"The policy of continuing to attract foreign investment will not change," Hu Jingyan, a department head at the commerce ministry, told the state-run China Securities Journal.

The remarks came after indications in the local press of a nationalist backlash against the continued massive inflow of foreign investment.

Last week the China Daily Business Weekly newspaper cited concerns, especially among officials, that massive sales of China's assets could lead to foreign monopolies in important industries.

But in Monday's China Securities Journal, Hu said there was no reason for anyone to fear foreign monopolies at least for now.

"Whether we're talking about competitive industries or national pillar industries, the inflow of foreign capital is limited," Hu said.

He said China's ballooning foreign exchange reserves, now the world's largest at 875.1 billion dollars, were not a signal that too much money was pouring across its borders.

"In absolute figures, the forex reserves are the largest in the world, but measured on a per capita basis... we're still behind," he told the paper. "So it's too early to say foreign capital has reached saturation point."

The China Daily Business Weekly last week indicated the backlash was so pronounced that it had started affecting individual deals.

The paper cited plans by US fund Carlyle Group to acquire Xugong Group, China's largest construction equipment maker, for three billion yuan (370 million dollars), in the nation's largest private equity buyout yet.

The deal has stalled, and people familiar with the situation suggested the commerce ministry was refusing to approve it unless Carlyle promised not to sell its majority stake to another foreign group in the future, the paper said.

Actual foreign direct investment in China rose 6.4 percent in the first three months of the year to reach 14.2 billion dollars, the commerce ministry said last week.