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Why Xi and Obama won't reach a cybersecurity deal

CNBC logo CNBC 24-09-2015 Everett Rosenfeld

Chinese president Xi Jinping will arrive in Washington, D.C., on Thursday for meetings with U.S. political leaders. And while the visit is likely to herald several announcements, experts say they'll be paying attention to what isn't said.

Xi, who comes to the U.S. capital from Seattle meetings with business leaders, may well show a willingness to publicly discuss climate change issues, bilateral investment and military-to-military agreements. Still, China watchers tell CNBC that he will want to avoid breakthroughs on major points of geopolitical or cyber contention.

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"The conceptual gaps are huge, he isn't going to 'see the light' on anything," Robert Daly, who directs the Kissinger Institute on China and the United States at the Wilson Center, said of Xi, adding that it was equally unlikely that Obama would fold on major policy points.

Cybersecurity, which administration officials and press reports drummed up as a major issue before Xi's visit, looks unlikely to yield any important agreements, Daly and other experts told CNBC.

In fact, The New York Times reported that China and the U.S. may unveil some sort of understanding (formal or informal) on not using cyberattacks to cripple each other's critical infrastructure during peace time, but cybersecurity and geopolitical analysts largely said this is a meaningless agreement.

"Taking down critical infrastructure is clearly an act of war," Daly said. "So to say that you're not going to engage in an act of war in peacetime seems a little odd—all's well to have agreements, but this one does not address any of the problems we have now."

At best, any deal will simply resemble a call for restraint, said Jason Healey, a senior research scholar at Columbia School of International and Public Affairs. Any suggestion that a Xi-Obama agreement could reach the level of an "arms control accord," as previous reports deemed, is overly optimistic, he said.

Although he deemed the infrastructure hacking truce a "side deal" to the chief concerns of both countries, Healey said any agreement is a positive step for the relationship.

"The agreement on cyberarms is nice ... but it won't mean very much on the practical side," said Adam Segal, a senior fellow for China studies and director of the digital and cyberspace policy program at the Council on Foreign Relations. "It really is just symbolic."

But anything more than a symbolic recognition of a problem may be asking too much of Xi's visit.

Harvard Law School's Jack Goldsmith wrote earlier this week that any specific agreement, even a narrow one, is unlikely to be feasible, citing the problems defining "critical" infrastructure and verifying the other side's actions.

The biggest impediment to making a deal work, however, is simply that the Chinese government refuses to admit that it engages in any offensive cyberactivities.

"China is a staunch defender of cybersecurity. It is also a victim of hacking," Xi said in a speech in Seattle. "The Chinese government will not, in whatever form, engage in commercial theft or encourage or support such attempts by anyone. Both commercial cybertheft and hacking against government networks are crimes that must be punished in accordance with law and relevant international treaties."

Beijing's repeated claims of innocence present a particular problem for any peace accord, experts told CNBC.

"It's not clear to know what an agreement means when China denies any activities of the sort," Daly said.

U.S. authorities have decried attacks originating in China for several years. Richard Bejtlich, FireEye's chief security strategist, told CNBC that no other country attacks American and European companies as frequently as China.

Many security analysts who spoke with CNBC said that the U.S.'s big problem is China's regular attempt at corporate cyberespionage.

"[That deal] does nothing to address the No. 1 problem, which is the steady erosion of our competitiveness by theft of commercial data," Bejtlich said. "If you can erode that key quality of innovation by being an exceptional fast follower—and maybe even beating the original product to market—then that makes life very, very difficult for us."

Most are expecting Xi's silence on the subject.

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