China suspends bank technology restrictions opposed by US

China has agreed to delay implementing new bank technology restrictions that Washington complained represented unfair regulatory pressure on foreign firms, a senior US Treasury official said in Beijing on Monday.

China said this month that work was ongoing on a draft anti-terrorism law that would require foreign companies to hand over encryption keys and otherwise boost Beijing’s ability to bypass security measures, triggering US protests. It followed an earlier set of draft financial sector regulations that pushes China’s state-owned banks to buy technology from domestic vendors.

Beijing was now “suspending” the regulations that applied to the banks, according to the official, speaking after meetings between US Treasury Secretary Jack Lew and senior Chinese officials, including Premier Li Keqiang.

There was no immediate comment from China, but US industry groups, which have been lobbying hard on the issue, cautiously welcomed the move.

“We are encouraged that there seems to be a delay; what we now need is a transparent, open consultation process with stakeholders and we’re hopeful that will be part of the next steps," said US Chamber of Commerce executive director for China Jeremie Waterman.

BSA, The Software Alliance – whose members include Adobe Systems, Apple Inc, IBM, Microsoft Corp and Oracle Corp – and the Software and Information Industry Association (SIIA), which represents financial institutions and tech companies including Google Inc and Thomson Reuters, also found the news encouraging.

SIIA senior director for international public policy Carl Schonander said the delay was a positive development, noting the industry asked for the rules to be suspended.