What Obama did and did not accomplish in cyber-espionage talks with Xi



On September 25, 2015, President Barack Obama and Chinese President Xi Jinping agreed not to engage in commercial cyber-espionage. In our previous blog post, we asked what might be expected. This blogpost surveys what Obama did and did not accomplish at the US-China Summit.

According to the White House factsheet, the leaders agreed on four points with respect to commercial cyber-espionage.[1] First, both countries will respond in a timely manner to requests for information and assistance related to pernicious cyber activity. Second, neither country will participate or sponsor “cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors”. Third, China and the United States will strive to identify and endorse proper norms of state behavior in cyberspace. Last, the two leaders established a high level working group to deter the spread of illegal cyber activity, and a hotline to address serious security issues.[2]

A major achievement is that China now publicly distinguishes between military and commercial cyber-espionage, and promises not to engage in the latter.  The exact lines of demarcation remain to be identified, and they might only be determined on a case-by-case basis.  Presumably Northrup Grumman and its Chinese counterparts will still be fair game for cyber espionage.  But what about telecom companies?  Whatever the precise line, most US business firms should experience far fewer Chinese-inspired attempts to extract trade secrets through cyber espionage. Moreover, with China’s cooperation, the United States should be better able to identify and target perpetrators based on concrete technical evidences.

Missing from the agreement is a promise from China to hold its companies or individuals accountable for the cyber theft of commercial information. Chinese firms that do business in the United States can be held accountable under US law, but most cyber espionage is conducted by cut-out entities.  It is highly doubtful that China will extradite perpetrators to the United States for trial.

The establishment of high level working group represents a replay of a prior initiative.  The two countries established a joint dialogue with the same objective in 2013, but that dialogue was shut down in 2014 following the U.S. indictment of Chinese military officials.[3] Absent such tensions, this time around the working group might not only agree on a sharper distinction between military and commercial cyber espionage, but also reach agreement on defining and prohibiting the first use of cyber warfare (for example, creating chaos in the banking system). Optimistically, US-China agreement on such matters could provide the basis for a wider international accord.

The United States will not solely rely on the Summit agreement to resolve its cyber espionage problems with China. President Obama declared that the United States would apply “whatever tools we have in our tool kit to go after cybercriminals, either retrospectively or prospectively”. [4] The tool kit includes economic sanctions that can be imposed under Executive Order 13694, as well as cyber counter-measures. From the US standpoint, the cybersecurity agreement with China, coupled with backup enforcement, represents a significant milestone in what promises to be a very long campaign.

[1] Office of the Press Secretary, “Factsheet: President Xi Jinping’s State Visit to the United States,” The White House Immediate Press Releases, September 25, 2015.

[2] Dialogues will be held twice per year starting at the end of 2015. The U.S. Secretary of Homeland Security and the U.S. Attorney General will co-chair the dialogue with the ministerial level Chinese officials in Ministry of Public Security, Ministry of State Security, Ministry of Justice and the State Internet and Information.

[3] See “China Halts Cybersecurity Cooperation After U.S. Spying Charges,” Bloomberg, May 20, 2014.

[4] Office of the Press Secretary, “Remarks by President Obama and President Xi of the People's Republic of China in Joint Press Conference,” The White House Immediate Press Releases, September 25, 2015.

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