Obama seeks elusive progress on cyberspying in China talks

China’s flag is displayed next to the American flag on the side of the Old Executive Office Building on the White House complex in Washington, the day before a state visit by Chinese President Xi Jinping. AP

WASHINGTON — President Barack Obama is banking that tough talk on suspected Chinese cyberattacks will yield changes in Beijing’s behavior and justify a decision to hold off penalizing China.

American officials say China is privately showing signs of taking the matter more seriously and noted comments from President Xi Jingping this week that he’s willing to work with the US on cybersecurity.

“Those kinds of comments are at least consistent with what we have urged the Chinese to do when it comes to their policies,” White House spokesman Josh Earnest said Thursday. “But it certainly is not going to eliminate the concerns that we have, and it certainly is not going to reduce the priority that we place on trying to make progress on those issues.”

Obama and Xi were to meet over dinner Thursday night and talk again at the White House on Friday.

Hacking attacks on US companies and government agencies have become a growing source of tension between the US and China.

The US has been preparing sanctions against China in retaliation for its suspected theft earlier this year of personal data of millions of current and former US government employees. But officials decided against levying the penalties ahead of Xi’s visit — in part because embarrassing the optics-conscious Chinese could have impacted potential cooperation during the talks that begin Thursday night.

However, some analysts say China will only see an incentive to change its cyber behavior if it feels real consequences.

“The Chinese are going to continue to engage in this activity until they begin to pay a cost for it,” said Patrick Cronin of the Center for New American Security. “And today they don’t pay a cost for it, so it’s going to continue.”

US officials are particularly concerned with cyberspying that aims to steal intellectual property from private corporations. The White House is seeking commitments from China to protect intellectual property, though officials are downplaying expectations for any particular formal agreement being reached this week.

“We can choose to make this an area of competition, which I guarantee you we’ll win if we have to,” Obama told business leaders last week. “Or, alternatively, we can come to an agreement in which we say, ‘This isn’t helping anybody. Let’s instead try to have some basic rules of the road in terms of how we operate.'”

In his visit to the West Coast earlier this week, Xi said China has also been a victim of hacking. Acknowledging that China and the United States don’t always see eye to eye, Xi said China is ready to set up a joint effort with the United States to fight cybercrimes.

Nick Rossmann, a program manager for the security company FireEye Inc., said his group is tracking about two dozen organizations in China that use malware to breach US organizations and companies. He cited defense, health care and high-tech firms as among the most frequently targeted companies.

“It’s really a range across American industry that we see this economic espionage occurring in,” Rossmann said.

The complaint from those companies is that they spend years developing innovative products while companies in China are able to launch comparable products without that same level of effort and cost, Rossmann said.

Ben Rhodes, a deputy national security adviser at the White House, said the US will make the appeal during talks that China’s failure to crackdown on cyber spying could alienate a business community that has been a strong backer of deepening US-China relations, and could also antagonize US lawmakers into taking more aggressive action.

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