Japan and the European Union joined the U.S. in pressuring China to change its stand on bank cybersecurity rules. Under the current regulations, technology vendors to Chinese banks must turn over their secret source code and use instead Chinese encryption algorithms.

Robert Holleyman, U.S. deputy trade representative, said Washington has secured support from its allies and trade partners, particularly Japan and the EU, to break down the barriers for American tech firms to have more trade with China.

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He told the National Lieutenant Governor Association that he again brought up the issue with Chinese officials when he visited Beijing last week. Holleyman stressed that while American tech firms would benefit if the issue is resolved, it is also a vital global initiative.

The EU confirmed that it also discussed the matter with Beijing on a ministerial level. Brussels also plans to elevate the case to the World Trade Organization at its next meeting on technical trade barriers, Reuters reports.

The EU spokesperson said that the regional bloc is concerned over the lack of transparency in developing the measures and its potential impact on companies within EU.

Washington gave banks in China until Sunday to submit their proposals on how to comply with the new regulations. Unless the banks change the rules, American technology and ATM providers would be shut out of the Chinese market, Holleyman points out.

Victoria Espinel, the successor of Holleyman as president of BSA The Software Alliance, a lobbying group, reminds Chinese banks, "It is not good for Chinese companies to be cut off from being able to choose the best products and services they want, it's not good for China ... as an economy."

Tagscybersecurity, ATMs