White House: Obama ‘prepared as necessary’ to sanction China over hacks

The White House on Tuesday said that while it will continue to pursue a strategy of engagement to address Chinese hacking, it is prepared to enact economic sanctions if diplomacy doesn’t work.

“We would be prepared as necessary to pursue sanctions as a tool if we felt there was a case that merited that type of punitive action,” Deputy National Security Advisor for Strategic Communications Ben Rhodes told reporters.

The remarks come the day before Chinese President Xi Jinping is scheduled to arrive in Washington, D.C., for his official state visit.

{mosads}Tensions over cybersecurity relations between the two countries are at a zenith, as lawmakers continue to press President Obama to take a hard line with China over state-sponsored hacking.

“We are concerned that well-documented state-sponsored or state-endorsed [People’s Republic of China] activities have not been met with an appropriate response from the United States,” a group of four Republican senators urged in a Tuesday letter to the president.

“We urge you to penalize all entities that your administration considers to be responsible for national security or commercial cyber-enabled activities directed against our nation.”

Rhodes emphasized a distinction between hacking for traditional intelligence purposes and stealing trade secrets and intellectual property from U.S. firms, indicating the administration was focused on eliminating the latter.

“We want to make very clear that this puts at risk China’s ability to continue on its economic growth if businesses don’t have confidence that they’re not going to be subjected to cyber theft,” Rhodes said.

The Obama administration has been weighing possible sanctions against Chinese firms linked to commercial hacking but said it would delay the issue until at least after the meetings this week.

Such penalties would not target Beijing, nor would they be a response to traditional intelligence-gathering hacks, such as the breach of the Office of Personnel Management revealed this spring.

Rhodes reiterated that the White House did not anticipate taking any punitive action before the meeting with Xi.

Xi defended China against allegations of cyber theft in a Wall Street Journal interview published Tuesday, claiming Beijing neither engages in nor supports commercial hacking in any form.

“Cybertheft of commercial secrets and hacking attacks against government networks are both illegal; such acts are criminal offenses and should be punished according to law and relevant international conventions,” Xi said. “We are ready to strengthen cooperation with the U.S. side on this issue.”

Rhodes addressed ongoing speculation that the administration will try to reach a formal hacking agreement with China, suggesting that “we’ll have to see what kind of discussion the leaders have.”

China has a vested interest in taking a cooperative stance with the United States, both during Xi’s visit and going forward, Rhodes said, if it wants to continue to benefit from being part of the global economy.

“China needs to be mindful that its activities don’t undermine its standing in the United States,” Rhodes said. “Part of our message is, if you are not taking steps to address some of these concerns as relates to particular trade irritants or cyber activities, you risk eroding the support for the US.-China relationship that comes from the business community and you risk inviting responses from Congress.”

President Xi arrived in the U.S. on Tuesday. He is expected to travel to D.C. on Wednesday evening.