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March 14, 2013

Obama, China's Xi Discuss Cyber Security Dispute in Phone Call

by Reuters

President Barack Obama took mounting U.S. concerns about computer hacking straight to China's president on Thursday in a sign of how seriously the United States takes the threat of cyber attacks emanating from China.

A day after meeting with U.S. corporate CEOs in the White House Situation Room about cyber threats, Obama spoke by phone with Chinese President Xi Jinping about the cyber issue as well as North Korea's nuclear challenge, currency and trade issues.

A White House statement said Obama "highlighted the importance of addressing cyber security threats, which represent a shared challenge."

Earlier this week, U.S. intelligence leaders said for the first time that cyber attacks and cyber espionage had supplanted terrorism as the top security threat facing the United States.

U.S. businesses are increasingly alarmed about the targeted theft of confidential business information and proprietary technologies through cyber intrusions emanating from China.

"The international community cannot afford to tolerate such activity from any country," White House national security adviser Tom Donilon said this week.

Obama called Xi to congratulate him on his new position and both agreed on the value of regular high-level discussions. To that end, Obama noted that U.S. Treasury Secretary Jack Lew will visit China next week to be followed in coming weeks by Secretary of State John Kerry, a White House statement said.

Lew lacks the international stature of his predecessor, Timothy Geithner, and may use the visit to China to boost his international visibility.

Obama welcomed China's commitment to G-20 nations to move toward a more flexible currency exchange rate, a development long sought by the United States to allow U.S. exports to become more competitive in Chinese markets.

Administration officials have said China has made progress in valuing its currency, allowing the yuan to appreciate by about 15 percent against the dollar in recent years.

A big drop in China's global trade surplus and a rise in labor costs have also helped make Chinese products less competitive, even as the U.S. economy continues to improve, giving currency concerns less salience.

But Lew has said China's yuan remains undervalued, and has pledged to push the country to do more to appreciate its currency. U.S. lawmakers say an artificially low yuan hurts American manufacturers.

On top of that, the United States has come under fire from other countries for an aggressive easing of monetary policy critics contend seeks to drive down the dollar, a charge that puts Washington in a tougher spot in criticizing China.

Obama and Xi also discussed North Korea's nuclear challenge.