"Increasingly, U.S. businesses are speaking out about their serious concerns about sophisticated, targeted theft of confidential business information and proprietary technologies through cyber intrusions emanating from China on an unprecedented scale,” said Donilon. “We have worked hard to build a constructive bilateral relationship that allows us to engage forthrightly on priority issues of concern.  And the United States and China, the world’s two largest economies, both dependent on the Internet, must lead the way in addressing this problem.”   

Donilon’s speech came in the wake of a widely cited report by the computer security firm Mandiant, which accused Beijing of sponsoring cyber espionage and theft of corporate secrets in the United States. During his annual State of the Union address on February 12, President Barack Obama presented an executive order to protect U.S. critical infrastructure from cyber threats. 

In his speech, Donilon outlined three requests for Beijing related to the cybersecurity issue. “First, we need a recognition of the urgency and scope of this problem and the risk it poses—to international trade, to the reputation of Chinese industry and to our overall relations,” he said.  “Second, Beijing should take serious steps to investigate and put a stop to these activities.  Finally, we need China to engage with us in a constructive direct dialogue to establish acceptable norms of behavior in cyberspace.”

In response, the Chinese government adopted a defensive posture, while emphasizing its willingness to cooperate with Washington. "China has always urged the international community to build a peaceful, secure, open and cooperative cyberspace and opposed turning it into a new battlefield," said Foreign Ministry spokeswoman Hua Chunying, who argued that China is also a major victim of cyber attacks. 

Hua added: “Cyberspace needs rules and cooperation, not wars. China is willing, on the basis of the principles of mutual respect and mutual trust, to have constructive dialogue and cooperation on this issue with the international community including the United States to maintain the security, openness, and peace of the Internet."

Hua’s response echoes earlier comments by outgoing Chinese Foreign Minister Yang Jiechi, on Saturday, rebutting accusations of Chinese hacking. “Anyone who tries to fabricate or piece together a sensational story to serve a political motive will not be able to blacken the name of others or whitewash themselves,” said Yang. 

Writing in The Washingtonian, Shane Harris argued that Donilon’s remarks, which evoke “carefully tuned language,” bring “the private sector into the problem as a key player, not a bystander.” 

Speaking to CNBC, Michael Chertoff, a former director of Homeland Security and EastWest Institute board member, said he hoped that the Chinese business community could put pressure on Beijing to rein in cyber attacks. “I’ve been in a number of public events recently, where people including myself have been very outspoken to audiences that include Chinese investors and businessmen about what is going on with intellectual property theft,” he said.

Chertoff continues: “I think what may happen is that these business people will go back home to China and they’ll start to tell their government, ‘Look, we’re going to be pushed out of global markets, we’re going to be global pariahs, if we don’t agree to reining in what’s been going on.’ So I’m hoping some business pressure may be part of the solution here.” 

James Lewis, a senior fellow and director of the Technology and Public Policy Program at the Center for Strategic and International Studies, told the Christian Science Monitor that Washington’s message to Beijing was unusually straightforward. “This is really the first time a senior U.S. official has come out and given Chinese officials three specific steps on what we need to do to work on this cyber spying problem,” he said, adding that “no one has ever publicly come out and said this directly to the Chinese before—that we want recognition by them of the scope of the problem, we want direct investigation of these cases—and direct dialogue on international norms.”

While Chinese hacking of U.S. computers remains a pressing challenge, it is important to keep the background of this issue in mind, especially in the wake of the Mandiant report and Obama’s executive order on cybersecurity. As EWI’s Franz-Stefan Gady pointed out in US-China Focus, the Mandiant report, “did not reveal anything new to experts in the field”; many nations, especially the U.S. and China, are known to already engage in significant cyber espionage, he added. 

Beijing’s efforts to that end will likely “continue and intensify regardless of what the United States does,” EWI Professorial Fellow Greg Austin argued in the The International Herald Tribune. “The real issue,” wrote Gady, “is how to avoid that these sort of [cyber] attacks lead to escalating tensions between the two great powers on a strategic level.”