WASHINGTON -- President Barack Obama on Friday laid out a fresh threat of sanctions for economic espionage emanating from China, even as he and President Xi Jinping pledged their countries would not conduct or support such hacking.
"The question now is: Are words followed by action?" Obama said, standing alongside Xi at a White House news conference.
Obama's wariness underscored deep U.S. concerns about what officials say is China's cyber campaign to steal trade secrets and intellectual property from American companies. While China has publicly denied being behind such activities, U.S. officials say their counterparts in Beijing have begun to take the matter more seriously, as well as the potential impact on ties with Washington.
"Confrontation and friction are not the right choice for both sides," Xi said, speaking through an interpreter.
The spying tensions cast a shadow over Xi's state visit to Washington, a grand affair complete with a formal welcome ceremony and a black-tie dinner. Obama faced criticism from some Republicans for honoring China with a state visit given the cyber concerns, as well as U.S. worries about Beijing's human-rights abuses and assertive posture in territorial disputes in the East China and South China seas.
While the latter matters were discussed during Obama and Xi's lengthy talks, no discernible progress was made.
Xi said the Chinese have "the right to uphold our own sovereignty" in the South China Sea, where Beijing has alarmed its neighbors with a campaign of building artificial islands. China has reclaimed about 3,000 acres in the past 1½ years by dredging sand from the ocean bed.
On human rights, long a divisive issue between the U.S. and China, Xi made no commitments, saying only that countries must have the right "to choose their own development independently."
Obama and Xi did herald progress on climate change, one of the few areas of bilateral cooperation that has proceeded smoothly in recent months, largely because Beijing has struggled to contain air, water and soil pollution that has destroyed farmland, sent cancer rates soaring and left its cities cloaked in dense smog.
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. China also said it will commit $3.1 billion to help developing countries reduce carbon emissions.
China also is announcing changes intended to favor electricity produced by sources that will pollute less.
The two presidents discussed the challenges of climate change during a private dinner Thursday night, Obama said, and spent Friday morning in a series of Oval Office meetings. Leaders of the two largest economies are using the announcement as a way to prod talks on a global agreement to stem climate change.
The measures are a follow-up to a 2014 announcement, made when Obama and Xi met in Beijing, in which China and the U.S., the world's No. 1 and 2 greenhouse-gas polluters, jointly promised to limit their emissions.
That agreement injected new life into United Nations-sponsored climate talks. Those negotiations are heading toward a conclusion in December in Paris, where envoys from more than 190 countries are expected to gather. In a bid to give momentum to those talks, Obama and Xi also outlined a series of shared principles they want to see in the final deal.
At the same time, Obama has warned that progress on climate change and other matters could be threatened by China's continued cybertheft of intellectual property.
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.
Ahead of Xi's visit to Washington, the U.S. administration had been preparing economic sanctions in retaliation for Chinese cybertheft. However, officials decided to hold off on the penalties in hopes that an accord like the one announced Friday could be reached.
Still, Obama said the possibility of sanctions against individuals or entities remains on the table.
"We will apply those, and whatever other tools we have in our tool kit, to go after cybercriminals either retrospectively or prospectively," he said.
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 publicly assign blame to China for that breach.
American officials have said the U.S. data were a legitimate intelligence objective -- and the type of thing that Washington itself might target in other countries.
U.S. businesses welcomed the cyber agreement, though some were cautious about the prospects of China following through.
"While a diplomatic agreement is an important first step, retailers will measure the success of these efforts by China's actions moving forward," said Nicholas Ahrens, vice president of privacy and cybersecurity for the Retail Industry Leaders Association, a trade group that includes such members as Best Buy, Sears and Wal-Mart.
Jeremie Waterman, executive director for China at the U.S. Chamber of Commerce, said he hoped the agreement "marks a new chapter" and leads to real progress. Like the president and others, he said the key will be how well the agreement is implemented.
Information for this article was contributed by Nancy Benac, Ken Dilanian, Marcy Gordon and Anne D'Innocenzio of The Associated Press and by Alex Nussbaum, Justin Sink and James Paton of Bloomberg News.
A Section on 09/26/2015