SHANGHAI (AFP) -- China said Wednesday it will restrict foreign investors in the insurance business to firms that have assets of at least two billion dollars, the latest effort by Beijing to slow foreign participation.

Overseas investors must have had three years of top marks from an international credit rating agency and show a viable earnings track record over the same period, the insurance regulator announced on its website.
Foreign companies will be required to use their own cash rather than bank loans for any deals, the China Insurance Regulatory Commission said.
Investment in Chinese firms will also be subject to a three-year lock-up period, a move aimed to curtail profiteering.
The regulator also said it will maintain investment caps that restrict foreign ownership of Chinese companies to less than 25 percent, with any single foreign investor limited to 20 percent.
Insurers with foreign stakes of 25 percent or above will be treated as overseas entities, it added.
Huang Huamin, an analyst with CITIC Securities in Beijing, said the much tougher rules aimed at quashing quick profit on the part of foreign firms while ensuring long-term growth in the sector.
""The two-billion-dollar threshold is not difficult for foreign investors to meet, but the requirement of three years of top marks from an international credit rating agency is much stricter.""
China had been keen to attract foreign investment in the past due to the lack of funding at home but now general sentiment has changed, with the government anxious to mop up excess liquidity in the financial system.
Foreign mergers and acquisitions accounted for five percent of all forms of foreign direct investment annually up to 2004 but increased dramatically to 11 percent that year and nearly 20 percent in 2005, according to previous figures.
The growth has stirred up fears from the government and the public that the Chinese economy ran a risk of falling into the hand of powerful overseas multinationals.
Andy Xie, an independent economist based in Shanghai, said a recent spike in private equity activity in China had likely heightened concerns among Beijing lawmakers.
""(Regulators) probably fear that some well-known private equity firms, the ‘big crocodiles’, may withdraw as soon as they’ve profited from initial public offerings of domestic insurers.""
""The government is more in favor of introducing foreign financial institutions to form joint ventures to help the development of domestic financial companies,"" he added.
As part of efforts to ensure closer scrutiny, the government rolled out a year ago new rules that require state-level approval for mergers and acquisitions, especially in key sectors.
Then in December, China's State Council, or cabinet, released a list of strategic sectors in which the state intends to retain control.
Among them are military-related manufacturing, power production and grids, petroleum, gas and petrochemicals, telecoms, coal, civil aviation, and shipping