Foreign takeovers may face further scrutiny

The National Development and Reform Commission's research institute of investment is pushing for a special government department to be set up to "rigorously examine" foreign takeovers of state-owned companies, the Financial Times reported, citing state media. If created, such a body would represent a sizeable obstacle for foreign companies looking to expand in China. While the government should try to stay out of corporate matters, the institute said, it should step in to "guard against all the kinds of hidden dangers that such investment brings". The move comes shortly after senior officials held an unprecedented three-day meeting to thrash out a resolution over US private equity firm Carlyle's protracted bid to take over state-owned construction equipment maker Xugong. The move is being seen as further evidence of Beijing's increasingly hesitant attitude towards further economic liberalization, fueled by fears that well-financed foreign firms will overrun strategic sectors.