Disputes over what’s acceptable behavior in cyberspace threaten to overshadow the agenda when Chinese President Xi Jinping and U.S. President Barack Obama meet in Washington this week.

A simmering conflict over hacking comes at a time when the U.S. is seeking cooperation with China on issues from North Korea to anti-terrorism and climate change. Xi arrives in Washington Sept. 24 for a two-day visit.

The two sides hope to announce an agreement to limit certain types of hacking, though people familiar with the negotiations say they have been contentious and any deal unveiled this week will probably be modest.

“Cybersecurity is shaping up to be one of those things whose impact is so enormous that it could affect the trajectory of the relationship,” said Wang Fan, director of the Institute of International Relations at the China Foreign Affairs University. Xi and Obama are likely to only reach an agreement in principle or risk “derailing the entire bilateral relation.”

U.S. government agencies and companies are reeling from a string of sophisticated attacks alleged to have been carried out by the Chinese government or its proxies, including the theft of corporate information and millions of health care and federal personnel records. China denies being involved, saying it’s a victim of cyber-espionage itself and opposes hacking.

“We are preparing a number of measures that will indicate to the Chinese that this is not just a matter of us being mildly upset,” Obama said Sept. 16. It was his most forceful comment to date and indicates a mounting frustration within the U.S. over what it says is Chinese theft of trade secrets and intellectual property.

Read the article “Hacking Allegations Threaten to Overshadow Xi-Obama Summit” on bloomberg.com.