"We have been welcoming foreign investment, but now we have to curb any attempt to monopolize the Chinese market," said Li Deshui,director of the National Bureau of Statistics and a member of the country's top political advisory body, which is in an annual session.

Foreign investment in China has shown new features since 1995, Li said. Transnational companies have launched a massive wave of purchasing Chinese companies, especially those dominating a sectoror having big potential of expansion.

More than 80 percent of China's supermarkets are in the hands of transnational companies, and a few other sectors involving beerand skin-care products are nearly under foreign monopoly.

"Any sovereign state will not allow such a thing to happen," said Li.

Some countries have enacted laws forbidding business acquisitions that would result in monopoly. In Canada, merger and acquisition deals valued above 200 million U.S. dollars need government approval. The United States government and Congress also set requirements on business acquisitions by foreign companies.

"If we allow hostile takeovers to happen without limitations, we would gradually lose our domestic brands and innovation capability," said Li.

The consequence, said Li, is that China may become a link in international division of labor with the least profits. Most corporate profits will be taken away by transnational companies, leaving China with only nominal big GDP figures.

Chinese Premier Wen Jiabao has mentioned in his government workreport, delivered on March 5 to nearly 3,000 deputies to the National People's Congress, that in opening wider to the outside world, China must "pay particular attention to safeguarding China's economic security."

"The new circumstances require us to constantly improve our level of opening-up and gradually improve our polices on using foreign investment," said Li.

"Laws and regulations on business acquisitions by foreign companies should be made as quickly as possible in line with international practices," he said. "There should be severe measures to curb and punish hostile takeovers aiming to monopolizethe Chinese market."