U.S. Ambassador Baucus Says China Cyber Theft Is a Threat

The U.S. will use diplomatic and legal means to halt China’s computer theft of trade secrets, its new ambassador in Beijing said today, amid escalating tensions between the two sides over cybersecurity.

“Cyber-enabled theft of trade secrets by state actors in China has emerged as a major threat to our economic and thus national security,” Max Baucus, who took up the post of U.S. ambassador to China in March, told members of the American business community during a speech in Beijing today.

Relations have been strained since five Chinese military officers were indicted last month on charges of hacking U.S. corporate networks for commercial ends. China rejected the charges and subsequently announced plans to vet technology companies operating in the country for potential national security threats. State owned media published attacks on U.S. vendors including Cisco Systems Inc., Apple Inc., Microsoft Corp. and Google Inc.

“Besides being criminal in nature, this behavior runs counter to China’s WTO commitments,” Baucus said, referring to the terms China agreed to when it joined the World Trade Organization in 2001. “We won’t sit idly by when a crime is committed in the real world, so why should we when it happens in cyber space? We will continue to use diplomatic and legal means to make clear that this type of behavior must stop.”

Baucus was confirmed as ambassador to China on Feb. 6 and he arrived the following month. A U.S. Senator from Montana prior to his confirmation, Baucus has said he will work to boost trade with China and press that nation over issues including breaches of computer security.

‘Tough Challenges’

At the time of his arrival in China, Baucus said that the U.S.-China relationship is one of America’s “most important bilateral relationships” and that cooperation between the two countries is “vital” in areas such as regional security, rules for cyberspace, climate change, wildlife trafficking, clean energy and others.

The U.S. and China have “no choice but to keep talking, to work our way through these tough challenges,” Baucus said today.

“Both countries recognize that nothing in the U.S.-China relationship is preordained,” he said. “Conflict between a rising power and an established power is not inevitable. It’s up to us. We both agree that stability in the Asia Pacific is the key to 21st century prosperity. Stability in this region depends in large part on constructive engagement between the U.S. and China.”

Baucus said he will work with China to deepen engagement on critical international security challenges.

“I will work as hard as I can to make sure the relationship works,” Baucus said.

Companies Hit

Still, tensions between the two have already begun to hit U.S. companies.

The China Central Government Procurement Center last month announced that Microsoft’s Windows 8 operating system was excluded in the bidding process for China government purchases of energy-efficient information technology products. China’s official Xinhua News Agency reported that the move was “to ensure computer security.”

Apple, Microsoft, Google and Facebook Inc. were accused of cooperating in a secret U.S. program to monitor China in a commentary on the microblog of the People’s Daily newspaper this month. Cisco takes advantage of its technology to play a “disgraceful role” in China as a tool for the U.S. to promote its Internet power, according to a May 26 commentary posted on the news portal of the Communist Party’s Youth League.

Today’s event was hosted by the American Chamber of Commerce in China, the U.S.-China Business Council and U.S. Information Technology Office.

— With assistance by Edmond Lococo

Before it's here, it's on the Bloomberg Terminal.