WASHINGTON -- President Barack Obama on Monday sharply criticized China's plans for new rules on U.S. tech companies, urging Beijing to change the policy if it wants to do business with the United States. In an interview with Reuters, Obama said he was concerned about Beijing's plans for a far-reaching counterterrorism law that would require technology firms to hand over encryption keys, the passcodes that help protect data, and install security "backdoors" in their systems to give Chinese authorities surveillance access. "This is something that I've raised directly with President Xi," Obama said. "We have made it very clear to them that this is something they are going to have to change if they are to do business with the United States."
The Chinese government sees the rules as crucial to protect state and business secrets. Western companies say they reinforce increasingly onerous terms of doing business in the world's second-largest economy and heighten mistrust over cybersecurity between Washington and Beijing. A Chinese parliamentary body read a second draft of the country's first anti-terrorism law last week and is expected to adopt the legislation in the coming weeks or months.The initial draft, published by the National People's Congress late last year, requires companies to also keep servers and user data within China, supply law enforcement authorities with communications records and censor terrorism-related Internet content. The laws "would essentially force all foreign companies, including U.S. companies, to turn over to the Chinese government mechanisms where they can snoop and keep track of all the users of those services," Obama said. "As you might imagine tech companies are not going to be willing to do that," he said.