UPDATE 2-Cyber disputes loom large as Obama meets China's Xi
(Updates with Obama arrival, small protest near summit venue)
RANCHO MIRAGE, Calif., June 7 (Reuters) - President Barack Obama will complain to Chinese President Xi Jinping at a summit on Friday about suspected Chinese cyber hacking of U.S. secrets, even as the White House faces growing questions at home over American government surveillance.
Meeting at the luxurious Sunnylands estate near Palm Springs in California, Obama will seek Xi's assurance that he takes seriously accusations of growing Chinese cyber spying, including snooping on advanced U.S. weapons designs.
"All nations need to abide by international norms and affirm clear rules of the road," a senior U.S. official told reporters. "That's the backdrop to the discussions that the two presidents will have."
Dispute over cybersecurity could test the two leaders' ability to get along when they meet in the California desert in talks that are billed as an informal get-to-know-you encounter.
Obama, who arrived at the sun-baked summit venue on Friday afternoon and will welcome his Chinese counterpart later in the day, intends to tell Xi that Washington considers Beijing responsible for any cyberattacks originating from its territory and that it must take action, U.S. officials said.
But in his first meeting with Obama since taking over China's presidency in March, Xi may not be in a conciliatory mood.
He is expected to voice discomfort over Washington's strategic "pivot" toward Asia, a military rebalancing of U.S. forces toward the Pacific that Beijing sees as an effort to hamper its economic and political expansion. He also wants a new "big power" relationship that takes into account China's rise.
And Obama's protests about Chinese cyberspying might be blunted by news that the U.S. government has been quietly collecting the telephone records of millions of Americans as part of U.S. counter-terrorism efforts.
On the eve of the California summit, more questions were raised about the extent of U.S. government domestic spying when the Washington Post reported that the National Security Agency and the FBI are also tapping into the central servers of leading American Internet companies to examine emails and photos. But major tech companies said they do not provide any government agency with "direct access" to their servers.
Obama, visiting California's Silicon Valley earlier on Friday, staunchly defended the surveillance, calling it a "modest encroachment" on privacy that was necessary to protect the United States from terrorist attack.
Pushing back against years of U.S. allegations of Chinese hacking, Beijing insists it is more a victim than a perpetrator of cyber espionage. China's top Internet security official said this week that he has "mountains of data" pointing to U.S. hacking aimed at China.
But the U.S. Congress is losing patience, particularly after a report that Chinese hackers had gained access to design plans for U.S. weapons systems like the F-35 Joint Strike Fighter. China denied that, saying it needed no outside help for its military development.
The two leaders may try to deflect pressure at the summit for immediate progress on cyber disputes by promising more in-depth deliberations by a U.S.-China "working group" already set to convene in July for the first time.
'BIG POWER' RELATIONSHIP
High-level U.S.-Chinese encounters of recent decades have been unable to match President Richard Nixon's groundbreaking visit to Communist China in 1972 that ended decades of estrangement between Washington and Beijing.
U.S. officials believe Obama and Xi will develop personal rapport - something lacking between American presidents and Xi's notoriously stiff predecessor, Hu Jintao - that could help ease tensions between the world's top two economic powers.
Now almost five months into his second term, Obama talked about the meeting at a Democratic fundraiser on Thursday.
"The transformation that is taking place in China is extraordinary and never in the history of humanity have we seen so many people move out of poverty so rapidly in part because of what is happening in China and what's happening in India," he said. "And yet when you look at the challenges they face and the challenges we face I'll take our challenges any day of the week."
In an apparent concession before the summit, China granted passports to the mother and eldest brother of blind activist Chen Guangcheng, whom they hope to visit in the United States. Chen escaped house arrest last year and fled to the U.S. Embassy in Beijing.
Obama aides played down the chances of any big breakthroughs in more than five hours of talks with Xi over two days in Sunnylands, a 200-acre (81-hectare) desert estate that has hosted presidents such as Ronald Reagan and Bill Clinton.
A willingness to forgo the traditional pomp and scripted discussions of a White House visit appears to signal a fresh approach by Xi, who as president-in-waiting met Obama in Washington in February 2012. He is a Communist Party "princeling," the son of a revolutionary leader. But he is also fond of Hollywood movie war dramas.
"He seems to be someone who is fast on his feet, who is open to engagement," another Obama aide said, drawing a contrast to Xi's more buttoned-down predecessors.
Despite the relative informality, the meetings are expected to be anything but laid back.
The leaders face longstanding differences on issues such as North Korea, China's territorial disputes with U.S. allies in Asian waters, trade problems and China's human rights record.
Obama will be looking to build on growing Chinese impatience with North Korea over its nuclear and missile programs, a shift that could bring Beijing - the closest thing Pyongyang has to an ally - closer to Washington's position.
Obama is likely to ask Xi to brief him on a visit to China last month by an envoy of North Korea's young leader, Kim Jong-un. Beijing's message to Pyongyang was to halt its internationally banned tests, although the North showed little sign of acquiescing, according to a source.
Shedding jacket and tie, Xi, 59, will have the kind of face time with his 51-year-old U.S. counterpart that few foreign leaders have been afforded.
The White House may have missed an opportunity for even deeper relationship-building.
Xi's glamorous wife, Peng Liyuan, a famous singer who has broken the mold of Chinese first ladies who have traditionally kept out of the limelight, is accompanying her husband. But popular American first lady Michelle Obama will remain in Washington as their two daughters finish the school year.
Near the gates of Sunnylands, about 100 protesters - including Vietnamese angered by China's muscular approach to territorial disputes in the South China Sea, Tibetan rights supporters and adherents to the banned Falun Gong spiritual group - braved withering heat to wave banners and signs. (Additional reporting by John Ruwitch in Palm Springs and Ben Blanchard in Beijing; Writing by Matt Spetalnick; Editing by Alistair Bell, Doina Chiacu and Paul Simao)