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China to probe tech suppliers for security checks amid row with U.S.

A hacker, who requests not to have his name revealed, works on his laptop in his office in Taipei July 10, 2013. REUTERS/Pichi Chuang
A hacker, who requests not to have his name revealed, works on his laptop in his office in Taipei July 10, 2013. REUTERS/Pichi Chuang

By Li Hui and Megha Rajagopalan

BEIJING (Reuters) - China will investigate providers of important IT products and services to protect "national security" and "economic and social development", the official Xinhua news agency said on Thursday, amid a row over cyber spying with the United States.

Companies that don't pass the checks will no longer be allowed to supply products and services in China, Xinhua cited the State Internet Information Office as saying. Products that don't meet security requirements will be banned.

The likely consequences of the ruling were not immediately clear but it comes amid a heated dispute with the United States, after Washington charging five Chinese military officers with hacking U.S. companies to steal trade secrets.

The Chinese media on Wednesday labelled the U.S. government a "high-level hooligan", while official in Beijing have accused Washington of "double standards" on issues of cyber spying.

When asked which governments or businesses China is targeting with this move, Chinese Foreign Ministry spokesman Hong Lei declined to directly respond, while defending the measures being taken to vet companies providing IT products and services.

"The introduction of such a system will be the most effective legal basis for safeguarding China's Internet security and will also have a significant role in promoting the construction of China as an Internet powerhouse," he told a news briefing.

"China now accounts for the largest number of Internet users in the world," he said.

China has also banned new central government computers from using Windows 8, Microsoft Corp's latest operating system.

This was done because of security concerns around Windows 8, which exposes computers to monitoring and the risk of being controlled remotely, the Communist Party mouthpiece People's Daily newspaper reported on Thursday, citing a U.S. National Security Agency programme called Prism.

Windows 8 was also not user-friendly, the People's Daily added.

Xinhua said the investigations would check product security and seek to prevent suppliers from illegally gathering, storing or processing user data.

"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 and technological edge," Xinhua quoted Jiang Jun, spokesman for the State Council Information Office, as saying.

"They not only seriously undermine interests of their clients, but also threaten cyber security of other countries."

A small number of governments and businesses "take advantage of technological monopolies to collect sensitive data on a large scale" from the Chinese government, business and institutions, Xinhua added, saying there had been extensive wiretapping and security breaches.

Documents leaked by former U.S. security contractor Edward Snowden "rang alarm bells" over cyber security, Jiang added.

Xinhua did not give details of which governments or businesses it was referring to but U.S. security standards for information technology were not transparent or clear-cut, Xinhua added.

China has also targeted other foreign tech firms in recent months, including Qualcomm Inc.. The anti-monopoly regulator accused the U.S. chip giant of overcharging and abusing its market position.

(Additional reporting by Paul Carsten and Sui-Lee Wee; Editing by Nick Macfie and Simon Cameron-Moore)

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