BEIJING, Aug. 1 (Xinhua) -- Chinese officials have reassured overseas investors that the country still welcomes foreign investment in the form of mergers and acquisitions (M&As), amid domestic worries that they may threaten national economic security.

    The message was sent by a string of positive comments on foreign M&As made by Chinese officials.

    Chinese businesses should neither demonize nor make light of foreign mergers and acquisitions in a globalizing economy, the People's Daily quoted Liao Xiaoqi, vice minister of commerce (MOC), as saying on Tuesday.

    Backed foreign M&As at an investment forum in Beijing two weeks ago, Liao said, "Foreign investment in the form of mergers and acquisitions could benefit the restructuring of state-owned enterprises as well as the national economy."

    Liao said the government would like to see the healthy development of M&As under proper regulation and management.

    Minister of Commerce Bo Xilai seemed to be optimistic about the foreign M&As, saying they could bring new opportunities to Chinese enterprises and China was just getting started in this field.

    The MOC statistics showed that foreign mergers and acquisitions account for only 2.5 percent of all forms of foreign direct investment in China, while the proportion averaged 80 percent worldwide.

    However, foreign M&As came under scrutiny in China as foreign companies began to acquire major state-owned enterprises or companies with famous brands in recent years, such as private equity firm Carlyle's attempt to buy a 45-percent stake in Xugong Construction Machinery, the country's largest construction equipment maker.

    China's top legislature has read for the second time a draft anti-monopoly law that requires foreign purchases of Chinese companies to go through checks to ensure there is no negative effect on China's national security.

    The MOC issued a regulation to ask foreign investors to apply for approvals from the MOC "if their purchases of domestic companies affect national economic security, take place in key sectors or cause a transfer of the operating rights of famous domestic brands". Previously, only mergers and acquisitions worth more than 100 million U.S. dollars needed MOC checks and approvals.

    The government had enhanced supervision over foreign M&As in such sectors as power supply, power grid construction, the national defence and military industries, petroleum production and key manufacturing sectors, said Jin Bosheng, a research analyst with the MOC.

    Liao downplayed the negative side of foreign M&As in recent comments, and said M&As could facilitate foreign investment without the use of land, which would avoid straining the land supply.

    He also stressed that foreign M&As could bring both capital and technologies that are keenly needed by state-owned enterprises in their industrial restructuring and upgrade.

    Meanwhile, both officials and economists agreed that legislation governing M&A deals should be established to ward off risks from hostile mergers and acquisitions.

    Long Yongtu, secretary-general of the Bo'ao Forum for Asia, said foreign mergers and acquisitions were not "great scourges", but supervision of the process was important.