This conservative backlash has foreign investors fearing the rise of an economic nationalism similar to that in South Korea and Japan, where highly profitable tax-free private equity deals triggered a wave of anti-foreign investment legislation last year.

In his speech at the close of the congressional session on Tuesday, Premier Wen Jiabao laid some fears to rest by stressing the need for continued reform. 'Retrogression or back-pedalling offers no way out,' Mr Wen said. 'We must unswervingly press ahead with reform and opening up.'

But he balanced the statement by saying China must retain a dominant controlling share in state-owned commercial banks and better manage the process of reform to avoid the stripping of state-owned assets.

The policy of listing three of the Big Four banks (which still control about 57 per cent of the country's assets) has been strongly criticised by conservatives, as has the policy's chief advocate, central bank governor Zhou Xiaochuan.

Mr Zhou told the South China Morning Post during last week's congress that he was not the target of any conservative backlash but sources at rival regulatory agencies suggested otherwise.

Speaking at a public forum on the sidelines of the congress, Ji Baocheng, the president of Beijing's influential People's University, spoke out against recapitalising debt-ridden banks before selling them to foreign investors, saying China had lost more than US$60 billion by listing firms abroad.

'We pay the restructuring costs of these companies and then let foreign investors enjoy the profits,' Mr Ji said.

And on Wednesday, the banking regulator reportedly summoned the chairmen of top mainland banks, including Hong Kong-listed China Construction Bank Corp and Bank of Communications, to make the case to lawmakers and officials that the country's banks have not been sold too cheaply to foreigners.

In contrast to the views of conservative critics, Liu Chuanzhi, the founder and chairman of Legend Group (the parent company of Hong Kong-listed Lenovo Group, the world's third-largest computer manufacturer), summed up the pragmatic attitude of the pro-market reform camp during a CPPCC press conference when he said strategic sales and public listings of the banks were essential to introduce better corporate governance, risk management and technical expertise to the country's rickety financial sector.

'Without the introduction of foreign investors the government will have to keep recapitalising the banks forever,' Mr Liu said.

The top leadership, or at least the Hu Jintao-Wen Jiabao alliance, appears to agree with this assessment, as do the banks themselves. The rumbling of critics did not stop the largest bank, Industrial and Commercial Bank of China, from announcing during the NPC session that it had awarded three foreign investment banks the underwriting mandate for its estimated US$15 billion initial public offering, expected in Hong Kong later this year.

Foreign investors hoping to gauge the extent of anti-foreign sentiment are closely watching two landmark deals in the financial sector. A consortium led by US giant Citigroup is the frontrunner to take an 85 per cent stake in troubled Guangdong Development Bank and Swiss investment bank UBS is supposedly on the verge of taking a 20 per cent stake in bankrupt Beijing Securities.

Market sources said the UBS deal had been delayed and there was 'no timetable' for regulatory approval even though it was originally scheduled for completion at the end of last month. The Citigroup deal also remains in doubt.

The financial sector is not the only target of irredentist critics. In an NPC press conference last week, Li Deshui, the head of the National Bureau of Statistics, talked about the dangers of foreign dominance in industries such as beer, soft drinks, skin care and supermarket retailing.

Some mainland media outlets have taken to the topic with apparent relish. On Wednesday, China Business News, a moderate business daily, ran a full-page diatribe headlined 'Say 'No' to foreign monopolistic buying', accompanied by a large cartoon of a green-faced, blond-haired, big-nosed monster in pinstripes standing on a bag of dollars and euros and reaching greedily for China's prized assets.

The article talked about the need for a proposed anti-monopoly law that has been in the drafting stage for almost 10 years but made no mention of the various industries, such as airlines and telecommunications, monopolised by giant state-owned enterprises.

In the current political climate, this legislation, which foreign investors claim is partly aimed at forcing multinational firms to share core technologies with domestic competitors, could be pushed through as early as this year.

The battle of ideologies comes at an inopportune moment for China's trade relations, particularly with the United States. China's record US$202 billion (US government estimate) bilateral trade surplus last year has US politicians squawking for action on China's currency and greater access for US companies. A proposed bill from senators Lindsey Graham and Charles Schumer would impose a 27.5 per cent tariff on Chinese exports to the US if China does not take significant steps to appreciate the yuan and has been promised a vote before the end of this month.

'If China is to be a player in the world economy, they must play by the rules,' Mr Schumer said in a prepared statement released before his and Mr Graham's trip to China next week.

An economist and vice-chairman of the CPPCC economic affairs committee, Justin Lin Yifu, believes rising protectionism on both sides of the Pacific is mostly just bluster.

In the end, the US must accept China's rise and the Chinese government is committed to a pragmatic strategy of continued opening and integration into the global economy.

In the opinion of Professor Lin and others in the reformist camp, the current conservative backlash is little more than a last gasp of the old-guard leftists. 'The president and premier repeatedly say they are committed to market-oriented reform and that we will only solve the problems arising in the process of reform by deepening the reform,' he said.