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Calming Cyber Nerves

Oct 02 , 2015

China President Xi Jinping’s late September visit to the United States was both important and historic. Among other activities, he and first lady Peng Liyuan were welcomed to the White House with a 21-gun salute and a state dinner, the highest level of protocol that can be extended to visiting foreign leaders. As a matter of international respect and an indication of both status and rank, Xi’s reception showed the strategic importance that the United States accords to maintaining strong, positive relations with China.

At the same time, the visit clearly and intentionally placed cyber issues at the very top of the bilateral agenda. In some ways, Xi’s state visit was really a summit on cyber security, as allegations of spying and theft of national security information and commercial intellectual property have increasingly complicated bilateral relations. Just prior to the visit, in fact, the White House leaked news that it was considering sanctions against Chinese nationals credibly accused of engaging in such activities. Sanctions were ultimately withheld, but the threat remains.
In the meantime, a battle has been joined for the hearts and minds of the private sector, which has been at the forefront of building the bilateral relationship. It has been the U.S. private sector which has pushed most aggressively for improved economic and commercial links, from permanent normal trade relations and China’s WTO membership to liberalized technology transfer rules and open trade and investment regimes. The private sector has also maintained purposeful engagement in Washington that serves as a counterweight to the political passions that often create tension in the relationship, particularly during U.S. presidential-election cycles, working to maintain a pragmatic dialogue between the world’s two largest economies.

Cheerleading has turned to complaining, however, as the private sector increasingly finds itself the target of forced technology transfer and cyber-enabled theft of intellectual property, allegedly from Chinese entities including the government. According to US China Business Council head John Frisbie, cyber issues may pose “the greatest threat to the bilateral relationship.” For its part, the United States government says that it does not engage in commercial espionage.
These issues are deeply felt, because they are critical drivers of commercial success. Technological advantage over the years has given the United States an economic edge, but China is rapidly catching up, an unsettling vision given Washington’s preferred narrative of technological superiority. With this in mind, a state visit that did not directly address cyber-related issues would have been untenable.

As it happened, during Xi’s visit both countries committed to cooperation on cyber issues, maintaining a positive tone at all times, eschewing the conduct or knowing support of cyber-enabled IP theft and agreeing to additional steps on cybersecurity and cybercrime, early-warning, and high-level consultations. Of course, implementation must now follow, and China’s record in living up to its international commitments has been spotty, but the fact remains that China has now publicly committed to forego commercial cyber-espionage against the United States. As technology increasingly drives economic development in addition to national security, competition in cyberspace is now firmly a part of the international-relations agenda. This is a breakthrough.

It is also a process. Several days prior to the state visit, Xi was in “the other Washington,” meeting in Seattle with technology CEO’s and other senior business leaders. The optics were revealing: Xi was in a hotbed of U.S. innovation and technology development seeking additional investment and collaboration, but was also looking to exchange views on more complicated issues such as compliance with a new national security law widely seen as anti-competitive. At issue is a requirement that all information systems be “secure and controllable,” with pressure on U.S. companies to pledge compliance, potentially risking personal consumer data, business-confidential information, and reputation. It’s the age-old dilemma: Market access is granted along with agreement to conform to local requirements and conditions. A full scale tech sector revolt was underway, threatening to undermine the state visit. Hence, Xi’s high-profile, carefully scripted program in Seattle that addressed but did not fully resolve the issues, which will only become more compelling as the United States and China continue to develop and compete. A nascent, government-to-government process is now in place for consultation and coordination on critical commercial issues. But this is just the beginning. Success will require the Chinese government not just to cease cyber-enabled commercial acquisition but also to identify and bring to justice independent and quasi-independent hackers who may be engaged in such activities. The same holds true for the United States.

Going beyond commercial relationship and proprietary intellectual property, the next step will be to engage in meaningful discussions toward cyber-détente between governments. The parallels with the nuclear age are obvious, whereby two committed and sophisticated global security rivals eventually understood it to be in their mutual interests to foreswear the further build-up of nuclear arsenals and to exist under a strategy of mutually assured destruction. In some ways a full scale cyber-attack would be as destructive, disruptive, and indiscriminate as a nuclear attack, without the concomitant loss of life. As the conduct of national security, commercial, and even daily personal affairs becomes increasingly networked through the Internet of Things, however, the threat posed by cyberwar increases exponentially. Establishing a robust, multilateral regime of cyber deterrence and restraint could be the best means to counter these emerging threats. As two of the more capable and interested parties, the United States and China should consider entering into negotiations leading to such a result.

President Xi’s visit to both “Washingtons” signaled China’s continued rise on the global stage. Now is the time to find the means to recognize and celebrate this fact while engaging directly with China to support, rather than undermine, security. The stakes are already high, and they get higher with every further day of delay.

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