WORLD NEWS

RANCHO MIRAGE, Calif.— President Obama said Friday that he told China's President Xi Jinping that it's critical they come to an understanding on how they'll work together on cybersecurity, one of the most contentious issues facing the two nations.

Emerging after nearly three hours of talks on the first of two days of meetings at the Sunnylands estate, Obama said that the two leaders didn't delve deeply into the issue, but he noted the "deep concerns" the U.S. government has about theft of intellectual property and hacking into private and government networks.

"What both President Xi and I recognize is that because of these incredible advances in technology, that the issue of cyber security and the need for rules and common approaches to cybersecurity are going to be increasingly important as part of bilateral relationships and multilateral relationships," said Obama, adding that world was entering "uncharted waters" on the issue.

China has been widely linked to network break-ins of numerous Western companies and agencies. And Obama issued an executive order this year to compel government and industry to share intelligence about network breaches, mainly to protect the nation's infrastructure.

The Pentagon also blamed China for cyberattacks in its annual report to U.S. lawmakers on Chinese military capabilities. The report, published in May, stated that some of the recent cyberattacks in the United States appeared "to be attributable directly to Chinese government and military."

Xi didn't address those charges but said China was also the victim of cyberattacks. He added that through good faith negotiations the U.S. and China could make the issue "a positive area of cooperation."

The comments come as Obama and Xi kicked off their summit in the southern California desert on Friday evening, with both leaders declaring that they hope to forge "a new model" of cooperation.

"We're going to have a healthy economic competition, but we also have a whole range of challenges on which we have to cooperate, from...North Korea's nuclear and missile programs -- to proliferation, to issues like climate change," Obama said.

Xi said the talks were about charting the future of U.S.-China relations.

"Together we can build a new model for major country relationships," Xi said.

The two ended their evening with a private dinner and will meet again on Saturday morning for more talks, before heading separate ways on Saturday afternoon.

The White House billed the informal meeting with Xi, who was elevated to the Chinese presidency in March, as an opportunity to plant the seeds for a more meaningful dialogue with China's leadership, which for years has largely been scripted.

Ahead of the talks, White House officials expressed optimism that Xi is a different type of Chinese leader and his ascension could present an opportunity to improve the relationship. Xi has been praised by the White House for eschewing the formality in diplomatic relations that was the hallmark of many of his predecessors. And Xi was described appreciatively by former Secretary of State Hillary Rodham Clinton as "pragmatic."

But a break-through in the relationship is hardly a certainty.

"If it is going to work, both sides will have to show some flexibility," wrote Christopher Johnson, a former China analyst at the CIA and a senior adviser at the Center for Strategic and International Studies. "President Obama must be willing to more directly signal U.S. acknowledgment of China's arrival as a great power and with that, a role in shaping new global rules and norms. Xi will have to demonstrate that he wants more from the meeting than just a photo op, and that he is prepared to engage in a meaningful dialogue about China's ambitions—both in the region and globally—and is committed to pursuing a truly cooperative relationship with Washington to realize those objectives."

There's no shortage of difficult issues for the two leaders to talk about.

Business groups say currency manipulation by Beijing remains rampant, leading to a record-setting $315 billion trade deficit last year. And Obama and Xi are expected to trade notes on North Korea, whose nuclear program is causing varying levels of unease for both leaders. And arguably the most sensitive issue in the U.S.-Sino relationship, at least for the moment, is cyberhacking.

The carefully choreographed summit was in danger of being overshadowed by revelations that the U.S. government had secretly collected massive amounts of information from Americans' phone and Internet records.

Obama was twice questioned by reporters on Friday about the controversy, and the president forcefully defended the National Security Agency programs as critical tools in keeping Americans safe from terrorism.

"We have to make choices as a society," Obama said in his first remarks about news of the vast scope of government surveillance. "It's important to recognize that you can't have 100% security and also then have 100% privacy and zero inconvenience."

The White House and China analysts were surprised that the Chinese were willing to make Xi's first visit to the United States an informal one outside of Washington. The Chinese—usually sticklers for protocol—have required the first visit by a president to the USA in the past to be a State visit.

"I've gone through this for 25 years with the Chinese and have the bruises to show for it," said Jeffrey Bader, who served as the East Asia director for the National Security Council in Obama's first term. "We've always liked something more informal and frankly we've never gotten it."

With the opening, Obama chose Sunnylands, the historic estate that was the winter home of Walter and Leonore Annenberg and over the years had become a "Camp David of the West" to seven previous presidents.

Richard Nixon drafted his final State of the Union during a stay at Sunnylands in 1974. He returned several months later following his resignation.

Ronald Reagan signed a major trade agreement at Sunnylands, but perhaps more notably celebrated the New Year's holiday ever year of his presidency at the estate. George H.W. Bush and his wife, Barbara, were also frequent visitors and even hosted a State Dinner in 1990 in honor of Japanese Prime Minister Toshiki Kaifu, one of the few times a State Dinner has been held outside Washington.

The estate also was the setting for Frank and Barbara Sintara's wedding in 1976. And in 1979, after fleeing from Iran, the mother and sister of Mohammad Reza Shah Pahlavi, the ousted Shah of Iran, took haven at the estate.

Xi connected this summit to the historic visit by Nixon to Beijing in 1972, which led to a thaw in the U.S.-China relations.

At the beginning of the trip, Nixon was famously photographed shaking the hand of Communist Party Chairman Mao Zedong--a moment that was particularly poignant to Prime Minister Zhou Enlai. Twenty years earlier, Secretary of State John Foster Dulles refused to shake hands with Zhou at a conference in Geneva, a story that Zhou recalled to Nixon.

"This reminds us of what happened over 40 years ago when the leaders of China and the United States, with the strategists' political courage and wisdom, realized a handshake across the Pacific Ocean and reopened the door of exchanges between China and the United States," Xi said. "And in the more than 40 years since then, the China-U.S. relationship has gone through winds and rains and it made historical progress. And our two peoples and the people elsewhere in the world have reaped huge benefits from this."