China on Tuesday defended its regulation that reviews mergers and acquisitions (M&A) of domestic companies by foreign investors, saying it does not impose a new threshold for such practices.

The policy targets the practices that will affect national security or have the potential to be a threat, Shen Danyang, spokesman of the Ministry of Commerce said at a regular news briefing in response to foreign investors concerns over M&A of domestic firms.

The regulation, which took effect as of September 1, "does not mean a new threshold has been set up for acquisitions and mergers by foreign investors or a new recognition procedure," he said.

According to the regulation which was issued in February, the review process will involve foreign M&A of domestic military-industrial enterprises and supporting firms, companies near "major and sensitive military facilities" and other M&A that are deemed to be relevant to national security.

Shen said foreign M&A of domestic companies accounted for 3.1 percent of the foreign direct investment (FDI) that China attracted last year. From January to August this year, foreign M&A projects amounted to 3.4 billion U.S. dollars, a big increase from past years, he added, without giving comparable figures.

Total FDI for the first eight months of this year reached 77.63 billion U.S. dollars, the ministry said last week.

Go to Forum >>0 Comment(s)