And the financial turmoil is seen as positive to stimulate Chinese investment overseas, analysts believed. "The deadlock facing foreign companies enhances China's negotiation power. The appreciating RMB provides a favorable environment to China's FDI," Zhou said.

Chen Jian, vice minister of Ministry of Commerce, suggested China's FDI should turn its focus from developing countries to developed countries, and from greenfield investment to mergers and acquisitions.

Panitchpakdi noted that the efforts of enterprises from developing economies to acquire strategic assets abroad have led to greater FDI flows to the developed world.

"I believed that business leaders, trade unions and policy makers in host developed countries will see more M&A activity involving firms from the South in the coming years," Panitchpakdi said.

Over the past three years from 2004 to 2007, China's participation in international M&A is increasing dramatically, Mckinsey Co said.

FDI through M&A reached US$6.5 billion in 2007, accounting for 32.6 percent of the total FDI. M&A happens mainly in home appliances, telecommunications, automobiles, resources and petrochemical, according to the statistics from China's Ministry of Commerce.

European countries along with the United States have also called on China to make joint efforts in holding back the teetering economy.

David H. McCormick, under secretary for international affairs at the US Treasury Department, said recently that US welcomes China's continued foreign direct investment as it benefits both parties.

"Given the condition of current economies, many people have become hesitant about international investment, and we firmly believe international M&As are very important part of how Chinese companies going globalized. It is not necessarily easy, but it can be very effective," said James Hexter, a senior director for Mckinsey Co.

"The current economic condition plagued by financial crisis has increased the risks but the value of assets has also increased," according to Hexter.

(Shanghai Daily November 3, 2008)