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"This isn't a mild irritation, it's an economic and national
security concern to the United States," Rice said during remarks
at George Washington University.
"It puts enormous strain on our bilateral relationship, and it
is a critical factor in determining the future trajectory of
U.S.-China ties," she said.
President Barack Obama and Xi are expected to have an intense
back-and-forth about the issue when the Chinese leader visits
the White House this week.
"Cyber-enabled espionage that targets personal and corporate
information for the economic gain of businesses undermines our
long-term economic cooperation and it needs to stop," Rice said.
Xi said in a written interview with the Wall Street Journal
China's government does not engage in the theft of commercial
secrets and does not support Chinese companies that do so.
"Cyber theft of commercial secrets and hacking attacks against
government networks are both illegal; such acts are criminal
offences and should be punished according to law and relevant
international conventions," Xi said.
"China and the United States share common concerns on cyber
security. We are ready to strengthen cooperation with the U.S.
side on this issue," he said.
Rice also said the United States would insist on maintaining
freedom of navigation and commerce through busy sea lanes in
disputed areas of the South China Sea.
Xi told the Wall Street Journal that China's development of
facilities on the disputed Spratly Islands in the South China
Sea do not impact upon or target any other country, and "should
not be overinterpreted".
Rice said Obama would be direct with Xi on those issues and
disagreements over human rights at their meetings.
(Reporting by Jeff Mason and Roberta Rampton; Additional
reporting by Ben Blanchard in BEIJING; Editing by Doina Chiacu
and Paul Tait)
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