Obama Warns China on Cyber Spying Ahead of Xi Visit

President Barack Obama on Wednesday called for an international framework to prevent the Internet from being "weaponised" as a tool of national aggression, while holding out the prospect of a forceful US response to China over hacking attacks.

With Chinese President Xi Jinping set to visit Washington next week, Obama told a group of company chief executives that cyber-security would be a major focus in his talks with Xi, a topic that has become a point of friction in US-Chinese relations.

A person briefed on the White House's thinking said on Tuesday the United States does not plan to impose sanctions on Chinese entities for economic cyber-attacks ahead of Xi's visit to avoid what would be seen as a diplomatic disaster.

The United States has emphasized to China that industrial espionage by its government or its proxies in cyberspace goes beyond traditional intelligence gathering, Obama said.

"That we consider an act of aggression that has to stop," Obama told the Business Roundtable, a lobbying group.

Obama said the United States is preparing measures to show the Chinese "this is not just a matter of us being mildly upset, but is something that will put significant strains on a bilateral relationship if not resolved and that we are prepared to take some countervailing actions."

White House spokesman Josh Earnest later said Obama was "intentionally non-specific" in the comments and said the US government is "hopeful" that it will not need to use sanctions or other measures against China for cyber-attacks on US commercial targets.

"It is clear that the Chinese government is being responsive to those concerns by at least engaging in a candid discussion of those issues," Earnest told reporters.

Obama told business leaders that he would like to see a "basic international framework" for governments on cyber-security, perhaps resembling existing global nuclear agreements - a deal that would require "tough negotiations" that could take years.

"If we and the Chinese are able to coalesce around a process for negotiations, then I think we can bring a lot of other countries along," Obama said.

Obama said the United States is equipped to "go on offence" against rival nations. "We don't want to see the Internet weaponised in that way."

In referring to nuclear arms control regimes, Obama was most likely thinking about "norms," rather than governance, since the US has not advocated creating an agency like the International Atomic Energy Agency to monitor cyber weapons, said Bruce McConnell, a former Department of Homeland Security cyber-security chief.

Those principals could include agreements to refrain from attacking critical infrastructure during peacetime, and responding to requests for help with attacks.

"I don't think the president was talking about the structure - I think he was talking about the ideas," said McConnell, who now works on multilateral cyber-security issues for the nonpartisan, international EastWest Institute.

© Thomson Reuters 2015