement “marks a significant step forward” in the bilateral relationship on cyber issues, “it does not and will not solve all of our cyber challenges that we face with China,” said a senior administration official, who spoke under ground rules requiring anonymity. “A lot of the proof will be in whether or not the Chinese can live up to their commitment.”
The agreement has been in the works for several weeks, the official said. Discussions began after the OPM hack, which incensed U.S. negotiators whose own personnel files were compromised. When national security adviser Susan E. Rice traveled to Beijing in late August to lay the groundwork for the summit, she stressed the importance of the cybersecurity issue. But “the meat of it was done” during a visit two weeks ago by special envoy Meng Jianzhu, a member of the political bureau of the Communist Party Central Committee.
“The Chinese wanted a happy outcome to the summit,” said James A. Lewis, a cyber-policy expert at the Center for Strategic and International Studies.
The senior administration official said the indictments last year, the threat of sanctions “and the messages that the administration has been delivering both publicly and privately have begun to persuade the Chinese that this is not just something we are doing for domestic political consumption, but it is in fact a significant issue and a significant irritant in the bilateral relationship.”
Rep. Adam B. Schiff (Calif.), the ranking Democrat on the House Intelligence Committee, said, “I remain skeptical that China will deliver on this promise, and believe it will be necessary to impose a series of increasing consequences on Chinese businesses that continue to profit from the theft of American research and development.”
Aside from cybersecurity, another gap was over China’s ongoing construction of runways on disputed islands and reefs in the South China Sea. Obama said that “the United States will continue to sail, fly or operate anywhere international law allows,” adding that China’s activity “makes it hard for countries in the region to resolve these disputes peacefully.”
Xi did not promise to halt construction on the reefs or islands but said that “China does not intend to pursue militarization.”
On human rights, Obama said he urged Xi to respect such rights, treat ethnic minorities equally and enter dialogue with the Dalai Lama or other Tibetan leaders. Xi said that people “must recognize that countries have different historical processes and realities.”
Earlier, Obama welcomed Xi in a White House ceremony, complete with a 21-gun salute and military fife and drum corps.
Obama and first lady Michelle Obama emerged from the South Portico just after 9 a.m., welcoming Xi and his wife, Peng Liyuan, after their limousine pulled up to the top of the semicircular driveway. The visitors greeted dignitaries including Vice President Biden and Secretary of State John F. Kerry. Xi and Obama then shook hands with dozens of children from Yu Ying Public Charter School, a Chinese-language immersion school in Washington.
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