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.