Obama issues sanctions threat over Chinese cybertheft

 U.S. President Barack Obama laid out a fresh threat of sanctions against China for alleged cybercrimes on Friday, even as he and Chinese President Xi Jinping reached an agreement not to conduct or support such hacking.

"It has to stop," Obama declared during a Rose Garden news conference with Xi, and the president made it clear he will be wary until the Chinese follow through on promised efforts to stop cyberespionage, saying, "The question now is: Are words followed by action?"

• Dinnertime diplomacy with Chinese president
• Obama snubs Waldorf-Astoria hotel amid espionage fears
• China's Xi arrives in U.S., talks joint cybercrimes effort

As for the possibility of sanctions against either individuals, businesses or state-run companies, he said: "We will apply those and whatever other tools we have in our tool kit, to go after cybercriminals either retrospectively or prospectively."

Obama said the agreement was progress, but he added that "I have to insist our work is not yet done."

Xi, for his part, agreed that the two countries would not "knowingly support" cybertheft and promised to abide by "norms of behaviour" in cyberspace.

"Confrontation and friction are not the right choice for both sides," Xi said, speaking through a translator.

Both countries claim they don't engage in cybertheft of commercial secrets, one of the deep differences that have threatened ties between the world's two largest economies.

The agreement to clamp down on the theft of trade secrets doesn't address the theft of national security information, such as the tens of millions of U.S. federal personnel records that American lawmakers and some U.S. officials have said was engineered by Beijing. Obama has declined to assign blame to China for that breach nor to sanction its government. U.S. officials have said the U.S. data was a legitimate intelligence target — and the type of thing the U.S. itself might target in other countries.

Massive campaign

Separately, U.S. intelligence officials say China's military and intelligence agencies have engaged in a massive campaign of cybertheft of intellectual property designed to benefit Chinese industry at the expense of European, American and other companies, resulting in what former National Security Agency director Keith Alexander called "the greatest transfer of wealth in history."

U.S. officials say that while they regularly hack Chinese networks for espionage purposes, they don't steal corporate secrets and hand them to American companies. Chinese officials traditionally have viewed that distinction as meaningless, saying that national security and economic security are inextricably linked.

Overall, Obama said, the visit had yielded "an extremely productive meeting," adding that their candid conversations on areas of disagreement "help us to understand each other better."

Territorial claims

On the issue of China's disputed territorial claims in the South China Sea, which have unnerved some U.S. partners in Asia, Xi defended his nation's claims in the area. He said construction work on artificial islands doesn't "target or impact any country, and China does not intend to pursue militarization." The U.S. has no territorial claims in the area but says the island development is destabilizing the region and should stop.

Xi said China wanted disputes to be settled peacefully and respects freedom of navigation and overflight in the area that is crucial to global trade."

On climate change, an area where the two countries have been co-operating, China said it will commit $3.1 billion to help developing countries reduce carbon emissions, one of a series of measures taken with the U.S. to combat global warming.

A joint statement listed a series of measures taken to flesh out their pledge, made last year, to work to reduce emissions.