Foreigners to be Mostly Kept Out of China's Privatizations

SHANGHAI, March 6 (Reuters) - As China embarks on a new wave of opening up state-dominated industries to private capital, foreign firms will largely be kept out and authorities are likely to look to institutions like domestic pension funds and insurers.

State giants China National Petroleum Corporation (CNPC), Sinopec Corp and China Railway Corporation have said they were seeking investments from private capital and also social capital, or funds sourced from pension funds and insurance companies.

"I think those are going to be the key groups that the SOEs (state-owned enterprises) will first partner up with," said Sun Lijian, deputy director of the School of Economics at Fudan University.

"It will also fit in with Beijing's strategy to diversify investment channels for its vast, locally managed pension funds."

The move reflects China's desire to avoid adding further debt on to the federal government's books while injecting much-needed cash into vital sectors, but without ceding control.

On Wednesday, Premier Li Keqiang said on the opening day of the annual parliament session on Wednesday that the fiscal deficit would be maintained at 2.1 percent of GDP in 2014, the same as last year.

Analysts said recent announcements by some of China's largest state-owned enterprises to diversify ownership provides a hint of Beijing's public-private partnership model as it opens up its petroleum, railway, finance, power and telecom sectors to private investors for the first time.