FOREIGN passports are being purchased by Chinese nationals to fake their identities to enjoy preferential policies for overseas investors, the Ministry of Public Security has warned. A ministry official said some Chinese citizens had been found using overseas passports to engage in investment or other business activities in China in the guise of foreign businessmen. ''As a result, some Chinese enterprises had been cheated,'' the official in charge of the Entry and Exit Bureau under the Ministry of Public Security said. ''Those who have purchased overseas passports want to enjoy preferential treatment for overseas investors on the one hand and enjoy the rights and interests of Chinese citizens on the other.'' Purchasing foreign passports was illegal and public security departments would confiscate the passports as soon as they were discovered, the ministry warned. Domestic enterprises and individuals were also urged to remain vigilant against being cheated. Most of the passports are believed to have been bought from Hongkong, but a small number were purchased from mainlanders involved in the trade.