China and its official Xinhua news agency defended new rules controlling foreign news organisations on Thursday, saying they are not aimed at commercial gain and will not give the agency unfair dominance.

But Xinhua said that foreign news outlets in China must abide by the law, in a country that tightly controls its own media and brooks little dissent to Communist Party rule.

Xinhua aims to regulate the release of news and information in China by foreign news agencies and the subscription of such news and information by users in China, it said, citing an unnamed agency official. Xinhua seeks no economic gains therefrom.

The state news agency announced rules on Sunday requiring foreign media to seek its approval to distribute news, pictures and graphics within China.

The rules seek to bar international financial information companies, including Reuters and Bloomberg LP, from selling services directly to Chinese customers such as banks and brokerages.

Warning against dissemination of news that endangers national security, sabotages national unification or promotes cults, the rules empower Xinhua to censor reports distributed in China by foreign media and to delete forbidden content.

A vice minister of China's General Administration of Press and Publication, which regulates print media, said the rules were simply an extension of supervision powers granted in 1996.

What you mentioned about Xinhua news agency is actually what we have done in the past for quite some time, Liu Binjie told a news conference.

International rights groups denounced the new regulations as another Chinese attack on freedom of information and as a backward step in the run-up to the 2008 Beijing Olympics, when thousands of journalists will descend on the capital.

The United States and European Union both expressed concern.

The foreign minister of Finland, which holds the EU presidency, suggested the curbs might also be aimed at securing Xinhua's position in China's multi-million-dollar financial information market.

... There may also be commercial reasons, say guarding the monopoly of the China news agency, as a reason behind it, Erkki Tuomioja said in Helsinki at an EU-Asia summit.

But Liu said the rules would not give Xinhua an unfair grip on information and did not violate China's commitments under the World Trade Organisation.

The regulations impose many constraining conditions on Xinhua and there is no problem of impeding competition in the market, he said.

In implementing these rules, the government will certainly attach importance to an environment of fair competition and prevent excessive monopoly.

Chinese Premier Wen Jiabao said in London on Wednesday that Beijing's open policy towards foreign media and financial information agencies remained unchanged and the government would protect their rights.

Liu suggested during his news conference that there could be more changes to the way foreign media are regulated.

Xinhua, as a news agency, is just temporarily authorised by the government to deal with these things, he told reporters. It is just a transitional period. We will improve it gradually, and later on the government will take control of it.