US manufacturers urge Obama to get tough on cybersecurity with China

Josh Peterson Tech Editor
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Just days ahead of a highly anticipated two-day summit between President Obama and Chinese President Xi Jinping, American manufacturers urged Obama to stand up for American companies against Chinese cyber espionage.

During a conference call with reporters on Monday, Scott Paul — president of the Alliance for American Manufacturing — said he was concerned that Chinese involvement in the supply chain of U.S. defense systems, including rocket propellant, posed a critical national security risk.

AAM is a lobbying group representing U.S. manufacturers in Washington, D.C.

U.S. companies have also expressed continuous concern over the past several years that China has been conducting major industrial and military espionage, stealing patents and designs of high technology — including computers, software and advanced weapons systems.

“On intellectual property rights, I have to say I grow weary and tired of U.S.-China summitry when new agreements on intellectual property rights are announced, which are basically updated promises that China has made since 2001 to improve its enforcement of intellectual property rights,” said Paul.

“And I think that unless you hit China in the wallet,” he said, “that it has no incentive to improve the environment for [it] realizes there are no consequences for its behavior.”

While concern over China’s investment in U.S. debt has limited American options in dealing with China, Paul was confident that the U.S. had a stronger position than China. He told reporters that China depended on U.S. imports as vital parts of its economy.

“If you look on balance as to who holds the cards, its us and we just haven’t been willing to play them,” he said.

AAM sent a letter expressing its concerns to Obama on Monday, in which Paul stated that national security, supply chains, currency manipulation, trade law enforcement and intellectual property rights should all be brought up for discussion at the talks.

“Americans are losing patience with China’s refusal to play by the rules,” wrote Paul.

The heads of state are set to meet on June 7-8 in California.

On May 6, the Department of Defense for the first time publicly blamed the Chinese government as the perpetrator behind major acts of cyber espionage against the U.S. government and industry — allegations Beijing continues to deny.

The Washington Post revealed last week a confidential list of advanced U.S. weapons systems compromised by Chinese espioniage, a threat the Pentagon subsequently downplayed.

Delivering the keynote during the annual security summit known as the Shangri-La Dialogues, Secretary of Defense Chuck Hagel doubled down on the U.S.’ position — rebuking the Chinese government for cyber attacks that appeared to be tied to it and its military.

Members of congress are also joining in on their frustration. Congressional concern over Chinese intellectual property theft over the past several years has explored law enforcement, trade and national security solutions.

Michigan Democratic Senator Carl Levin, in a letter to the president, called on Obama last week to take a firm stance with Xi over the cyber theft of American intellectual property.

Levin introduced a bill at the beginning of May, the Deter Cyber Theft Act, which would require the Director of National Intelligence ” to develop a watch list and a priority watch list of foreign countries that engage in economic or industrial espionage in cyberspace with respect to United States trade secrets or proprietary information, and for other purposes.”

Levin’s bill, which estimates has a one percent chance of passing through committee, is cosponsored by Republican Sens. Thomas Coburn of Oklahoma and John McCain of Arizona, and West Virginia Democratic Sen. Jay Rockefeller.

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