DATE=1/27/2000 TYPE=CORRESPONDENT REPORT TITLE=CHINA-INTERNET (L-O) NUMBER=2-258473 BYLINE=STEPHANIE HO DATELINE=BEIJING CONTENT= VOICED AT: INTRO: China is defending new rules imposed on the Internet, saying they are aimed at protecting state security. V-O-A's Stephanie Ho reports from Beijing, the Chinese government says the new controls should not worry foreign companies that want to do business in China. TEXT: Chinese Foreign Ministry spokesman Zhu Bangzao refused to discuss the reasons for the government's decision to try to tighten control of the Internet. On Wednesday, the government published a new set of rules for the Internet which critics say could have a chilling effect on both business and personal use of the web. But Mr. Zhu -- speaking through an interpreter -- defended Beijing's actions. // ZHU INTERPRETER ACT // What I would like to say is that recent years have seen the rapid development of Internet in China. The measures we have taken in this regard are very positive. I think that for any country, they will adopt necessary policies in terms of protecting state security. // END ACT // The Chinese spokesman expressed his government's hope that the new rules would not frighten away foreign businesses. // ZHU INTERPRETER ACT // This will not hamper the process of foreign companies entering into China. // END ACT // Mr. Zhu did acknowledge, though, that what he referred to as "irrationally encrypted commodity exchanges" will be affected. New regulations require all companies in China to provide the government extensive information about their encryption software by January 31st. Encryption software enables people and businesses to send confidential information and financial data safely over the Internet. The regulations also mandate that all electronic products in China use encryption software manufactured in China. Other new rules, that retroactively went into effect at the beginning of the year, were outlined in a report Wednesday in the People's Daily -- the flagship paper of the ruling Communist Party. The report said any information released over the Internet must first be approved by Chinese security authorities. It added that operators of Internet chat rooms or online discussion groups must undergo security checks. The regulations say any discussion or dissemination via the Internet of what the government considers a state secret is forbidden and grounds for punishment. Internet use in China has grown significantly in recent years. Official Chinese media say there were nearly nine million Internet users in China by the end of last year -- more than four times as many as the year before. (signed) NEB/HO/FC 27-Jan-2000 06:06 AM EDT (27-Jan-2000 1106 UTC) NNNN Source: Voice of America .