US firms, in return, have said they will integrate the Wireless Authentication Policy Infrastructure into international standards.
Officials made the announcement a day after trade talks, where both countries agreed to work harder to protect intellectual property.
Before the agreement, China was insisting that all foreign companies had to meet its WAPI standard before June 1st. Foreign firms wishing to trade in China would have been forced to partner with one of 24 Chinese firms that owned the encryption algorithms in the standard.
Earlier this year processor manufacturer Intel withdrew some products from the country because it said it was unable to meet the standard. The firm has made no further comment on the matter.
In February, the US government backed a letter from the Information Technology Industry Council and others to China urging the government to reverse its decision.