China moved closer to opening up key industries to overseas investors with its top economic planning agency floating a plan to ease restrictions on foreign ownership of sectors including steel and oil refining.

The National Development and Reform Commission yesterday called for public comment on the restrictive foreign investment guidelines. The policy draft no longer limits foreign investment in industries identified as having overcapacity such as steel, oil refining and ethylene production, according to the official Xinhua News Agency.

Relaxing the rules would follow moves by the government this year to open up state-owned enterprises to private capital. It may also mean the country, the world’s biggest steel market and the No. 2 oil buyer, is closer to ending the nine-year-old ban on foreign takeovers of steelmakers.

“China needs foreign investment to help its industry upgrades at a time of loosening control in state-owned enterprises,” said Zhou Xizeng, who helps oversee 100 billion yuan ($16 billion) worth of assets at Citic Securities Co. “It’s an irresistible trend.”

The revised guidelines would reduce the number of industries subject to foreign investment restrictions to 35 from 79, according to Xinhua. The number of sectors in which Chinese investors must have majority-control would also drop to 32 from 44, it said.

The changes are designed to encourage the creation of joint ventures or other forms of cooperation in oil and gas exploration, without giving a clear share-holding threshold, according to the draft on the NDRC’s website.

Overseas Complaints

China is facing complaints from some overseas companies that officials in the world’s second-biggest economy discriminate against non-Chinese corporations.

About 60 percent of foreign-based companies said in a survey released on Sept. 2 by the American Chamber of Commerce that China has become a less welcoming place to do business, up from 41 percent who said the same thing at the end of 2013. China’s recent emphasis on anti-monopoly regulation comes on top of concerns about market access, licensing and intellectual-property rights, chamber Chairman Greg Gilligan said at the time.

Easing the rules may also help China address crippling overcapacity in the steel and oil refining industries via better technology and higher-value products.

Acquisitions?

“For steel, low-end competition isn’t what foreign investment is interested in,” said Xu Xiangchun, chief analyst with Mysteel.com, China’s biggest industry researcher, “They would only target premium steel grades that the Chinese are unable to make. They would probably enter China through acquisitions and they may seek equity control.”

The ban on foreign control in steel hasn’t deterred all investment in the sector with Voestalpine AG, Austria’s largest producer, signing an initial agreement last month to invest 140 million euros ($176 million) building a specialty plant in the Western Chinese city of Yinchuan, according to a statement on the company’s website.

Voestalpine plans to build around 15 new plants in China between 2013 and 2020, bringing its total investment in Asia to between 400 million euros and 500 million euros, the statement said.

China is increasing imports of specialty steel as its economy grows. Steel-product imports rose to a three-year high in the nine months ended Sept. 30, according to data compiled by Bloomberg.

Refining capacity in China, the world’s biggest oil consumer after the U.S., also faces excess supply of 34 million metric tons of fuel by 2020, according to China National Petroleum Corp., the nation’s top producer.