June 22 (Bloomberg) -- The U.S. formally lodged a complaint with China on its plan to require Internet filtering software on all personal computers, the Financial Times said.

The U.S. is concerned about any attempt to restrict the free flow of information, Ian Kelly, a State Department spokesman, was quoted as saying in the report published today. Filtering Internet content is “incompatible with China’s aspirations” to develop a modern, information-based society, Kelly said.

China will require the Green Dam-Youth Escort program, which monitors Web site access, to be included with all computers shipped in the country starting July 1, according to a May 19 government directive. The American Chamber of Commerce in China and the Business Software Alliance were among 19 trade groups that last week called on the government to review the requirement.

Computers loaded with Green Dam block sites with pornographic images and text as well as references to the Falun Gong spiritual organization, according to researchers at the University of Michigan. A June 17 update to the software failed to fix a vulnerability that could allow Web sites to take control of a computer, the researchers said.

The filtering software mandate poses potential technical and trade problems for U.S. computer makers seeking to sell in China, the Financial Times said. Those concerns prompted representatives of the U.S. embassy to meet officials at China’s industry and information technology and commerce ministries on June 19, the newspaper said.

Richard Buangan, a spokesman for the U.S. Embassy in Beijing, couldn’t confirm the report, though he said there may be a statement later today.

Business Groups Concerned

Green Dam raises “questions of security, privacy, system reliability, the free flow of information and user choice,” according to a copy obtained by Bloomberg News of a letter sent by the business groups to Chinese Minister of Industry and Information Technology Li Yizhong on June 18.

Last week, the Chinese government blocked some Google Inc. search links to stop the spread of pornography amid a government crackdown on obscene material on the Internet.

The office handling a crackdown on Internet pornography asked Google to remove the links to the disputed content, China’s official Xinhua news agency said June 19 on its Web site. English-language search results weren’t affected, the agency said.