Obama issues new China sanctions threat over cybertheft

WASHINGTON — Somber against a backdrop of grand pageantry, 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.

The president, in a Rose Garden news conference with Xi, was clear that he'll be wary until the Chinese follow through on promised efforts to stop cyberespionage, saying, "The question now is: Are words followed by action?"

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 behavior" 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 falls short of addressing the Obama administration's greater concerns about 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, amid concerns that retaliating for that breach might have led Xi to cancel the state visit.

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

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 human rights, another sore spot between the nations, Obama said the two had a "frank discussion." Listing a string of grievances, the president said he expressed "strong views that preventing journalists, lawyers, NGOs and civil society groups from operating freely, or closing churches or denying ethnic minorities equal treatment, are all problematic in our view, and actually prevent China and its people from realizing its full potential."

Xi countered that "countries have different historical processes and realities" and said nations "choose their own development independently." But he added that China stands ready to "conduct human rights dialogue with the United States" and "learn from each other."

On climate change, an area where the two countries have been cooperating, 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.

The U.S. earlier pledged $3 billion to a United Nations fund to aid developing nations reduce emissions.

Xi, during a morning arrival ceremony, called on the U.S. and China to be "broadminded about differences and disagreements."

Obama, in turn, said, "The United States will always speak out on behalf of fundamental truths.

"We believe that nations are more successful and the world makes more progress when our companies compete on a level playing field, when disputes are resolved peacefully, and when the universal human rights of all people are upheld," he said.

The White House's concerns over China's cyberattacks in the U.S. had caused particular strain ahead of Xi's visit. Obama has faced calls from some Republican presidential candidates to scale back the grandeur of Xi's visit, which included an Oval Office meeting, the joint news conference and a black-tie dinner.

Both countries have sought to emphasize areas where they do agree, most notably on climate change.

In conjunction with the state visit, Xi announced a blueprint for a nationwide cap-and-trade system beginning in 2017 that would cover highly polluting sectors ranging from power generation to papermaking.

Climate change is one of the few areas where bilateral cooperation has proceeded smoothly in recent months, largely because Beijing has struggled to contain heavy air, water and soil pollution that has destroyed farmland, sent cancer rates soaring and left its cities cloaked in dense smog.

U.S. officials have hoped for broader cooperation between Obama and Xi since the pair's unusually informal 2013 summit at the Sunnylands estate in southern California.

In recent weeks, however, U.S. officials have been taking a tougher line publicly against China's hacking, saying it is reaching epidemic levels. Officials have warned of retaliatory sanctions on businesses and individuals.

China dispatched its top domestic security official to Washington to try to stave off sanctions ahead of the president's arrival.