Obama, China's Xi discuss cybersecurity dispute in phone call

WASHINGTON Thu Mar 14, 2013 6:03pm EDT

China's newly-elected President Xi Jinping takes a seat before the fifth plenary meeting of the National People's Congress (NPC) at the Great Hall of the People in Beijing, March 15, 2013. REUTERS/Jason Lee

China's newly-elected President Xi Jinping takes a seat before the fifth plenary meeting of the National People's Congress (NPC) at the Great Hall of the People in Beijing, March 15, 2013.

Credit: Reuters/Jason Lee

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WASHINGTON (Reuters) - President Barack Obama took mounting U.S. concerns about computer hacking straight to China's president on Thursday in a sign of how seriously the United States takes the threat of cyber attacks emanating from China.

A day after meeting with U.S. corporate CEOs in the White House Situation Room about cyber threats, Obama spoke by phone with Chinese President Xi Jinping about the cyber issue as well as North Korea's nuclear challenge, currency and trade issues.

The two leaders committed to engage in an ongoing discussion to address the cyber issue, White House deputy national security adviser Ben Rhodes told reporters. "Given our significant concerns in this space we need to ensure protection for our citizens, our security and our businesses," he said.

Earlier this week, U.S. intelligence leaders said for the first time that cyber attacks and cyber espionage had supplanted terrorism as the top security threat facing the United States.

U.S. businesses are increasingly alarmed about the targeted theft of confidential business information and proprietary technologies through cyber intrusions emanating from China.

The issue has suddenly soared to the top of the U.S.-China agenda. The Washington Post reported last month, for instance, that security experts believe Chinese cyber spies have in recent years hacked many of Washington's law firms, think tanks, news organizations, human rights groups, contractors, congressional offices, embassies and federal agencies.

Obama told ABC News in an interview aired on Wednesday that some cybersecurity threats are "absolutely" sponsored by governments while some are sponsored by criminals.

"We've made it very clear to China and some of the other state actors that, you know, we expect them to follow international norms and abide by international rules," he said.

Obama called Xi to congratulate him on his new position and both agreed on the value of regular high-level discussions. To that end, Obama noted that U.S. Treasury Secretary Jack Lew will visit China next week to be followed in coming weeks by Secretary of State John Kerry, a White House statement said.

Lew lacks the international stature of his predecessor, Timothy Geithner, and may use the visit to China to boost his international visibility.

Obama welcomed China's commitment to G-20 nations to move toward a more flexible currency exchange rate, a development long sought by the United States to allow U.S. exports to become more competitive in Chinese markets.

Administration officials have said China has made progress in valuing its currency, allowing the yuan to appreciate by about 15 percent against the dollar in recent years.

China's global trade surplus has dropped sharply and a rise in labor costs has also helped make Chinese products less competitive, even as the U.S. economy continues to improve, giving currency concerns less salience.

But Lew has said China's yuan remains undervalued, and has pledged to push the country to do more to appreciate its currency. U.S. lawmakers say an artificially low yuan hurts American manufacturers.

On top of that, the United States has come under fire from other countries for an aggressive easing of monetary policy critics contend seeks to drive down the dollar, a charge that puts Washington in a tougher spot in criticizing China.

Obama and Xi also discussed North Korea's nuclear challenge. After a new round of U.N. sanctions took effect recently, North Korea was reported to have declared invalid the 1953 armistice agreement that ended its war with South Korea.

(Additional reporting by Anna Yukhananov; Editing by Vicki Allen and Todd Eastham)

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Comments (1)
JarnoLim wrote:
Cyber quarrelling ‒ lately practiced by the US and China ‒ makes the need for increased openness and international cooperation in the domain clearly evident. An inclusionary process for negotiating cyber rules should be established in order to overcome the severe problems related to cyber espionage and other forms of cyber hostility.

The quarrelling intensified, when Mandiant, a private US cyber security company, in its February report pointed a finger towards China and accused her of systematic intrusions into governmental and business networks. These accusations are nothing new as such but reflect a widely recognised problem. What is new is the US attitude towards and response to Chinese intrusions.

The US cyber policy is becoming less tolerant towards breaches of the tacit cyber etiquette and more denunciatory. The Obama administration has been, and is, under public pressure to take a more firm stance to cyber security. As a response, it has e.g. constructed a hierarchy of the capabilities of potential adversaries to guide policy making. The report of Defence Science Board from January lists adversaries from tier I to tier VI. The top tier adversaries are not only able to abuse existing vulnerabilities, but also to create new ones ‒ even to highly protected systems. It names China, alongside the US and Russia, as one of the most apt cyber actors capable of inflicting existential damage on opponents.

China, on the other hand, has declared that she condemns cybercrime, has not been systematically involved in such activity and suffers from the same consequences of cyber hostility as other countries. Lately, China has also expressed her willingness to enter multinational negotiations dealing with cyber security issues and thus, signalled interest in cooperation.

It seems that bets are rising in the cyber game. Despite the declarations of goodwill, espionage is common on each side and produces significant economic losses and other problems related to compromised security. In addition, the heads of the US intelligence organisations named cyber security as the top current security issue in a congressional hearing this month. This implicates the end of terrorism dominated security discourse and policy in the US.

The only way to overcome cyber problems is to engage in rules making and practical cooperation to organise the diffuse cyberspace. There is a real and urgent need for this, as the importance of the domain for every aspect of life is continuously increasing. Diplomacy ought to take over the international cyber agenda. Otherwise, the current tensions will only intensify.

Mar 14, 2013 5:19pm EDT  --  Report as abuse
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