Effect of U.S., China Cyber Pledge Unclear

September 28, 2015

The U.S. and China announced agreement on broad anti-hacking principles aimed at stopping the theft of corporate trade secrets though President Barack Obama pointedly said he has not ruled out invoking sanctions for violators.

After a morning of meetings with Chinese President Xi Jinping, Obama said the two governments pledged they won’t condone hacking to steal commercial secrets, a first step toward resolving one of the biggest disputes between the two countries.

“I raised once again our growing concern about cyberthreats,” Obama said during a joint White House news conference with Xi. “I indicated it has to stop.”

The White House said last month it was considering economic sanctions on Chinese individuals and companies in response to a string of cyber-attacks against American businesses and government agencies.

Xi said he and Obama agreed to step up prosecutions and cooperate on investigations of cybercrime, including creating a hotline between officials in the two countries.

“We have broad common interests in the field of cyber, but we need to strengthen cooperation and avoid confrontation,” Xi said.

Industrial Espionage

The two sides agreed that neither government “will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors,” according to a fact sheet released just before the news conference.

It’s unclear how the agreement will substantively affect U.S. companies and government agencies reeling from sophisticated attacks alleged to have been carried out by the Chinese government or its proxies, including the theft of corporate information and millions of health care and federal personnel records.

Obama said the U.S. will be “watching carefully” if words are followed by action and didn’t rule out the possibility of leveling sanctions against Chinese officials and companies in retaliation for hacking.

China denies being involved, saying it’s a victim of cyber- espionage itself and opposes hacking.

Xi said the talks between his government and the U.S. reached “some new consensus” on the issue. He said cybersecurity “could be a new growth source rather than a source of contention between our two countries.”

–With assistance from Mike Dorning, Angela Greiling Keane and Justin Sink in Washington.

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