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Premier Wen Jiabao said in his report to the National People's Congress that the government should guide foreign acquisitions in a direction fitting the country's strategic needs and impose proper regulations.

At the same time, the Chinese legislative body will review a State-owned assets law that regulates transactions of such assets to ensure that they are not embezzled or sold cheap.

It may thus be natural that China will want to test the waters further with this case to gather more experience for relevant regulations. Considering the long and complicated legislative process and the need to set up a model, the Xugong-Carlyle deal could well face more challenges and scrutiny.

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