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Trade group wants U.S.-China action on cyber security threats

By Doug Palmer

WASHINGTON (Reuters) - U.S. companies want the U.S. and Chinese governments to work together to address the growing problem of cyber attacks that threaten to undermine trade between the world's two largest economies, a U.S. business leader said on Monday.

"We would simply say it's time for the governments to work on it," John Frisbie, president of the U.S.-China Business Council, told reporters at a briefing on the trade group's priorities for 2013. "We do know that companies are constant targets of efforts to get into their systems globally."

The New York Times, Wall Street Journal and the Washington Post have in recent days complained of large-scale cyber attacks believed to have originated from China. In the Post's case, the attacks dated back to 2011.

The U.S.-China Business Council represents about 230 U.S. companies with operations in China, ranging from manufacturers such as Boeing and Caterpillar to financial services giants such as Citigroup and JP Morgan Chase.

The companies' cyber security systems shield valuable intellectual property and propriety business information worth millions, if not billions, of dollars.

The Chinese government has frequently said it opposes hacking and that China too suffers frequently from hackers.

Frisbie avoided putting all the blame for the incursions on China, but said failure to address the problem would "threaten to undermine a constructive trade relationship."

"What we're saying is it is becoming a concern, a serious concern. We'd like to see the two governments try to work on it together and see if it can be addressed regardless of the source and we would encourage them to do so ... this year," he said.

Frisbie also urged the two governments to consider holding a regular annual summit between U.S. President Barack Obama and China's president-in-waiting Xi Jinping.

CHINESE CONSUMERS

Obama over the past four years has met regularly with outgoing Chinese President Hu Jintao on the sidelines of larger international meetings such as the Group of 20 forum.

Regularly scheduled summits could focus more effort on resolving problems in the U.S-China relationship, Frisbie said.

They should be in addition to existing bilateral forums that bring together high-ranking officials on both sides, such and the U.S.-China Strategic and Economic Dialogue and the Joint Commission on Commerce and Trade, he said.

Chinese leaders, after years of relying on exports to fuel their economy, realize they have to shift to a growth model focused more on domestic consumption to satisfy the rising aspirations of Chinese workers, said Jan Borgonjon, president of InterChina Consulting, based in Beijing.

"I think there's increased reason for optimism (about Chinese government reform). I wouldn't have said that two years ago because then I was quite pessimistic about the potential for change," Borgonjon told reporters at a briefing arranged by the U.S.-China Business Council last week.

Frisbie told reporters on Monday he shared some of that optimism, but said it was still unclear whether Beijing would address barriers to foreign investment, licensing restrictions and other U.S. business priorities.

Meanwhile, U.S. government figures due out on Friday are expected to show the U.S. trade deficit with China in 2012 surpassed the record of $295 billion set in 2011.

The same report is also expected to show U.S. imports from China topped $400 billion for the first time, setting another record. U.S. exports to China likely reached close to $110 billion, which would also be a record.

(Reporting By Doug Palmer; Editing by Todd Eastham)

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