HANK PAULSON: Cyber theft is a threat to the global economic system

China and the US need to work together to address cyber theft - or it will spiral out of control and hurt the global economy.

That is according to former US Treasury Secretary Hank Paulson, who sat down with CNBC's Michelle Caruso-Cabrera Tuesday, to weigh in on Chinese President Xi Jinping's visit to the US, tech companies, and Lloyd Blankfein's lymphoma.

The world's two largest economies by GDP need to see eye-to-eye on the encroaching issue of cyber security, Paulson said.

"Ultimately I think it's just very, very important for our two countries to come together, because we need a global regime - a global economic regime that's going to be able to be enforceable and to curb and to punish cyber theft," he said. "And I think you're only going to that can only be done on a multilateral basis."

"I don't see how the global economic system can function if you ever have a cyber theft," he said.

"It's going to be a lot easier to do that if we're working with China. And ultimately, China has a need to do something here too."

When asked how cyber security played into Sino-American relations, Paulson said: "When you look at our economic relations, the most troublesome and economic issue is corporate or commercial cyber theft.

"I think it's the biggest risk when we look at US-China relations."

Cyber assaults have impacted relations between the two nations in recent years. The topic is set to be a major talking point during the Chinese president's visit to the US this week.

The FBI said October last year that hackers, thought to be related to the Chinese government, had launched a spate of attacks against US companies.

It wasn't the first time. Over the past few years, US companies have accused Chinese hackers of stealing or attempting to take sensitive information. That list includes Google, Yahoo, Dow Chemical and Adobe Systems.

The Chinese central government denies any involvement.

"The Chinese government does not engage in theft of commercial secrets in any form, nor does it encourage or support Chinese companies to engage in such practices in any way," Xi said during an interview with AFP.

Xi touched down stateside Tuesday, and will be addressing top US and Chinese corporate heads early Wednesday. He will meet with companies that do work with China - such as executives from Microsoft and Boeing.