Cybertheft Adds to US-China Tensions Ahead of Upcoming Talks

By Associated Press | June 20, 2015

A researcher at security company DBI searches the Darknet. Governments, law enforcement agencies, and private industries are turning to the Darknet to to investigate terrorist organizations, organized crime, and cyberattacks. NOTE: this photo has been modified for security reasons. (DBI)

WASHINGTON—Tensions between the U.S. and China are growing over its island-building in the South China Sea and over suspicions that Beijing was behind a massive hack into a federal government server that resulted in the theft of personnel and security clearance records of 14 million employees and contractors.

But both powers have incentives to calm the waters ahead of the Chinese leader’s visit to Washington in the fall.

The two countries’ top diplomats and finance officials meet here next week for the annual U.S.-China strategic and economic dialogue. The Obama administration says the two governments won’t be papering over their differences, but they are expected to accentuate the positive, stressing areas of cooperation, like climate change.

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Civilian and military officials will meet Monday to discuss thorny security issues. Secretary of State John Kerry and Treasury Secretary Jacob Lew kick off two days of talks Tuesday with Vice Premier Wang Yang and State Councilor Yang Jiechi on a sprawling agenda, including plans for a bilateral investment treaty.

China, in particular, is presenting the dialogue as a prelude to Xi Jinping’s visit to the White House slated for September, his first since becoming China’s president in 2013.

Foreign Ministry spokesman Lu Kang called it an opportunity to “push for new progress in the building of a new model of major power relationship,” the state-run Xinhua news agency reported Friday.

But it’s a model with cracks in it. Relations between the world’s two largest economies, with their divergent political systems and priorities, rarely run smoothly. But recent months have been particularly rocky.

China’s reclamation of more than 2,000 acres of land on disputed islands and atolls in the South China Sea since last year has raised international alarm over its territorial ambitions. Washington took the unusual step last month of publicizing a U.S. military surveillance flight that showed the massive scale of China’s island-building.

China says the islands are its sovereignty territory, but Washington argues that the continuation of building work and militarization of the islands could enflame complex territorial disputes with China’s neighbors, with whom the U.S. is seeking to forge closer ties while preserving freedom of navigation in sea lanes crucial for world trade.

“Nobody is interested in conflict here and there’s no reason why it needs to devolve into conflict. Again, that’s why next week’s meeting is so important,” State Department spokesman John Kirby told reporters Thursday.

Cybersecurity is another source of acrimony that’s up for discussion, given fresh urgency by the massive security breach that led to the theft of personal information of as many as 14 million current and former U.S. federal employees. The Obama administration believes that China’s government, not criminal hackers, was responsible for the breach that included detailed background information on military and intelligence personnel.

China has denied involvement in the break-in and says it is also a victim of cyberattacks.

The U.S. business community, meanwhile, is concerned that regulatory barriers in China are growing, not easing, despite Xi’s promise to advance economic reforms. Progress has been slow on the bilateral investment treaty the U.S. and China agreed to pursue two years ago, and China has reportedly submitted a long list of sectors it wants excluded.

Daniel Russel, top U.S. diplomat for East Asia, said that the U.S. and China wouldn’t ignore their differences, including on human rights issues. Since taking power two years ago, Xi has consolidated China’s authoritarian system, squelching dissent and civil society.

“We don’t always see eye to eye but the fact is global challenges require that we cooperate,” Russel told reporters Thursday, citing recent cooperation on fighting the Ebola virus in Africa, the transition in Afghanistan and diplomacy by world powers to prevent Iran from developing a nuclear weapon.

As the push for a global climate change deal intensifies ahead of a December summit of world leaders in Paris, President Barack Obama needs China’s support. Obama and Xi committed to curbing emissions when they met in Beijing in November, which environmentalists hailed as a sign that reluctant nations like China were finally getting on board.

Climate change will be a “hot topic” at next week’s dialogue in Washington, China’s Xinhua agency said in Friday’s report. The South China Sea and cybersecurity didn’t get a mention.