US, China agree to hold regular talks on hacking

US` Barack Obama and China`s Xi Jinping have agreed to hold regular, high-level talks on how to set "standards of behaviour" for cybersecurity and commercial espionage

Last Updated: Jun 02, 2013, 20:16 PM IST

Washington: Ahead of the first summit between US President Barack Obama and his Chinese counterpart Xi Jinping, the two countries have agreed to hold regular, high-level talks on how to set "standards of behaviour" for cybersecurity and commercial espionage, according to a media report on Sunday.
It would be the "first diplomatic effort to defuse the tensions over what the United States says is a daily barrage of computer break-ins and theft of corporate and government secrets," The New York Times reported.

"The US and China have agreed to hold regular, high-level talks on how to set standards of behaviour for cyber-security and commercial espionage," it said, noting that the talks will begin in July.

Cybersecurity issues loom large between the United States and China because they go to the heart of the economic relationship between the two countries, even more so now that previous sources of friction, like China`s foreign exchange policies, have eased in the last year.

The decision to hold talks on came ahead of the June 7-8 informal summit between Obama and Xi, who took office in March, in Rancho Mirage, California, that could set the tone for their relationship and help them confront chronic tensions like the nuclear threat from North Korea.

American officials say they do not expect the process to immediately yield a significant reduction in the daily cyber intrusions from China, the paper said.

The head of the United States Cyber Command and director of the National Security Agency, Gen. Keith Alexander, has said the attacks have resulted in the "greatest transfer of wealth in history."

Hackers have stolen a variety of secrets, including negotiating strategies and schematics for next-generation fighter jets and gas pipeline control systems.

Nonetheless, a senior American official involved in the negotiations to hold regular meetings said that "we need to get some norms and rules."

"It is a serious issue that cannot simply be swatted away with talking points," said the official, who noted that the meetings would focus primarily on the theft of intellectual property from American companies.

"Our concerns are not limited to that, but that`s what needs urgent attention," he added.

China has insisted it is a victim of cyberattacks, not a perpetrator, and Chinese officials have vigorously denied the extensive evidence gathered by the Pentagon and private security experts that a unit of the People`s Liberation Army, Unit 61398 outside Shanghai, is behind many of the most sophisticated attacks on the United States.

Last month, a study said that the "unprecedented" theft of
American intellectual property (IP) is costing the US a whopping USD 300 billion annually and the main culprit is China.

"The scale of international theft of American intellectual property is unprecedented hundreds of billions of dollars per year, on the order of the size of US exports to Asia," a 11-month study led by high-ranking former US officials said, while recommending sanctions as tough as those used to combat terrorism and drug trafficking.

Intellectual property thieves should be slapped with a mix of banking sanctions, bans on imports and blacklisting in financial markets, the non-partisan commission said in its 89-page report.

"The banking system has a very well-developed system of denying the ability to change money for companies and other organisations that either support terrorism or are involved in drug activities," said Dennis Blair, former US Director of National Intelligence and a co-chairman of the commission.

"Unless current trends are reversed, there is a risk of stifling innovation, with adverse consequences for both developed and still developing countries," the IP Commission co-chair Jon Huntsman, the former US ambassador to China and presidential candidate, said.

The American response to date of hectoring governments and prosecuting individuals has been utterly inadequate to deal with the problem, the study said.

China has been the principal focus of US intellectual property rights (IPR) policy for many years.

The report said China was behind 50 per cent and 80 per cent of the problem.

"The major studies range in their estimates of China`s share of international IP theft; many are roughly 70 per cent, but in specific industries we see a broader range," the study said.

The study noted that a core component of China`s successful growth strategy is acquiring science and technology.

"It does this in part by legal means imports, foreign domestic investment, licensing, and joint ventures but also by means that are illegal. National industrial policy goals in China encourage IP theft, and an extraordinary number of Chinese in business and government entities are engaged in this practice," the study said.