China on Monday moved closer to adopting a controversial cyber security law after its parliament held a second reading of the draft rules, which carry significant consequences for domestic and foreign business and threaten greater censorship…The draft…requires network operators to comply with social morals and accept the supervision of the government and public, official news agency Xinhua said. It also reiterated that Chinese citizens' personal data, as well as "important business data" must be stored domestically…

Cyber security has been a particularly irksome area in China's relations with economic partners such as the United States and the European Union, which see many recently proposed rules as unfair to foreign firms…The first draft of the cyber security law, published almost a year ago, stiffened user privacy protection from hackers and data resellers but also boosted the government's powers to access and block dissemination of private information records that Chinese law deems illegal.

China's broadly-defined regulations have been a source of concern, especially for foreign governments, multinational companies and rights activists, which worry that the government can interpret the law as it sees fit…[mentions Baidu, Facebook & Google]