"The new version is undoubtedly good news for local industry and foreign companies."

The guidelines are still being formulated and a month-long program soliciting public opinion commenced at the beginning of April.

The first guidelines were published in 1995, and they are amended every four years. The new guidelines, when implemented, will be the fifth version and should be issued in the coming months.

"As the new guidelines show, China is allowing many strategically important and emerging industries to get foreign investment," said Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation, a think tank affiliated to the Ministry of Commerce.

But the guidelines also prohibit foreign investment in some sectors. Foreign companies, for the first time, are excluded from some energy industries, including crude oil and nuclear fuel processing and chemical manufacturing.

Foreign companies are also prohibited from industries dealing in certain metals and marine resources as well as seed selection and production and processing agricultural goods.

"The prohibition is understandable," Huo said. "China has to say no to foreign investment in some sectors for the sake of protecting its industries and natural resources."

In February, the State Council announced it would set up a ministerial panel to examine foreign companies' proposals on buying, or merging with, domestic firms involved in defense and national security.

Government officials have consistently said that the nation always welcomes foreign business.

FDI hit a record high last year, growing by 17.4 percent from a year earlier to $105.74 billion, after dropping by 2.6 percent in 2009. From January to February, China's FDI grew by 27 percent year-on-year to $17.8 billion.