"This isn't a mild irritation, it's an economic and national security concern to the United States," she said during remarks at George Washington University.
"It puts enormous strain on our bilateral relationship, and it is a critical factor in determining the future trajectory of US-China ties."
President Barack Obama and Xi are expected to have an intense back-and-forth about the issue when the Chinese leader comes to the White House this week.
"Cyber-enabled espionage that targets personal and corporate information for the economic gain of businesses undermines our long-term economic cooperation and it needs to stop," Rice said.
Rice also said the United States would insist on maintaining freedom of navigation and commerce through busy sea lanes in disputed areas of the South China Sea.
Rice said Obama would be direct with Xi on those issues and disagreements over human rights at their meetings. — Reuters
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