Updated: 07/10/2014 22:33 | By Agence France-Presse

US, China fail to paper over cracks in ties

The United States and China Thursday ended two days of high-stakes talks seeking to put on a show of unity despite failure to paper over obvious fault lines on cyber-spying and maritime disputes.


US, China fail to paper over cracks in ties

US Secretary of State John Kerry shakes hands with Chinese Premier Li Keqiang during a meeting at the Zhongnanhai leadership compound in Beijing on July 10, 2014 - by Ng Han Guan

Sitting alongside his Chinese hosts, US Secretary of State John Kerry rapped them for what he described as the "chilling effect" of Internet hacking on US businesses.

"Instances of cyber theft have harmed our business and threatened our nation's competitiveness," Kerry warned in a joint closing session in the marble-columned Great Hall of the People, which abuts Tiananmen Square.

"The loss of intellectual property through cyber (spying) has a chilling effect on innovation and investment," he warned.

His remarks came as the New York Times reported that Chinese hackers accessed US government computers containing personal information on all federal employees in March. 

The perpetrators appeared to be targeting the files of people who had applied for top-security clearances, the Times said, quoting senior US officials.

Kerry said the claim was under investigation.

To Beijing's anger, Washington indicted five Chinese military officers in May for hacking into US companies.

The issue was among many disputes and challenges discussed by the world's two leading economic powers during the sixth annual Strategic and Economic Dialogue.

China insists that it too is a victim of hacking, and accuses Washington of hypocrisy since it conducts sweeping surveillance around the world.

Leaks by former government contractor Edward Snowden have alleged widespread US snooping on China.

State Councillor Yang Jiechi said cybersecurity was a "common threat and challenge facing all countries".

"Cyberspace should not become a tool for damaging the interests of other countries," Yang warned at an event billed as a press conference, but was merely a reading of statements by the two sides.

Despite pleas from the US, Beijing did not agree to resume a cybersecurity working group which it suspended after the unprecedented indictments.

Kerry also pressed Beijing on human rights, and later told reporters that Washington would always stand up for "our values and promote human rights and freedoms."

He said he had "raised concerns about recent detentions and arrests" of journalists and lawyers with his Chinese counterparts.

- Territorial tensions -  

The two sides also disagreed on how to resolve tensions in the South and East China Seas, amid warnings from the US that Beijing risks triggering conflict as it presses its claims to large swathes of territory.

"We do believe that claimants should exercise restraint and adhere to peaceful and diplomatic ways," Kerry insisted.

But Yang earlier gave up no ground saying: "China is committed to upholding its territorial sovereignty and maritime rights."

"The Chinese urged the US side to adopt an objective, just position and honour its commitment of not choosing sides."

However the two economic powerhouses did manage to find some common ground.

Kerry said the two sides had agreed "on the importance and urgency of achieving a denuclearised, stable and prosperous Korean peninsula".

They had discussed "specific ways" to ensure North Korea complies with its obligations, Kerry said, without giving details.

There was also agreement on efforts to fight climate change, and US officials welcomed moves to open up the Chinese economy.

Washington officials and lawmakers have repeatedly lambasted Beijing for failing to play by global rules.

US Treasury Secretary Jacob Lew said the two sides had "made progress on fostering greater competition over the past two days."

"Today, China committed to reduce market intervention as conditions permit, and is making preparations to provide greater transparency including on foreign exchange," Lew said.

"This commitment will help accelerate the move to a more market determined exchange rate, and is central to creating a level playing field. This also reflects the increasing role and responsibility China has in promoting balanced and strong growth in the global economy."

While the US does not brand China a currency manipulator, it has long argued that its currency, the yuan, is undervalued and gives Chinese traders an unfair advantage.

Earlier this month the World Trade Organization called on China to make its trade policies more transparent amid a "striking" lack of clarity on its rules.

China, which recently became the largest trader in the 160-member group, has failed to live up to transparency commitments it made when it joined the organisation in 2001, WTO members said.

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