China denies shelving controversial cyber rules

A top Chinese official said Monday that Beijing will move forward with broad new cybersecurity requirements, days after a senior U.S. official suggested the initiative had been temporarily paused.

The new rules, part of a larger counterterrorism law, have alarmed foreign businesses and drawn opposition from President Obama. Under the measure, foreign firms would be required to submit source code for inspection and use of Beijing-approved encryption keys.

{mosads}“Currently, the deliberation on this law is ongoing,” said Foreign Ministry spokesman Hong Lei, Reuters reported.

White House Cybersecurity Coordinator Michael Daniel indicated last week that Beijing officials had chosen to at least delay the new regulations as they further discussed the measure with anxious foreign governments and business groups.

China has faced increasing criticism over the measure, which would also require companies to store user data locally and hand over communications records to authorities.

Industry groups in the U.S. and Europe have argued it would lock them out of doing business within the Asian economic power.

Obama raised the issue directly with Chinese President Xi Jinping, stressing the measure would hurt the Chinese economy as foreign businesses scale back investments in the country.

The law was first presented by the National People’s Congress late last year and is expected to go into effect in the coming months.

Hong said China was willing to “communicate with relevant parties” on the final text of the law, but insisted the ultimate language will represent China’s needs.

“China will formulate its anti-terrorism law based on its own counterterrorism needs, and protect national security,” Hong said. “This is an important necessity of China’s current national development.”

The Wall Street Journal also reported Sunday that similar banking security laws that could reduce reliance on foreign technology were still on track. Chinese banks have started to file initial plans for how they will comply.