US, China Agree to Hold Talks on Hacking

The United States and China have agreed to hold regular, high-level talks on cyber security that will convene in July and meet regularly after that, an Obama administration official said.

The official said on Saturday the panel would focus not only on hacking but on "developing rules of the road for operating in cyberspace."

The action comes as President Barack Obama and newly installed Chinese President Xi Jinping are set to meet on Friday in Palm Spring, Calif., at a relatively informal retreat aimed at allowing the pair to get to know each other away from the spotlight of Washington.

While China worries the United States is trying to encircle it militarily with its strategic "pivot to Asia," the cyber dispute is the most pressing issue for Obama.

"The president wants to be able to have, behind closed doors, a tough and straight conversation with Xi Jinping about our specific concerns," a senior U.S. official said of the cyber-security issue. "Problems and activities emanating from China have a deleterious effect on our companies, on our interests and on our relationship."

The official said Obama would not shy away from pointing out U.S. concerns about hacking, nor would he accept China's "pro-forma protestation" that it too is a victim of cyber intrusions from abroad.

"Obviously the competitive nature of the relationship will always be there, but there's also a play-by-the-rules aspect to it," another senior Obama administration official said of the cyber-security disagreements with China.

Obama has been under strong pressure to persuade Xi to take U.S. hacking worries seriously, and complaints in Congress about cyber security are growing.

"There has got to be red lines drawn. If the activity continues, there need to be some sanctions," said Shawn Henry, who fought cyber thievery as an FBI assistant director and is now president of the security firm, CrossStrike Services. "They need to understand what the risks are."

The Washington Post reported this week that China had used cyber-attacks to access data from nearly 40 Pentagon weapons programs, including the F-35 Joint Strike Fighter. China dismissed the report, saying it needed no outside help for its military development.

In the two-day meeting with Xi, Obama will also likely bring up differences over North Korea, world trade and China's territorial disputes in the South and East China Seas.

Xi is eager to be seen on an even footing with the American leader and to show China's ruling echelon and public that he can promote their interests on the world stage as Beijing seeks what it calls a new "big-power" relationship with Washington that takes into account China's rise.

It is his first U.S. trip since taking over the presidency in March in China's once-in-a-generation leadership transition.

He is likely to express Beijing's unease about a U.S. reorientation of foreign policy and a shift of American military resources toward the Asia-Pacific region as the war in Afghanistan winds down.

Shen Dingli, vice dean of the Institute of International Affairs at Shanghai's Fudan University, said the U.S. "return" to Asia and the security issues it raised was the biggest issue from the Chinese perspective.

"The U.S. goal is stability, but it has really created instability," Shen said.

Beijing has increasingly used its growing economic clout internationally and exercised its military muscle regionally.

Yet China feels hemmed in by the U.S. "pivot to Asia," which Defense Secretary Chuck Hagel said on Saturday would involve prioritizing deployments of the most advanced U.S. weapons systems to the Pacific, including the radar-evading F-22 Raptor jet fighter, the F-35 and Virginia-class fast-attack submarine.

"China is going down the path to peaceful development, and other countries must follow suit, for only if this happens can there be peaceful coexistence between nations," the Communist Party's official People's Daily wrote in a front-page commentary about the Xi-Obama talks.