A document being considered by the National Development and Reform Commission will decide the fate of the controversial takeover deal between Carlyle Group of the United States and China's Xugong Group.

The document entitled "Strategic Management Method to Enhance Restructuring of Machinery Industry" was discussed at a closed-door meeting of the commission on Monday morning. It will be submitted to the State Council for final approval, a source close to the deal was quoted as saying by the China Business Times on Tuesday

Apart from Carlyle Group, German-based Schaeffler Group -- which hopes to take over the Luoyang Bearing Corporation in Central China's Henan Province -- will also be impacted, said the newspaper.

With the commission making no comments on the news and no detailed information involving the document available, takeover deals in China's machinery sector are becoming increasingly unpredictable.

Regarding machinery as a sector "crucial to the country's industrial and economic integrity", Chinese authorities have been very cautious about foreign mergers and acquisitions in this field.

Earlier this month, the Ministry of Commerce issued a regulation to standardize merger and acquisition rules for foreign investors.

"This document and the following measures to be taken by the State Council will resolve specific problems in the machinery sector," said Lu Yansun, former Vice-Minister of the Machinery Industry.

Lu attributed the latest takeover controversy to a concern that China might lose core machinery manufacturing technologies if foreign investors took control.

Although the State Council mapped out a plan years ago to encourage investment in the machinery sector, heavy capital requirements combined with low yields have turned off private investors.

"It is impossible to do everything on our own. Economic globalization means that we can make use of all possible resources. But the best choice is still strategic domestic investors," Lu said.

Source: Xinhua