Cyber-Espionage Case Thwarts US Hopes That China Can 'Play by the Rules'

President Barack Obama and his predecessors have long recited a mantra that the United States welcomes China's rise but wants it to join a "rules-based order" and take a greater responsibility in global affairs.

"I think that the Obama administration over the past six years has been frustrated that the Chinese have not played the role that we hoped they would in supporting the system," said Adam Segal, a senior fellow at the Council on Foreign Relations.

(Also see: US Accuses China of Cyber-Espionage Targeting American Firms)

"The Chinese say that we didn't write any of these rules and we don't necessarily agree with them, so do not expect us to uphold them," he said.

The United States on Monday indicted five Chinese military officers for allegedly hacking into US computers to steal trade secrets, with prosecutor David Hickton saying the case vindicated "hard-working men and women" around the world who "play by the rules."

China responded swiftly and angrily, summoning the US ambassador and charging hypocrisy as former government contractor Edward Snowden has revealed widespread US snooping inside China.

(Also see: Chinese State Media Calls US a 'Mincing Rascal' Over Spying Allegations)

The United States has insisted that it is playing by "the rules" as its intelligence operations are purportedly for national security, not for commercial advantage.

Frustration over sea disputes
While US officials said that the case was years in the making, it comes as China moves assertively and unilaterally in maritime disputes with Japan, Vietnam and the Philippines despite pleas from the United States to respect international standards.

US officials have voiced alarm at China's assertions of legal authority over foreign vessels in the 200-mile exclusive economic zone from its coast, a sharp divergence from the positions of most nations that ships enjoy freedom of navigation in such waters.

China's "sails are full of wind because they think they're rising, we're falling, and in time as in the past, when the US started writing rules from World War II they will start writing the rules," said Douglas Paal, a former senior US policymaker on Asia.

Paal, a vice president at the Carnegie Endowment for International Peace, said the United States had a delicate task of trying to determine how far to accommodate China.

The US message has been "we'll change the rules for you for example at the IMF, to increase your voting shares but you can't go out and rewrite the law of the sea," Paal said.

The world's two largest economies have also clashed over solar energy, with each side accusing the other of unfair trade practices.

Will a court case matter?
Paal questioned whether court action was the best approach with China.

He said that the Obama administration has started to sound like George W. Bush-era neoconservatives who come off as "looking for confrontation," fueling anti-US sentiment among young people in China.

"Probably the best response to this would have not been in public, but instead some sort of American cyber-attack on Chinese treasure and then leaving a calling card saying, 'You want more of that, keep it up.' Spy-versus-spy stuff," he said.

Robert Daly, director of the Kissinger Institute on China and the United States at the Woodrow Wilson International Center for Scholars, said that the "name-and-shame tactics" against Chinese officers could backfire by making them lose face and may also set back the Pacific powers' military cooperation which had finally been improving.

"China cares more about face than we do and will fight harder to save it. Bilateral and multilateral consultation will yield better results over an arduous, imperfect long run," Daly said.

But James Lewis of the Center for Strategic and International Studies said that China had not responded to four years of private discussions on hacking.

"The Chinese now know that this is a serious problem in the bilateral relationship, and one they can't simply ignore," he said.