Chinese government rules due to come into force on Saturday would oblige security vendors to disclose encryption information.
The regulations mean that suppers of six categories of products - including smart cards, firewall and routers - will need to submit trade secrets to a government panel in order to receive a license to sell to government departments.
EU officials have described the move as both protectionist and commercially risky. One concern is that security know-how supplied to the government panel might be disclosed to local firms.
Handing over encryption information is "something companies cannot and will not do," said president of the European Union Chamber of Commerce Jorg Wuttke, The Wall Street Journal reports. US authorities are also opposed to Chinese demands, AP adds.
Details of the scheme are a little murky. It's unclear whether EU and US would be obliged to simply disclose encryption techniques, such as AES, which are publicly documented, or cryptographic keys, which must be kept secret.
Source code review of security products is carried out under security certification schemes run by CESG in the UK, for example, and by itself is certainly no bad thing. In the past Chinese authorities have asked for malware samples before allowing anti-virus vendors to sell technology into the country, a move into much murkier areas of security ethics. ®