A U.S. business group urged China on Wednesday to suspend new regulations governing foreign media, saying they were a step backward in China's goal of building an information-based economy.

The American Chamber of Commerce in China also said the rules contained an inherent conflict of interest in authorizing Xinhua, the state news agency, to regulate and censor its competitors.

This is fundamentally inappropriate and inconsistent with the Chinese government's efforts to construct a market economy in which regulatory and commercial functions are separated, AmCham-China said in a statement.

The rules, announced on September 10, require foreign media to seek the approval of Xinhua to distribute content within China.

They also seek to bar international financial information companies, including Reuters and Bloomberg, from selling services directly to Chinese banks and brokerages.

Those restrictions roll back government commitments to the World Trade Organization that China would not change market access conditions for foreign companies, the chamber said.

AmCham-China strongly urges the Chinese government to suspend implementation of these rules pending their revision to ensure compliance with China's WTO obligations and previous commitments to permit international news organizations to deal directly with their Chinese customers.

We also urge the Chinese government to speedily implement its plans to establish an independent government agency for the long-term regulation of these industries, it said.

The chamber warned that China's own financial sector would be at a disadvantage if its participants were deprived of immediate access to real-time information.

Xinhua has said it seeks no economic gain from the rules and that they would not influence China's financial reforms, but nearly two weeks after they were announced it remains unclear how the regulations will be implemented.