The new process raised questions about whether foreign investment in China would be affected.

Yao Jian, a spokesman for the ministry, said the government is confident about the influx of foreign investment, and the new mechanism is a sign that China is fulfilling its commitment to further open up market.

"China is following international practice. Many nations have already adopted such an approval process. It will help China to further open up and improve policy transparency," he said.

"The new rules will help improve the quality and structure of China's FDI and create a better environment for foreign businesses," he added.

During the past three decades, China's FDI activity was mainly realized through green investment.

During 2010's record FDI high, only 3 percent of the deals by value were made through M&A, whereas the global figure was more than 70 percent.

"More and more of the nation's foreign investment deals will be made through M&A, and will probably rise to 8 or 10 percent," Yao said.

According to the ministry, the nation's service industry continues to outperform the manufacturing sector in attracting foreign investment. In January, investment worth $4.69 billion went into the service sector, a rise of 31.8 percent, accounting for 46.8 percent of the total.