China’s overseas ambitions are generating concern from Australia to Africa, as its largely state-controlled companies seek to secure supplies of essential commodities.

But less attention has been paid to a parallel issue: is China willing to allow significant merger and acquisition transactions by foreigners in its own domestic market? We may be about to get an answer. Just over six months ago, Diageo, the UK drinks group that owns the Guinness, Johnnie Walker and Smirnoff brands, quietly announced an offer worth up to $1bn for control of a Chinese white spirit brand called Shui Jing Fang. There was a good reason for the lack of fanfare. Although unknown in the west, Shui Jing Fang is one of the best known brands of baijiu, a vodka-like drink that has been part of Chinese culture for two millennia. Shui Jing Fang is said to have been first made 600 years ago.

Just a year before Diageo’s offer, a $2.4bn bid by Coca-Cola for Huiyuan Juice, one of the country’s best known fruit juice manufacturers, was blocked by the Ministry of Commerce in the first real test of China’s anti-monopoly law, a competition framework introduced in 2008.