China should not restrict foreign investment in order to protect uncompetitive domestic industries, a leading economist said yesterday. During group discussions at the NPC delegates suggested China should slow direct foreign investment, especially in industries with high profit margins, to protect domestic manufacturers. But Li Yining, an economics professor at Beijing University and vice-chairman of the NPC Law Committee, said Beijing should immediately introduce foreign investment to help reform inefficient enterprises. 'If some industries face the problem of over-capacity, we should not only restrict foreign manufacturers but also the expansion of domestic production capacity,' he explained. He said it was China's lack of an efficient evaluation of state asset values, not foreign partners, which was responsible for underestimating the assets of local partners during the formation of Sino-foreign joint ventures. This had caused huge state asset losses. Mr Li said Beijing should make backward domestic industries more competitive instead of protecting them as this would hinder the mainland's economic and technological development.