China's Xi to visit US tech—amid tepid expectations

China's president lands in US
What China President Xi Jinping is doing in Seattle
China's Xi to meet US tech CEOs: How significant is it?

Chinese President Xi Jinping is set to meet with U.S. business executives in Seattle on Wednesday, but few experts expect much progress from the meetings.

Xi is expected to deliver a speech to a group of corporate CEOs including Apple CEO Tim Cook, Amazon chief Jeff Bezos and Microsoft's Satya Nadella. There, the Chinese president may respond to questions about his country's cyber-espionage actions, ask companies to oppose sanctions from D.C., and request that firms sign a pledge that could give Beijing the keys to their technologies. But no matter what subjects are covered, experts say not to expect much progress from Xi's U.S. weeklong tour—which will also take him to the White House and New York.

Chinese President Xi Jinping addresses the audience at a luncheon at SkyCity Grand Hotel on November 21, 2014 in Auckland, New Zealand.
Greg Bowker | Pool | Getty Images

"I expect a lot of diplomatic wording about how we're learning to work together, but not a lot of progress," said Adam Segal, a senior fellow for China studies and director of the digital and cyberspace policy program at the Council on Foreign Relations.

On the cybertheft front, China's line for many years is that it does not engage in such activities, and it is only the victim of digital U.S. invasions. Cybersecurity experts say that is patently false but acknowledge that tying Chinese-based hacks back to the central government is challenging.

In fact, U.S. authorities have for years expressed their concern at the level of attacks originating in China. No other country attacks American and European companies as frequently as China, said Richard Bejtlich, FireEye chief security strategist.

"In terms of the simple volume of activity directed against Western commercial interests, and the amount of information they take, there's nothing like China," Bejtlich told CNBC.

Additionally, Beijing's insistence on its innocence makes reaching a rules-of-the road agreement nearly impossible.

Chinese President Xi Jinping
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"At least U.S. officials say 'of course we're spying and we're happy to talk about strengths and deals, and how to be better,'" said Jason Healey, a senior research scholar at Columbia School of International and Public Affairs. "When China says it's a victim here and people who say otherwise must provide proof, then it's difficult to take talks to the next level."

"While it's valid and true that they're a victim, to go further and say 'therefore we have nothing to give up'—you can't have a serious dialogue," he added.

Media reports this month suggested that the White House may have been ready to place sanctions against China for cyberespionage, but President Barack Obama's administration ultimately decided not to make any waves before Xi's visit.

And while many focus on a reportedly forthcoming agreement on infrastructure cyberattacks, others say the corporate spying is a more serious immediate threat.

"(That deal) does nothing to address the number one problem, which is the steady erosion of our competitiveness by theft of commercial data," Bejtlich said. "If you can erode that key quality of innovation by being an exceptional fast follower—and maybe even beating the original product to market—then that makes life very, very difficult for us."

But while many call on Washington to sanction China, others say punitive actions could backfire.

Potentially just as important as what U.S. companies will tolerate from Beijing's cyber spies is what they agree to do for access to the Chinese market.

Bejtlich said he will be watching to see if any firms agree to sign China's pledge, promising Beijing that their products would be "secure and controllable." To many China watchers, that expression implies that Chinese regulators could require access into systems, potentially exposing companies to data and intellectual property theft.

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"I have a feeling they're ready to accept a lot because they are seduced by the amount of money you can make (in China)," Bejtlich said. The FireEye executive said he knows firsthand of security incursions that companies on the ground in China have faced.

Still, the as-for-now voluntary pledge may offer too little upside to the privacy-minded tech industry, Segal said, adding that he didn't expect most to sign on.

For his part, Columbia's Healey said that some tech sectors could be amenable to signing the pledge. While hardware could be more willing, software firms might be less interested in opening up their code to the Chinese, he said.