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US calls China's new rules for tech firms a 'major barrier' to trade

The rules will require tech companies to hand over source code, submit to audits and build deliberate back doors into both hardware and software products.

Although entry to China gives tech companies access to millions of more consumers, there may be a steeper price to pay soon. CNET

The Obama administration has slammed new Chinese regulations set for foreign companies, branding them a "major barrier" to trade and an open market.

On Thursday, Deputy US Trade Representative Robert Holleyman said the new regulations run counter to Beijing's declared wish of an open market and economy, Reuters reported.

"Our view is that it's a major barrier to trade," he said. "There's been engagement at the highest levels of the US government and cabinet with Chinese counterparts asking for those [regulations] to be put on hold."

New regulations due to be imposed by the Chinese government are going to hit foreign companies in the country hard. The rules will require tech companies to hand over source code, submit to audits and build deliberate back doors into both hardware and software products.

While the US Chamber of Commerce and a number of foreign business groups have objected to the rules, some companies -- such as Apple -- have bowed to the demands in order to preserve their business in the Chinese market.

China Foreign Ministry spokeswoman Hua Chunying said there would be no issues as long as foreign firms respected local laws and "harmed neither the country's national interests nor consumers," but it is possible the new rules could be challenged at the World Trade Organization.

China's new laws are due to go into effect next month.

The relationship between the United States and China is often strained at best -- not only due to trade, but also thanks to cybersecurity issues. Both countries continually accuse each other of cyberattacks levied against local firms and government agencies, and yet, both deny such involvement.

US President Obama is soon expected to announce an executive order aimed at allowing firms to share cybersecurity-related information with the government. Technology leaders and representatives are heading to a cybersecurity summit at Stanford University on Friday -- although the CEOs of Facebook, Google, Yahoo, and Microsoft will not be attending. Apple's chief executive officer Tim Cook will be present, but the other three firms are sending senior executives instead.

This story originally posted as "US slams new Chinese rules for tech firms" on ZDNet.