US, China agree to stop corporate hacks

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President Obama on Friday announced that the U.S. and China have reached a “common understanding” on the hacking of private companies.

“We’ve agreed that neither the U.S. nor the Chinese government will conduct or knowingly support cyber theft of intellectual property, including trade secrets or other confidential business information for commercial advantage,” Obama said during a joint press conference with Chinese President Xi Jinping.

{mosads}Xi echoed Obama’s comments, noting that the two countries had “reached important consensus.”

The U.S. and China have agreed to “step up crime cases, investigation assistance and information sharing,” Xi said. “Both governments will not engage in or support online theft of intellectual property.”

The remarks came during the Chinese leader’s first official state visit, which has been overshadowed by ongoing allegations that Beijing has either tacitly or explicitly condoned hacks on U.S. firms.

Xi has consistently denied such allegations.

Obama said that he was very firm with President Xi on the subject of hacking during their sensitive meetings this week.

“I raised once again our very serious concerns about growing cyber threats to American companies and American citizens,” Obama said. “I indicated that it has to stop.”

The administration has said that it will pursue economic sanctions against Chinese companies accused of hacking U.S. firms, a threat that Obama alluded to during his comments.

“This is progress, but I have to insist that our work is not yet done,” President Obama said. “I believe we can expand our cooperation in this area even as the United States will continue to use all the tools at our disposal to protect American companies, citizens and interests.”

The leaders also indicated that the two countries will work together with other nations to develop “rules of the road” for appropriate conduct in cyberspace.

“We will explore the formulation of appropriate state behavior norms of cyberspace,” President Xi said.

Rumors circulated earlier this week that the two sides were on the cusp of announcing a cyber warfare pact during the summit. Under the framework, both countries would agree to not launch the first cyberattack on the other’s critical infrastructure during peacetime.

President Obama did not mention the rumored warfare pact specifically.

President Xi also said that the two nations would develop a “high-level joint dialogue mechanism in the fight against cyber crimes.”

The Chinese leader referred to the same “high-level joint dialogue mechanism” during a speech Tuesday night at a dinner for business leaders in Seattle.

If the dialogue comes to fruition, it would be the first official, ongoing cyber talks between the two countries since China quit a joint working group in May 2014 following the Justice Department indictment of five members of the Chinese military for hacking the U.S.

President Obama insisted that despite progress made during the discussions, actions will speak louder than words.

“What I’ve said to President Xi and what I say to the American people, the question now is: Are words followed by actions?” he said. “We will be watching carefully to make an assessment as to whether progress has been made in this area.”

Prior to the state visit, the White House hinted it was preparing to slap China with a slate of economic sanctions for its ongoing cyberattacks on the U.S. private sector. But officials decided to hold off until after the visit in the hopes of making progress on the topic during Xi’s meetings.

Many in the GOP have hammered Obama over the delay, portraying it as another example of his inability to stand up to China.

During the press conference, Obama said he did not lay out any upcoming sanctions.

“We did not at our level have specific discussions of specific cases but I did indicate to President Xi that we will apply those and whatever other tools we have to go after cyber criminals either retrospectively or prospectively,” he said.

Many still expect White House sanctions to come down in the coming weeks or months.

Cyber leaders on Capitol Hill from both parties have backed these penalties to pressure China to end its cyber espionage. 

Those lawmakers on Friday implored Obama to punish China if it does not comply with the “common understanding” about state-sponsored corporate espionage. 

Several said they were “skeptical” China would keep its promise.

“No nation has done more to advance its economic interests through the theft of the work product of others than China, at tremendous cost to American businesses and jobs,” said Rep. Adam Schiff (Calif.), the top Democrat on the House Intelligence Committee. “I remain skeptical that China will deliver on this promise, and believe it will be necessary to impose a series of increasing consequences on Chinese businesses that continue to profit from the theft of American research and development.”

Rep. Jim Langevin (D-R.I.), who co-chairs the Congressional Cybersecurity Caucus, agreed. 

“The threat of sanctions brought President Xi to the negotiating table, and President Obama must make clear to his counterparts that sanctions will be levied on rogue actors in cyberspace,” he said.

— This story was updated at 2:08 p.m.

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