China’s cross-border mergers and acquisitions (M&A) continue to face strong headwinds, with a slowing economy and an expected new wave of Covid-19 cases. Growing foreign market regulation has also affected M&A activity. Late last year, the Canadian and British governments, citing national security concerns, ordered several Chinese firms to divest their investments in lithium mining and semiconductor companies. This heightened regulatory environment has pushed China to shift its investments from the historically attractive markets of the United States and Europe towards other parts of Asia and the Middle East. As a result, Chinese M&A activity in the U.S. has dropped to its lowest in 17 years, with just USD221 million invested so far this year, compared to USD3.4 billion for the same time last year, according to data from Dealogic. Activity on Datasite’s platform shows this, too, with China deals down 23% year-on-year in the first seven months of the year, led by fewer consumer, tech, media and telecoms, and industrial deals. By contrast, M&A activity in the Asia-Pacific is up by 42% year-on-year.
The drastic dip in Chinese cross-border M&A activity isn’t attributable to the U.S. alone. Chinese deals in Germany total just USD189 million so far this year, the lowest in more than a decade, according to Dealogic. Activities in the United Kingdom and Australia are also down, at just USD503 million and USD228 million respectively.
