This year, two merger and acquisition (M&A) cases attracted the most attention--the highly debated U.S. Carlyle Group's 50 percent share purchase of Xugong Group Construction Machinery Co. Ltd. and Citibank consortium's successful takeover of China's Guangdong Development Bank's 85 percent shares.

During 2006, the Chinese Government amended its policies toward foreign investment as well as M&As, issuing the Interim Provisions on the Takeover of Domestic Enterprises by Foreign Investors and Several Opinions of the State Council on Accelerating the Invigoration of the Equipment Manufacturing Industry and some other regulations. These are aimed at improving quality of foreign investment, creating a better investment environment and regulating acquisitions and mergers by foreign investors.