Obama to China’s Xi: Cybertheft hurts trade relationship

U.S. President Barack Obama and Chinese President Xi Jinping walk the grounds at The Annenberg Retreat at Sunnylands in Rancho Mirage, California June 8, 2013.
KEVIN LAMARQUE | REUTERS
U.S. President Barack Obama and Chinese President Xi Jinping walk the grounds at The Annenberg Retreat at Sunnylands in Rancho Mirage, California June 8, 2013.
Posted June 09, 2013, at 1:50 p.m.

RANCHO MIRAGE, Calif. — President Barack 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 two rival nations, U.S. officials said.

The discussion came near the end of a high-stakes and unusual summit here, 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 over 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 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 Obama had carved from a California redwood tree. Xi is taking the bench with him to China as a souvenir gift.

On Friday night, the two 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 and not.

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. And Xi faulted the news media with leaving what he considers 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.

 

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