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U.S. and China talk trade and cybersecurity

Dollars and yuan notes are seen at a bank on May 15, 2006 in Beijing, China.

It’s the second day of the annual US-China Strategic and Economic Dialogue in Washington. The meetings are high-level: Secretaries of State and Treasury on the U.S. side, State Councilor and Vice Premier for the Chinese. Economic issues -- from trade barriers and investment opportunities, to alleged currency manipulation and cyber-espionage -- are on the agenda between the two economic superpowers.

Vice President Joe Biden had this to say at the opening of the talks on Wednesday:

“One of the most important things that we need to continue to establish and deepen between our peoples and between our governments is trust. We don’t have to agree on everything, but we have to trust.”

But he also had a clear warning for the Chinese side, and particularly, representatives of the Chinese military establishment attending discussions on security:

“Outright cyber-enabling theft that U.S. companies are experiencing now must be viewed as out of bounds and needs to stop.”

Thursday’s sessions open with a meet-and-greet roundtable for U.S. and Chinese CEOs. Each side wants more access to the other’s lucrative market, says Nicholas Borst, China program manager at the Peterson Institute for International Economics in Washington.

“There’s this growing perception in China that the United States is not open to foreign direct investment from China,” says Borst. He cites instances in recent years in which major Chinese multinationals have faced political opposition investing in American telecoms, wind-farms and pork processors.

U.S. companies in turn want lower trade barriers, says Borst, “easing restrictions on high-tech exports from the U.S. to China.” U.S. financial firms, meanwhile, are pressing for a new bi-lateral treaty on investment that could open China to more direct foreign investment, as well as financial services like insurance.

Meanwhile, the U.S. continues to complain of Chinese hacking and corporate espionage. Recently, these concerns have been reiterated by the U.S. Defense Secretary, U.S. business leaders, and the Vice President.

But, says Martin Jacques, author of the book When China Rules the World, “America was caught a bit with their trousers down on this one.”

That’s because of revelations by fugitive leaker Edward Snowden about U.S. cyberspying overseas. Snowden initially fled to Hong Kong before moving on to Russia to seek a country willing to grant him asylum. His sojourn in Hong Kong was a temporary irritant in Sino-U.S. relations.

“The United States is technologically by far the most competent to engage in cyber-espionage,” says Jacques, “on a level that the Chinese don’t have the competence to do.”

And Jacques says that makes it harder for the U.S. to press its case against China for engaging in cyber-espionage.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.
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