US should sanction China for hacking: Rackspace exec

Sanctions... one way to curb hack attacks

Rackspace's chief security officer said Wednesday it was critical for the United States to impose sanctions on China in response to alleged cyber attacks.

The White House is considering applying sanctions against companies and individuals in China it believes have benefited from Chinese hacking of U.S. trade secrets, The Washington Post reported last month.

Suspicions that Chinese hackers were behind a series of data breaches in the United States have been an irritant in relations between the world's two largest economies as President Xi Jinping prepared for his first visit to the United States, which commenced Tuesday.

White House officials said cyberspying will be a key part of discussions between President Barack Obama and Xi, but they do not expect the United States to level economic sanctions against China for cyberespionage ahead of Xi's arrival in Washington.

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However, Rackspace's Brian Kelly said the time had come to get tough with China.

"It's troubling when we allow so many attacks to go without being answered for, particularly when we have pretty good evidence who may be behind the attack itself," he told CNBC's "Squawk Alley."

"So I think we do need to take a much stronger stance, and I think sanctions clearly are in order, beyond the indictments that we saw a year or two ago."

Chinese President Xi Jinping
Lintao Zhang | Pool | Reuters

In May 2014, the United States charged five alleged Chinese military hackers for economic espionage and other offenses against the U.S. nuclear power, metals and solar panel industries.

Obama administration officials have more recently said China is the top suspect in the massive hacking of a U.S. government agency that compromised the personnel records of at least 4.2 million current and former government workers. China has denied involvement.

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On Tuesday, Xi touched on a litany of issues that have seriously frayed U.S.-China ties during a keynote address to some 650 business executives and other guests in Seattle.

Responding to allegations that China has been behind cyberattacks affecting U.S. business and government databases, Xi said China, too, has been a victim.

"The Chinese government will not, in whatever form, engage in commercial thefts or encourage or support such attempts by anyone," Xi vowed.

Xi also promised to work with the United States to combat cyber criminals.

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Honeywell International Chairman and CEO David Cote told CNBC on Wednesday he was encouraged by Obama's stance that cyberattacks on private companies should be off the table, and by Xi's comments on Tuesday.

Still, some American businesses could find it difficult to do business in China when it comes to handling sensitive information, GGV Capital managing partner Hans Tung told "Squawk Alley" on Wednesday.

Opening the doors to that business would likely require government-to-government dialogue in order to establish protocol, he said.

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Tung counted router maker Cisco, whose hardware provides the backbone for the Internet, among the tech firms that would face challenges.

Cisco's China business has suffered in recent years following allegations by former U.S. National Security Agency contractor Edward Snowden that the NSA used American-made hardware, including Cisco's products, to spy on China.

On Tuesday, The Wall Street Journal reported that Cisco planned to announce a deal to work with a young Chinese server maker named Inspur Group in order to win back business in the country.

—Reuters contributed to this story.