BEIJING—A Chinese economic official blamed "fraudulent practices" at some international investment banks for large losses incurred by Chinese state-owned companies on derivative contracts, in the government's strongest criticism yet of the role played by foreign banks.

Li Wei, a vice chairman of the State-Owned Assets Supervision and Administration Commission, cited contracts tied to energy prices sold by banks including Goldman Sachs Group Inc., Merrill Lynch & Co., and Morgan Stanley to aviation and shipping firms.

Mr....