Obama, China's Xi to discuss cyber-security in June meeting

President Barack Obama will discuss cyber security with Chinese President Xi Jinping during a meeting in California next week, as Washington becomes increasingly worried about Chinese hacking of U.S. military networks.

"Cyber security is a key priority of this administration. It is a key concern that we have," White House spokesman Jay Carney told reporters on Air Force One as Obama flew to New Jersey.

"It is an issue that we raise at every level in our meetings with our Chinese counterparts, and I'm sure it will be a topic of discussion when the president meets with President Xi in California in early June," he said.

The Pentagon underscored its concerns in a report to Congress earlier this month, accusing China of using cyber espionage to modernize its military. It said the U.S. government has been the target of hacking that appeared to be "attributable directly to the Chinese government and military."

But Pentagon spokesman George Little and other defense officials downplayed as outdated and overstated a report in Tuesday's Washington Post, which cited a Defense Science Board (DSB) report as saying that Chinese hackers have gained access to designs of more than two dozen major U.S. weapons systems.

The newspaper said the compromised U.S. designs included those for combat aircraft and ships, as well as missile defenses vital for Europe, Asia and the Gulf. But Little said it was wrong to suggest that U.S. capabilities had been eroded.

"We maintain full confidence in our weapons platforms," Little said in a statement. "Suggestions that cyber intrusions have somehow led to the erosion of our capabilities or technological edge are incorrect."

Little said the department was taking steps to strengthen the military's cyber capabilities, improve security of government networks and get more insight into threats faced by U.S. defense companies.

A Defense Department spokesman said some findings of the Defense Science Board report were dated because much of its research was completed two years ago, but it had highlighted some security issues that needed attention.

"Despite significant gains to better posture the department against cyber threats, the DSB report outlines several areas of concern that we will address promptly to ensure the viability of our cyber capabilities and defenses," the spokesman said.

"The findings of the DSB report make it clear that much work remains as we establish the right balance of integrated cyber defenses, capabilities and forces."

Among the weapons listed as compromised were the advanced Patriot missile system, the Navy's Aegis ballistic missile defense systems, the F/A-18 fighter jet, the V-22 Osprey, the Black Hawk helicopter and the F-35 Joint Strike Fighter.

The report did not specify the extent or time of the cyber-thefts or indicate if they involved computer networks of the U.S. government, contractors or subcontractors.

But the espionage would give China knowledge that could be exploited in a conflict, such as the ability to knock out communications and corrupting data, the Post said. It also could speed China's development of its defense technology.

China dismissed as groundless the Pentagon's report to Congress earlier this month.

China also dismissed as without foundation a February report by the U.S. computer security company Mandiant, which said a secretive Chinese military unit was probably behind a series of hacking attacks targeting the United States that had stolen data from 100 companies.

Australian "security blunder"
In Australia, a news report by Australia's ABC Television said hackers linked to China stole the floor plans of a A$630 million headquarters for the Australia Security Intelligence Organization, the country's domestic spy agency.

The attack through the computers of a construction contractor exposed not only building layouts, but also the location of communication and computer networks, it said.

Chinese Foreign Ministry spokesman Hong Lei, asked about the report, said China disapproved of hacking.

"China pays high attention to the cyber security issue and is firmly opposed to all forms of hacker attacks," Hong said at a daily briefing. "Since it is very difficult to find out the origin of hacker attacks, it is very difficult to find out who carried out such attacks."

"I don't know what the evidence is for media to make such kinds of reports," Hong added.

Repeating China's position that every country is susceptible to cyber attacks, Hong said nations should make joint efforts toward a secure and open Internet.

The building is to be part of an electronic intelligence gathering network that includes the United States and Britain. Its construction has been plagued by delays and cost over-runs, with some builders blaming late design changes on cyber attacks.

The influential Greens party said the hacking was a "security blunder of epic proportions" and called for an inquiry, but the government did not confirm the breach.

Prime Minister Julia Gillard said the reports were "inaccurate", but declined to say how.

Despite being one of Beijing's major trade partners, Australia is seen by China as the southern fulcrum of a U.S. military pivot to the Asia-Pacific. In 2011, it agreed to host thousands of U.S. Marines in near-permanent rotation.

© Thomson Reuters 2013