The mergers and takeover of local companies by foreign investors have brought China "new opportunities" and would help the country ascend the world's industrial chain and make better use of foreign investment, a senior commerce official said here on Sunday.

"Some departments do not have a thorough understanding of the mergers and acquisitions of local enterprises by overseas investors and therefore adopt a cautious approach in dealing with the issue," said director Li Zhiqun of the Foreign Investment Department of the Ministry of Commerce in an interview on the ministry's official web site.

"China must promulgate at an earlier date the regulations on foreign mergers and acquisitions (M&As) to encourage fair competition, standardize and advance mergers and takeovers," he said.

Foreign M&As have become a controversial topic since last year because of the concern that such deals might jeopardize China's industrial safety.

China has beaten other developing countries to become the most popular destination for overseas capital for years, but greenfield investment, or new operation on a bare site, has been the dominant form.

Only recent years that multinationals started to try merging with or taking over local companies in chemical industry, fundamental material industry, consumer goods production and services sector.

"Such mergers and acquisitions are small in both number and turnover," Li said.

The director identified a number of uncertainties in attracting foreign investment including the unification of corporate income tax rates which would require foreign-funded companies to pay the same rate as local competitors, the appreciating yuan, higher lending rates, lower export tax rebates as well as stricter policy changes in processing trade, land, labor and environmental protection.

"The Ministry is striving to make good preparations for the promulgation of new corporate income tax regulations and trying its best to secure the continuity and stability of foreign-investment-attracting policies," Li said.

The ministry together with other authorities is accelerating the revision of industrial guide for foreign investment and the catalog for high-tech products in favor of foreign investment.

China encourages foreign investors to channel their capital into the industries of high-tech, advanced manufacturing, service, agriculture and environmental protection, Li said.

China has overtaken the United States becoming the top seat for multinationals to establish their research and development centers according to a survey of the United Nations Conference on Trade and Development.

Foreign direct investment used in China topped 69.47 billion U.S. dollars last year, bringing the total foreign investment used to 685.4 billion U.S. dollars.

The country so far has more than 590,000 foreign-invested companies with 41,485 newly established last year, official data revealed.