China has openly denied involvement in the break-in. Obama administration officials have said they are increasingly confident that China's government, not criminal hackers, were responsible.
US and Chinese officials are discussing thorny issues including cybersecurity, maritime security, military relations, missile defense, nuclear policy and space security.
The discussions, led by Deputy Secretary of State Antony Blinken and his Chinese counterpart, Executive Vice Foreign Minister Zhang Yesui, involve both civilian and military officials.
A senior State Department official described yesterday's talks at the department as candid. The official was not authorised to speak on the record in briefing reporters about the deliberations, which follow revelations about the massive breach of data at the Office of Personnel Management, or OPM.
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Information on as many as 14 million current and former US federal employees and contractors, including military and intelligence personnel was stolen.
"Certainly the issue will be addressed in pretty direct terms with the Chinese," the official said.
But the US is still stopping short of publicly blaming the breach on China. State Department spokesman John Kirby said it remains under investigation by the FBI and there's been no official allegation on who was responsible.
But investigators say the evidence points to the work of a government, not criminal hackers.
This week's talks will help prepare the ground for Chinese President Xi Jinping's visit to the White House slated for September.