Beijing will run internet security checks on all "critical" information technology products and services before allowing them to be used in systems that affect national security and the "public interest".
The aim was to safeguard the country's users against exposure to illegal access and control of their systems and access to their data, the State Internet Information Office (SIIO) said yesterday.
State media reported that the new measures would apply to both domestic and foreign vendors.
The measure follows the US' indictment of five PLA officers this week for hacking into US companies for trade secrets.
It also comes after Beijing launched a powerful steering committee for internet security earlier this year, chaired by President Xi Jinping. The SIIO serves as the steering committee's general office.
At the first meeting of the committee in February, Xi said: "There is no national security without internet security."
The government would roll out more programmes and measures aimed at improving China's cyberspace security, China News Service reported.
Xinhua said products and services that failed the vetting would be banned from use on the mainland.
"For a long time, governments and enterprises of a few countries have gathered sensitive information on a large scale, taking advantage of their monopoly in the market," SIIO spokesman Jiang Jun told Xinhua.
He said the information revealed by former US intelligence contractor Edward Snowden had exacerbated China's cybersecurity woes, as it showed the United States using internet-based resources to implement large-scale network monitoring and stealing of political and military secrets as well as business data.
CNS said among China Telecom's 163 backbone networks, 73 per cent used products by the US network equipment giant Cisco. It also named other major vendors, including IBM, Google, Qualcomm, Intel, Apple, Oracle and Microsoft.
"Foreign companies have helped China's adoption of information technologies," CNS cited an anonymous senior official from SIIO as saying. "But this also laid security risks."
A Cisco spokesman said: "Our products are reviewed by customers and governments around the world and they meet the highest global, quality and security requirements and standards."
Michael Gazeley, managing director of Hong Kong-based information security firm Network Box, said: "I imagine that all technology vendors, large and small, will be affected by this policy.
"The technology marketplace in China could slow down this year as people become unsure of what to buy. Imagine the downside of buying new equipment, only to have it fail the vetting process shortly after purchase."
James McGregor, Greater China chairman of US advisory firm APCO China, said China was still reliant on foreign technology.
"For the last few years, it's been tougher and tougher for foreign tech companies in China," he said.
"The impact remains to be seen, because a lot of the foreign equipment has the top technology and top performance and I don't think that Chinese companies want inferior equipment."
Liu Duo, a deputy chief of the China Academy of Telecommunication Research, which is affiliated with the Ministry of Industry and Information Technology, told CNS that Chinese suppliers were discriminated against by US authorities, referring to an earlier ban by Washington on some Chinese companies over telecommunication safety fears.
"Maybe we could apply similar vetting on American companies, and possibly rein in the US' unfair sanctions against Huawei and ZTE," Liu said.