Snowden revelations imperil cyber hacking talks with China

Revelations of U.S. spying on Chinese universities and businesses risk undermining cybersecurity talks with China scheduled for next week.

The Obama administration had hoped to press China on the issue during the fifth round of the U.S.-China Strategic & Economic Dialogue. Instead, it finds itself on the defensive amid former contractor Edward Snowden's allegations that the National Security Agency has been spying not only on the Chinese government but on universities, students and businesses as well.

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“The U.S. in the cyber arena is trying to draw a bright red line,” said Kenneth Lieberthal, a former senior director for Asia at the White House who's now with the Brookings China Center. “I think the Snowden revelations clearly give China an increased opportunity to muddy the waters.”

President Obama put newly elected Chinese leader Xi Jinping on notice when he hosted him at Sunnylands in California last month that the United States wants an end to Chinese hacking. Next week's summit was expected to be an opportunity for officials from the State and Treasury departments to make concrete progress on that front.

“Effectively the U.S. position is, everyone conducts espionage. We don't object to Chinese espionage, they shouldn't object to ours,” Lieberthal said in a call with reporters previewing next week's meeting. “But the U.S. does not do commercial espionage to benefit our own firms' competitive position; the Chinese side does, and we insist that they stop.

“Part of Snowden's revelations that are most damaging in our discussion of cybersecurity with China is his making it clear that we have gone well beyond penetrating China's government and military networks; we've gotten into their universities, their research centers and presumably into major enterprises, too. I think the distinction that we want to draw is still a valid distinction, which is that none of that is done to increase the competitiveness of American firms … while the Chinese are using their commercial knowledge for direct competitive advantage.”

The administration has sought to minimize the damage since Snowden first made his revelations to Hong Kong media last month by distinguishing between U.S. and Chinese practices. The Chinese view, Chairman of the Joint Chiefs of Staff Martin Dempsey told a Brookings conference last week, “is there are no rules of the road in cyber, there are no laws they are breaking, there’s no standards of behavior.”

Secretary of State John Kerry told CNN that NSA operations in China had “nothing to do with hacking.”

“Nothing to do with illegality. Nothing to do with stealing. Everything to do with national security,” he said. “In fact, their national security is at risk and at stake in the very same way.”

And the top Democrat on the House intelligence panel said U.S. spying was done to monitor that country's cyber hackers.

“We're not stealing information, business records, patents and everything else,” Rep. Dutch Ruppersberger (D-Md.) told The Hill. “Every country has security, every country has intelligence. But when you start stealing private information, that's a different story.”

Some experts, however, suggest it's too late to draw that distinction.

Fiona Hill, director of the Center on the United States and Europe at Brookings, in a recent interview with The Hill called the Snowden revelations a “wonderful opportunity that has fallen into their laps to turn back against the U.S. all the accusations the U.S. has been making against China and Russia about massive surveillance and cyber espionage and hacking and violations of this, violations of that.”