A think-tank under China’s powerful National Development and Reform Commission has called for the creation of a government body to “rigorously examine” foreign takeovers of state-owned companies.
The call from the commission’s research institute of investment highlights concerns among Chinese officials and academics that deep-pocketed foreign companies are seizing control of strategic industrial sectors.
It will fuel suggestions that such concerns are undermining Beijing’s enthusiasm for further liberalisation of the economy.
In a report published on Thursday in a state newspaper, the institute said that while government should generally not interfere in corporate matters, “the relevant departments should strictly guard the pass” when industrial or national security were at stake.
The think-tank said that China should set up a specialist government department to regulate the “scope and depth” of foreign takeovers in the state sector.
“It should rigorously examine major individual foreign acquisitions of state companies and assess the effect of foreign investment, in order to guard against all the kinds of hidden dangers that such investment brings,” the institute said.
The proposal comes shortly after senior officials held an unprecedented three-day private meeting to resolve a bureaucratic impasse over the attempt by Carlyle, the US private equity firm, to buy Xugong, a state-owned construction equipment company.
A senior researcher at the research institute stressed that the call for a body to scrutinise foreign takeovers – part of an “authoritative report” printed in the official China Securities Journal – did not represent the views of the National Development and Reform Commission (NDRC).
However, an NDRC blueprint for foreign investment over the next few years does include a call for stronger investigation and supervision of foreign acquisitions involving “key ventures in sensitive sectors”.
If the research institute’s call for a new body was adopted, it would create a potentially daunting new hurdle for foreign companies hoping to carve out a position in the many industrial sectors still dominated by state-owned companies.
Frank Lavin, US under secretary for international trade, warned this week that China risked drifting towards economic nationalism following the looming completion of market-opening measures agreed as part of entry to the World Trade Organisation.
Perceptions that Beijing is closing the door to foreign companies would be likely to exacerbate frictions caused by China’s soaring trade surplus with the US.
Some liberal economists also worry that conservative and nationalist opposition to a greater role in the economy for private and foreign business could threaten China’s wider reform process. Beijing insists it is committed to further liberalisation, however.

China 



