China recently revised regulations on foreign mergers and acquisitions. The new law clarifies regulations concerning foreign investors. For the first time, the law allows share swapping between foreign and Chinese companies undertaking mergers and acquisitions. CRI's Shen Ting has more.

The new regulation is an amendment based on a draft in 2003 as well as the newly revised National Corporation Law. It confirms stock ownership exchanges and cash are allowable as payment for overseas-held stakes in domestic companies.

Mei Xinyu, an expert at the Ministry of Commerce, says the regulation brings China in line with the international market and further opens itself up.

"Share swapping can efficiently reduce costs of mergers and acquisitions. If it's done all in cash, foreign companies will face big financial burdens. The new regulation would make the situation a lot easier for them. It will also improve China's investment environment."

Meanwhile, the revised law gives detailed guidelines on the requirements and application process foreign companies need to follow for the mergers and acquisitions. Experts say this will speed up the procedure and make it much more convenient for qualified companies.

The new regulation also re-emphasizes that foreign investors must receive approval from the Ministry of Commerce to work with domestic companies running dominant sectors of Chinese industry or owning famous brands.

Shen Danyang, another expert at the Ministry of Commerce, says the new regulation doesn't tighten rules to get approvals, but makes them more transparent.

"The law balances national economic security and fair competition well. It ensures both the protection of indigenous industries and the investment enthusiasm of foreign companies. You'll find more details in terms of aspects such as approval time and requirements."

The new regulations will take effect in two weeks' time.