Week ahead: White House weighs sanctions for Chinese hacking

The Obama administration has one week left to decide whether it will punish China’s alleged hacking with sanctions before President Xi Jinping arrives for his first official state visit to the U.S.

In recent months, the White House has grown increasingly irritated with Beijing for allowing — and potentially even orchestrating — a massive campaign to pilfer intellectual property from U.S. companies.

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Ahead of Xi’s visit, Obama administration officials have hinted they will slap several Chinese companies with sanctions to signal a new hard-line approach on cyberattacks.

It would be the first example of President Obama employing a new tool established by an April executive order.

The president's order gave the Treasury Department the power to levy sanctions on individuals or companies behind cyberattacks. Essentially, the penalties would freeze targets' assets when they pass through the U.S. financial system and prohibit them from working with American companies.

“Targeted sanctions, used judiciously, will give us a new and powerful way to go after the worst of the worst,” Obama said in a post on Medium at the time.

Pressure has been mounting on Obama to take a stand against China on hacking since devastating hacks at the Office of Personnel Management exposed more than 20 million people’s sensitive data.

Beijing is widely believed to have ordered the digital assault, though the White House has not publicly blamed China.

Chinese policy experts said Beijing is worried about the possibility of sanctions and even considering pulling out of the summit altogether.

“It’s not out of the question,” said Bonnie Glaser, a senior adviser for Asia at the Center for Strategic and International Studies. “That’s just highly unlikely.”

But many experts and former administration officials are wary the administration will hit Beijing with sanctions days before Xi lands in Washington, eliminating the chance of a canceled summit.

Capitol Hill is also set next week to wade into the battle over government access to a company’s customer data.

The Senate Judiciary Committee on Wednesday plans to hold a hearing to discuss reforming the Electronic Communications Privacy Act (ECPA), the 30-year-old law that governs law enforcement access to digital data.

The hearing follows a bout in court between Microsoft and the Justice Department over the issue, arguing the government shouldn’t be able to compel the tech firm to hand over emails stored in a Dublin data center.

More broadly, privacy advocates and the tech community have been pressing the government to update the ECPA, which they believe relates poorly today’s technology.

The measure doesn’t provide the necessary protections for email and documents stored in the cloud, they say. Those communications should at least be held to the same standards for a search warrant as physical documents are, advocates say. 

Google’s director of law enforcement and information security, Richard Salgado, will represent Silicon Valley at the hearing.

Officials from the Justice Department and Securities and Exchange Commission will get a chance to make the government's case.

 

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