Cyber warfare is a key future battleground and strategic attacks can cripple nations, Defense Secretary Leon Panetta said in Beijing on Wednesday.
Panetta said he raised the issue of China’s growing cyber warfare capabilities during what he termed "candid" discussions with Chinese military leaders.
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"I did raise the area of cyber," Panetta told reporters.
"This is the potential battlefield for the future and the technology that's developing in cyber has the potential to cripple a country, paralyze a country," he said.
Computer networks are also being used for spying, he said.
"Cyber is now, you know, being used in order to exploit information, important economic information, from one country to the next, and that the United States has concerns about what China has been doing, in terms of exploiting information," Panetta said.
Panetta said he told Chinese military leaders that the United States and China should engage in a dialogue on cyber warfare and intelligence gathering. He said the Chinese agreed.
The defense secretary also said he hoped that international standards and rules could be developed through a security dialogue.
China is considered among the most aggressive nation states engaged in both military cyber warfare activities and intelligence gathering through cyberspace.
The congressional U.S.-China Economic and Security Review Commission reported in March that Chinese military cyber warfare capabilities threaten U.S. military operations.
"Chinese capabilities in computer network operations have advanced sufficiently to pose genuine risk to U.S. military operations in the event of a conflict," the report said.
China’s military would use computer and other digital attacks on logistics networks and command and control links, which Beijing regards as "centers of gravity," the report said.
The report said "PLA commanders will almost certainly attempt to target these systems with both electronic countermeasures weapons and network attack and exploitation tools, likely in advance of actual combat to delay U.S. entry or degrade capabilities in a conflict."
Critics have said Panetta’s attempt to cooperate with China on cyber warfare through dialogue is risky, since China likely would use such cooperation to learn key strategic vulnerabilities of U.S. cyber security that could be exploited in a future conflict.
China’s cyber warfare capabilities are among the most secret aspects of China’s military buildup. In past meetings between U.S. and Chinese officials, the Chinese refused to discuss the topic in any substantive way, according to officials familiar with past closed-door meetings.
Instead, the Chinese categorically deny that any of the major attacks that have occurred against the U.S. government and corporations were Chinese government attacks.
A classified State Department cable made public on WikiLeaks stated that China’s ruling Politburo was behind the large-scale cyber attacks on Google and other U.S. companies that began in November 2010.
The cables revealed that the attacks on Google were systematic strikes of sabotage linked to Chinese government operatives.
Since 2010, the U.S. government has traced major cyber attacks on defense contractors to China, including a highly sophisticated program to steal encryption technology used by defense contractors to remotely access corporate computers containing sensitive defense information.
Panetta, in his meeting with reporters, also said he urged the Chinese to seek a peaceful solution to disputes over islands.
"At each meeting that I had, I raised the issue of, you know, the maritime issues that have been raised and—not only in the South China Sea, but now in the China Sea, as well, with these islands, as I’ve been saying that while the United States does not take a position with regards to these territorial disputes, that we strongly urge the parties to exercise restraint and to work together to find a peaceful resolution to these issues," he said.
While Panetta sought to put a positive spin on his meetings with Chinese military leaders, Vice Chairman of the Central Military Commission Gen. Xu Caihou bluntly warned Panetta not to invoke the U.S.-Japan defense treaty over China’s claims to Japan’s Senkaku Islands.
According to the state-run Xinhua news agency, Xu told Panetta that "the Chinese side resolutely opposes the inclusion of Diaoyu islands in the US-Japan Security Treaty," and hopes that "the U.S. side will truly deliver on its promise of not taking sides on the sovereignty belonging of Diaoyu Island so as to benefit the safeguarding of regional stability and world peace."
Panetta said in Tokyo before arriving in China that the U.S. will observe its defense commitment to Japan, a clear indicator that if China uses military force against Japan over the islands that the United States military could get involved.
Panetta said he sought to reassure Chinese leaders that the U.S. military’s pivot to Asia as the wars in the Middle East and South Asia wind down is not targeted at China.
"We had very good and candid discussions about the rebalance issue," he said.
"The one thing I was very pleased to hear from the leaders I talked to is that they acknowledge that the United States presence in the Pacific is not something they viewed as a threat," he said.
China’s military has written in articles and papers that the United States is building up forces in Asia to contain China.
The Pentagon last year announced a new strategy called the Air-Sea Battle Concept that is designed to counter China’s new high tech weapons.