By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-07-16 14:53

According to a senior commerce official, overseas investment in China through mergers and acquisitions (M&As) is in favor of State owned enterprises' reshuffle and Chinese economic development, the Beijing Morning Post reported today.

Liao Xiaoqi, vice commerce minister, said at the East Asia Investment Forum held in Beijing from July 14 to 15 that multinationals' M&As in China are still in their infancy, although M&As have been a major investment means taken by multinationals worldwide.

Liao also said that the Chinese government is to strengthen management on M&As.

China's foreign direct investment consists largely of greenfield investment, according to Liao.

M&As have more advantages than greenfield investment, which refers to construction of new production facilities, requiring too much land, Liao said.

According to Liao, overseas enterprises invested less than US$5 billion in China through M&As in 2006, accounting for only 2.5 percent of total overseas investment in China.

However, in 2005 global transnational M&As accounted for a total trade volume of more than US$710 billion, up nearly 100 percent from 2004.