BEIJING, March 5 -- China should speed up revisions to its laws and regulations governing mergers and acquisitions of domestic companies by foreign firms to avoid jeopardizing the nation's industrial security, law makers said over the weekend ahead of the legislature's annual session.

    The country needs improved legislative oversight to manage foreign mergers and acquisitions in order to guard against monopolies by overseas companies, said Ma Jinquan, a deputy to the National People's Congress, which begins its yearly session in Beijing today.

    Ma, a director of the Anshan Iron and Steel Group Corporation in northeast China's Liaoning Province, suggested that the country upgrade its regulations as soon as possible to encourage fair competition and standardize the merger and acquisition process.

    Citing Xugong Group Construction Machinery as an example, NPC deputy Qin Chijiang said it is shortsighted for some domestic companies to sell their valuable brands to foreign companies to raise capital.

    The country's biggest construction machinery manufacturer and distributor agreed last year to sell 85 percent of its shares to the global private equity firm Carlyle Group.

    "Xugong made a historical mistake," said Qin, secretary-general of the China Society for Finance and Banking.

    "If it needs capital, why not turn to domestic channels? Either private funds or national financing should be available," Qin said.

    The bid was ultimately blocked by the Ministry of Commerce. Carlyle came back with an offer to buy 50 percent of Xugong, a proposal that awaits regulatory approval.

    China has surpassed other developing countries as the favorite destination for overseas capital, resulting in an increasing number of foreign mergers and acquisitions in recent years. Foreign capital is focused mainly on energy resources, machinery manufacturing, food, consumer goods, commerce and financial services.

    To counter security concerns and ensure proper growth, a Ministry of Commerce official said China is trying to balance the protection of indigenous industries and the investment enthusiasm of foreign companies.

    "Foreign mergers and acquisitions should be conducive to the country's economic development and industrial rejuvenation," said NPC deputy Guo Xiangdong.

    (Source: Shanghai Daily)