Zhang said that tougher rules didn't mean that overseas investment was unwelcome.

China has been one of the most successful nations in terms of foreign investment over the past three decades, with a paid-in amount of nearly 74.77 billion U.S. dollars last year.

Zhang discovered through his research that foreign investment raised total energy use in China, although it did improve energy efficiency.

The emphasis on statistics regarding the use of overseas investment in the past, however, produced negative results that couldn't be ignored. Some departments and many local governments made the amount of overseas investment into part of an official's work.

The blind pursuit of foreign funds led to many short-lived smokestack factories that turned out low-end goods.

A report released by the China Council for International Cooperation in Environment and Development in late February disclosed that the number of overseas investors investing in polluting industries accounted for about 30 percent of overseas-invested ventures in 1995 -- and 84.19 percent in 2005.

Overseas investment in environmental protection comprised a meager 0.2 percent of the total, according to the report.

China's past foreign investment practices meant that it had essentially subsidized foreign consumers with its resources and raw materials but had been left with huge amounts of pollution, Ren Yong, deputy chief of the environment and economic policy research center of the State Environmental Protection Administration, said.

In Qingdao, an east coast summer resort, the city government had not approved even one overseas-invested smokestack facility since the latter half of 2006. Sun Hengqin, vice director of the foreign economy and trade bureau of Qingdao City, said: "The day is gone when the more overseas investment, the better; we have now become picky."

Zhang said that China had entered a new stage from the perspective of use of overseas investment.

"Great attention will be paid to the quality of overseas investment and its harmony with China's overall economic development strategy," he said.