"It's one of the winds blowing through the government, that China has given enough ground to foreigners and now it is time to start drawing lines in the sand," said

Plans to curb foreign acquisitions play into two currents of opinion in China, Kroeber noted -- a "New Left" school which feels too much attention may have been paid to economic growth at the expense of social fairness, and officials who worry China's home-grown manufacturing industry is being left at the bottom of the global value chain.

China is much too dependent on foreign capital to start turning away large amounts of foreign investment, but more individual deals may be blocked and foreign acquirers will have to lobby the government harder, Kroeber predicted.

In one of the latest controversies over foreign acquisitions, Chinese machinery maker Sany Corp. announced last week that it was prepared to challenge U.S. private equity firm Carlyle Group for control of Xugong Group Construction Machinery Co.

Carlyle agreed last October to pay US$375 million for 85 percent of Xugong, and insists the deal will go ahead. But it has not yet obtained Chinese Government approval, and Sany's announcement raised the possibility of it emerging as a "national champion" to keep Xugong in Chinese hands.

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