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Special Report

All-Star Panel: How should US handle cyber theft by China?

This is a rush transcript from "Special Report," May 29, 2013. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Very high priority, the issue the issue of cyber security. You've seen it in the way he's taken executive action. You have seen it the way that we press for action by Congress on this. And the president considers this a very top priority.

JON HUNTSMAN, IP REPORT CO-CHAIRMAN: It will be very interesting to see if, in the upcoming meeting in California between President Obama and Xi Jinping if the whole cyber issue and IPR theft, if it actually breaks through to a top two or three issue. And, if it does, and if you find that a work program is created around this issue going forward for the rest of the year, that will be a very good sign because, so far, there has been nothing in terms of the work of both countries around IPR theft.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: Jon Huntsman on a private commission dealing with cyber threat and cyber stealing, really. Its report came out that China steals more than $300 billion worth of American ideas as well as research and development every year.

We are back with the panel.

Charles, I guess the question becomes that the White House says this is a top priority. But at what point do you cross the line? We obviously had the report about all of the defense plans that have been stolen. What point does it become cyber war and not cyber stealing?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: The line is crossed. We are in cyber war, but it's one-sided. This is really interesting. It's a very damaging issue. It isn't only intellectual property, damaging our economy, and now as we learn in this report, damaging our national security with high tech weapons or compromise.

What's interesting is that it's the second kind of new kind of warfare we have had in our generation. And  with terrorism, we started with a passive defense. After 9/11, we realized that you have to go on active defense. Here, with a cyber war, which is ongoing, we are entirely in passive mode. And in the end, it can't succeed because the other guys will be ahead of you.

I think we really have to unleash the beast here and to counterattack. Now, here is the problem. With terrorism, you don't allow individuals to go out and to counter attack freelance. We have organized army and units. I think what we ought to be thinking about is units who operate in the government, under the government certain agencies who will launch cyber attacks against the Chinese as a deterrent, as a way to say -- because the Chinese don't take any of this seriously.

We never raise it at high levels to any extent. Our passive defenses are a joke. You want to get the Chinese attention, cyber attack and do it the same way that we do the antiterrorism under a government agency and with control.

BAIER: Well, a lot of things happen at the NSA that are not talked about and red team, blue team kind of things, I think, go on there.

KRAUTHAMMER: Well, let's hope it's going on because it obviously isn't extremely effective given the extent of the Chinese attacks on us.

BAIER: Juan?

JUAN WILLIAMS, THEHILL.COM: Well, I think the administration has taken a much sharper tone with the Chinese in recent months. Now, Tom Donilon, the national security advisor has been over there and he spoke about the urgency and scope of the problem. The Pentagon has directly said that the Chinese government is responsible for this, that they had in the past have said well, those would be some Chinese companies, but the defense – the Pentagon, the Defense Department has now said those are agencies of the Chinese military that in fact, are conducting these kinds of attacks.

And then, you of course, have had in recent months attacks on the New York Times. The Wall Street Journal, again, directly tied to the Chinese.  Now, President Obama is supposed to meet next week with the Chinese President Xi Jinping. And when we heard today at the White House from Jay Carney was he plans to make this a priority in terms of their talks.

BAIER: but, you know, Jonah, to hear the White House talk about it, seeking China to investigate our concerns and start a dialogue on cyber issues. I mean, that's not exactly strong talk.

JONAH GOLDBERG, AT-LARGE EDITOR, NATIONAL REVIEW: No. I mean they are sloganing off the dime. But, you do hear that they are starting to realize the scope of this. Maybe that's what this report will do is sort of push them even more.

I like Charles' approach to this. There is a legal scholar Jeremy Rabkin who proposes issuing letters of marquee, the way we did 19th century private years to unleash them on China, because ultimately, the Chinese are a bunch of kleptocratic thugs. And they only respect power and they have to put a price on something they have been getting away with for free.

WILLIAMS: Let me add one complicating factor. We want an economic relationship with China.

(CROSSTALK)

KRAUTHAMMER: Holding them responsible and accountable. Haven't I heard that before?

WILLIAMS: Yes.

BAIER: That is it for the panel. But, stay tuned for some lippy remarks from President Obama.

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