TOKYO, May 18 Reuters Japan will not block foreign investors from buying industrial giants such as Toshiba Corp provided they comply with rules that govern the handling of sensitive infrastructure and technology, Japan39;s economic security minister said.

Economic activity is free, Takayuki Kobayashi said in an interview when asked whether officials would intervene in any foreign bid for Toshiba. In cases when there are security concerns, we respond appropriately in accordance with Japanese laws and regulations.

Foreign private equity firms are vying for control of Toshiba in what will be a test of Japan39;s willingness to allow one of its established corporations to fall under foreign ownership.

At the same time, Japan is increasing oversight of sensitive technologies as tensions grow with neighbouring China.

Japan wants to attract overseas investment, Kobayashi said, citing a speech Prime Minister Fumio Kishida made this month to bankers and investors in London, when he set out a plan to grow the world39;s thirdlargest economy by attracting privatesector investment and redistributing wealth.

Toshiba, whose businesses include nuclear energy, military radar, infrastructure and semiconductors, on May 13 said it had received interest from 10 investors for a potential buyout. It did not name them, although U.S. private equity firms Bain, Blackstone and KKR are among those considering bids, sources have said. 

Toshiba, which has been rocked by accounting scandals and…