US, China appear close on cyber economic espionage deal

China and the U.S. appear close to a ground-breaking agreement on cyber espionage that could be signed later this week when President Xi and President Obama meet in Washington.

On the eve of the state visit, both countries have expressed a desire to stop cyber espionage for economic gain and agreed it’s illegal.

But the two countries are still in disagreement over whether China’s government plays any part in trans-national cyber hacking for economic purposes.

On Monday, U.S. National Security Advisor Susan Rice said “cyber-enabled economic espionage must stop.”

During a speech in Washington, D.C., she said the issue was more than an irritation and “puts enormous strain on our bilateral relationship and it is a critical factor in determining the future trajectory of U.S.-China ties.”

Hours later, The Wall Street Journal published an interview with President Xi, who denied any part in hacking attacks on U.S. businesses and organizations.

“The Chinese government does not engage in theft of commercial secrets in any form, nor does it encourage or support Chinese companies to engage in such practices in any way,” he said in a written response to questions submitted by the newspaper.

But he went on to say China is ready to strengthen cooperation with the U.S. government on this issue.

“Cybertheft of commercial secrets and hacking attacks against government networks are both illegal; such acts are criminal offenses and should be punished according to law and relevant international conventions.”

Any agreement between the two nations will be aimed at stopping the type of hacking that came to light last year when the U.S. Department of Justice indicted five Chinese military hackers for cyber espionage against U.S. companies.

The five have been accused of hacking companies in the nuclear power, metals and solar products industries. Among the victims were Westinghouse, U.S. Steel, Allegheny Technologues and Alcoa.

Cyber espionage for economic purposes is an important issue for companies in the world’s two biggest economies, but it’s far from the only hacking problem between the two countries.

Earlier this year the massive breach of the U.S. government’s Office of Personnel Management saw the loss of private information on 21.5 million government employees and their friends and families. The data included sensitive information provided for background checks and 1.1 million fingerprints.

The U.S. government hasn’t publicly accused China but has been doing so in private. That hack is suspected of being carried out for intelligence purposes — something that would fall outside of any agreement on cyber espionage for economic gain.