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The head of China's statistics bureau has called for action to limit "malicious" moves by multinationals to acquire local companies as a way of establishing monopolies in the domestic market.
In a recent interview with the oficial Xinhua news agency, Li Deshui, head of the National Bureau of Statistics, said untrammelled access for foreign companies could threaten China's "economic security and national sovereignty".
Mr Li's warning highlights heated debate within official and academic circles in China about the degree to which the economy should be opened to foreign and private participation.
Foreign investment, a driver of China's economic development over the past two decades, has become a hot issue in a wider battle over economic policy centred on the extent of the ruling Communist party's commitment to a dominant role for state enterprises.
The purchasing of Chinese companies by multinationals "was originally just a market activity with nothing to criticise about it", Mr Li said, adding that Beijing would continue to welcome foreign investment that did not undermine China's development or economic security. "However, we must resolutely curb any malicious acquisitions aimed at establishing monopolies in the Chinese market."
Mr Li did not give any explanation of what he meant by "malicious acquisitions", but he cited several sectors where multinationals had made worrying inroads at the expense of Chinese companies, including the markets for beer, soft drinks and skincare products.
"If we allow the free development of malicious acquisitions by multinational companies, the autonomous brands and innovative ability of China's national industry will gradually disappear," he said.
"Under this kind of development, our [gross domestic product] growth and scale may appear very great, but it will be merely bloatedness. Our national interests will be harmed, the mass of the people will get no benefit, and national economic security and sovereignty may be directly threatened."
Such dire warnings will seem overblown to many officials and analysts. While acquisition sprees by foreign companies such as SAB-Miller and Anheuser Busch have given them a greater presence in China's beer market, for example, two of the most powerful players -- Tsingtao and Yanjing -- are Chinese-controlled.
Foreign and private companies also continue to be relegated to a minor role in state-dominated industries such as energy and telecommunications.
Shi Jianhuai, a professor at Peking University, said the government should not intervene in foreign acquisitions of local companies. "These purchases are market practice," Prof Shi said. "If they don't acquire you, they will defeat you through competition."
Mr Li's remarks could lead to concern that China's planned anti-monopoly law might be used to ward off unwelcome competition from foreign companies. Cabinet drafters hope to finish work on the long-awaited law this year.
But Mr Li's call for an end to the favouritism shown to foreign companies may find widespread support. Beijing is already moving towards harmonising the business tax rates levied on foreign and domestic companies. (FT Syndication Service)
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