U.S., China agree to fight cybertheft, but Obama also issues sanctions threat

WASHINGTON — U.S. President Barack Obama on Friday laid out a fresh threat of sanctions for economic espionage emanating from China, even as he and Chinese President Xi Jinping pledged their countries would not conduct or support such hacking.

“The question now is: Are words followed by action?” Obama said as he stood alongside Xi at a White House news conference.

Obama’s wariness underscored U.S. concerns about what officials say is China’s massive cyber campaign to steal trade secrets and intellectual property from American companies. While China has publicly denied being behind such activities, U.S. officials say their counterparts in Beijing have begun to take the matter more seriously.

“Confrontation and friction are not the right choice for both sides,” Xi said, speaking through an interpreter.

The spying tensions cast a shadow over Xi’s state visit to Washington. Obama faced criticism from some Republicans for honouring China with a state visit given the cyber concerns, as well as U.S. worries about Beijing’s human rights abuses and assertive posture in territorial disputes in the East and South China Seas.

While the latter issues were discussed during Obama and Xi’s lengthy talks, no discernible progress was made.

Xi said the Chinese have “the right to uphold our own sovereignty” in the South China Sea, where Beijing has alarmed its neighbours with a major campaign of artificial island-building. On human rights, Xi made no commitments.

Obama and Xi did herald progress on climate change, one of the few areas of bilateral cooperation that has proceeded smoothly.

U.S. officials say that while they regularly hack Chinese networks, they don’t steal corporate secrets. Chinese officials traditionally have viewed that distinction as meaningless.

The U.S. administration had been preparing economic sanctions in retaliation for Chinese cybertheft. However, officials decided to hold off on the penalties in hopes that an accord like the one announced Friday could be reached.

YURI GRIPAS/AFP/GETTY IMAGES U.S. President Barack Obama, right, welcomes Chinese President Xi Jinping to the White House. Tension over China’s cyber campaign targeting U.S. companies has cast a shadow of Xi’s visit the U.S.