Ma Kai, a state councillor, also said China would improve the regulatory system governing mergers and acquisitions by foreign companies as well as the mechanism for anti-monopoly assessment of foreign investment.

"We will try to further improve the government efficiency, continue to secure the legitimate rights of foreign investors and implement stricter regulation relating to intellectual property right protection," Ma told a trade and investment forum in Xiamen city.

Foreign direct investment in China has eased over past months, reflecting waning appetite among investors because of the global downturn and a more cautious outlook on the world's second largest economy, which has slowed for the sixth straight quarter in the three months to the end of June.

China drew $66.7 billion in foreign direct investment from January to July, down 3.6 percent from the same period the previous year, largely because of falling capital inflows from debt-ridden European countries.

A European business lobby said on Thursday a failure to make much needed market access reforms could put at risk sustained growth of China's state-led economy.

The European Union Chamber of Commerce in China said that without addressing "massive asymmetry" in market conditions for foreign and domestic companies, the government could have a hard time overcoming ills such as diminishing cheap labour and the global crisis.

Ma also said the government would step up efforts to boost domestic demand, which would likely provide more investment opportunities for foreign companies.

Gao Hucheng, a vice commerce minister, echoed Ma's comments, saying China would strengthen its policy support and would particularly encourage foreign companies to investment more in the high-tech, green energy and modern service sectors.

"We will try to attract more investment in the central and western area of China and encourage multinational companies to make investment in high-tech and modern service industries," Gao said at the same forum in Xiamen.

China drew a record $116 billion in foreign direct investment last year. The Commerce Ministry aims to attract an average of $120 billion in each of the next four years. It is roughly on course to hit the target in 2012.

China's economy expanded at its slowest pace in more than three years in the second quarter, growing 7.6 percent from a year ago as demand at home and abroad slackened, confirming a downtrend that leaves full-year growth on course for its softest showing since 1999.

(Reporting by Aileen Wang; Editing by Robert Birsel)

• A Permanent Economic Emergency