US president George W Bush [Images] formally acknowledged that his country is vulnerable to cyber attacks, and said he will raise the issue with Chinese President Hu Jintao when they meet in Sydney on this week, on the sidelines of the annual Asia Pacific Economic Cooperation summit.

Bush said it was important that countries respected each other's "systems and knowledge base". "That's what we expect from people with whom we trade," he said.

Media outlets in the US and elsewhere reported Bush's remarks against the backdrop of a Financial Times report a day earlier, that the Chinese People's Liberation Army had allegedly hacked into the Pentagon's computer network.

China has officially denied complicity in the attack on the US defense department, with a spokesperson suggesting the "absurd" claims reflected "cold war thinking".

The Pentagon disclosures about the attack follow reports in German newspapers of the insertion of spyware, also allegedly by China, into German government computers at the Chancellery and three ministries. British government officials have also spoken of similar attacks, with the media suggesting that Parliament, and the Foreign Office, had been attacked by hackers.

Security experts have been quoted in various sections of the media as saying the targets are not limited to government, but also target private companies, especially in the financial sector.

Experts have been quoted in various sections of the media as pointing out that China's military strategy encompasses cyberspace. China believes the internet is a key battleground of modern war, and that information flows across networks are crucial to battle.

Interestingly, certain segments of the media have claimed that the US has been doing the same sort of hacking it is now accusing China of - allegations the US has strenuously denied.

Earlier this year, Russian hackers had unleashed what experts called the biggest ever international cyber assault. The target was Estonia, and the attack took the form of denial of services, wherein large numbers of visitors overwhelmed Estonian government computers.

The Russian government said then that the attack was the work of ordinary Russians, incensed by Estonia's move to re-bury a Russian soldier from World War II. Experts however claimed to spot the Pentagon's fingerprints all over the attack.

Interestingly, China has also claimed, this year, that it was the victim of cyber attacks, and that it is taking measures to protect itself.