A Microsoft logo is seen on an office building in New York City in this July 28, 2015 file photo. [Photo / Agencies]

Microsoft Corp has allowed government customers in China to use their own encryption algorithms in the especially-tailored Windows 10 Government Edition, with the aim of keeping all data in the nation, senior company executives said.

The US technology company unveiled the first version of its operating system customized for China's government agencies and State-owned enterprises in Shanghai on Tuesday, which it said has passed security reviews and received feedback for improvement through trial runs.

"One of the discussions we had is that they (Chinese government customers) want to keep all data within the country. They had this desire to be able to add encryption capabilities," said Terry Myerson, executive vice-president of Windows and Devices Group at Microsoft.

China Daily reported in March that Microsoft was developing the special build through C&M Information Technologies, its 49-51 joint venture with State-backed China Electronics Technology Group Corp.

Three government customers are the first to pilot the government version operating system－at the national level with China Customs, at the regional level with Shanghai Commission of Economy and Informatization, and State-owned enterprise Westone Information Technology, said Beth Xu, chief executive officer of CMIT.

According to Myerson, the China Government Edition is based on the Windows 10 Enterprise Edition, but has removed elements not necessarily needed by Chinese government employees, such as the cloud storage function OneDrive, and a number of entertainment features.

Myerson said CMIT is configuring the deployment so that all updates and data remain strictly within China. But whatever is added in encryption is beyond the reach of Microsoft.

"The security review is a thorough and transparent process. There has been a lot of education on the Windows operating system among government customers, and we will share the source code through the Government Security Program," he said.

This is "a far cry" from the initial design and normal practices of the Windows operating system, which relies on data feedback for improvement, said Harry Shum, executive vice-president of Microsoft's Artificial Intelligence and Research Group.

"Yet we fully respect the government's concerns not to collect data. This is also in line within our thinking that within their own computer systems, they are entitled to add encryption capabilities," he said.