Although most of the deals so far have been confined to energy and resources, there have been mounting calls for mainland manufacturers and financial institutions to buy into overseas assets.

The mainland leadership is under increasing pressure at home to diversify its foreign exchange reserves worth almost US$2 trillion, of which more than US$1 trillion has been invested in the low-yield US government securities.

Mr Wang, in charge of economic and financial affairs in the State Council, issued the warning in a group discussion with Hunan deputies to the National People's Congress yesterday.

Xiang Wenbo, the chief executive of one of the mainland's most successful heavy machinery manufacturers, directed his question to Mr Wang and pleaded for more government assistance, including bank credit to finance possible acquisition deals.

'Are you sure of your managerial skills? Have you analysed the corporate culture differences between the two parties? Do you understand how to deal with unions and their relations with management in the country [where your target company is based]?' Mr Wang reeled off a string of questions in an apparent sceptical tone to Mr Xiang of Hunan-based Sany Heavy Industries, according to the China News Service.

'If you don't know your target and yourselves well, your ambition really scares me.

'The success of a company depends on personal connections and the environment. You are successful in Hunan and China but not necessarily so in a foreign country.

'We should be adventurous but, at the same time, we have to be reasonable.

'If you need the money, I will give you the money but you should first study your target company thoroughly before I can tell you my answer.'

Chinese enterprises and financial services companies have a poor record in overseas investments.

China Investment Corp, the country's US$200 billion sovereign wealth fund, has been regularly criticised for disastrous investments in Morgan Stanley and Blackstone.

CIC has up to 90 per cent of its overseas portfolio, amounting to US$90 billion, in the form of cash or other highly liquid assets, Jesse Wang Jianxi, its vice-president, said on the sidelines of the annual plenary session of the Chinese People's Political Consultative Conference.

'Asset prices, such as shares in HSBC and Citi look enticing but we can't make purchases simply because of low price,' Mr Wang said.

Analysts believed the risk aversion was a response to ferocious public criticism of the heavy losses, although on paper, that the mainland companies incurred on their previous investment moves.