China is set to pass its controversial new anti-terrorism law on Sunday, the largely rubber-stamp parliament has said, despite US criticism about its cyber provisions and concerns over human rights.

The draft law, which could require technology firms to install "back doors" in products or hand over sensitive information such as encryption keys to the Government, has also been criticised by some Western business groups.

United States President Barack Obama has said he raised concerns about the law directly with Chinese President Xi Jinping.

In a brief statement, China's National People's Congress said it would hold a news briefing on Sunday to talk about the law, following the end of parliament's latest law-making session.

Parliament does not challenge or block legislation proposed by the ruling Communist Party, meaning it is certain to pass.

This week, the US State Department said it had expressed "serious concerns" about the law which it said would do more harm than good against the threat of terrorism.

China's Foreign Ministry hit back, saying technology companies had nothing to fear and the US had no right to intervene.

On Thursday, the US Embassy took the unusual step of issuing Christmas security warnings for Westerners in Sanlitun, a popular Beijing diplomatic and entertainment district.

Chinese police stepped up patrols, though no specific threat has been reported.

China's official Xinhua news agency said the US was "insincere" and should help Beijing fight terrorism instead of "smearing" the law.

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"It is always the innocent people that fall victim to terrorism and extremism, and that is why the Chinese Government is taking concrete actions to protect its people, including ordinary Americans enjoying Christmas in Beijing's Sanlitun," it said.

Officials in Washington have argued the law, combined with new draft banking and insurance rules and a slew of anti-trust investigations, amounts to unfair regulatory pressure targeting foreign companies.

China's national security law adopted in July requires all key network infrastructure and information systems to be "secure and controllable".

The US has also said the new law could restrict freedom of expression and association.

Chinese officials say their country faces a growing threat from militants and separatists, especially in its unruly Western region of Xinjiang, where hundreds have died in violence in the past few years.

Rights groups, though, doubt the existence of a cohesive militant group in Xinjiang and say the unrest mostly stems from anger among the region's Muslim Uighur people over restrictions on their religion and culture.

Reuters