China’s emergence as a global player in M&A
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Since the turn of the century, China’s share of global cross-border M&A rose from near-zero to 14 percent—putting it second only to the US
Chinese outbound M&A grew at a remarkable pace over the past decade. In 2005, the value of Chinese cross-border acquisitions totaled less than US$10 billion. By 2009, the amount had risen threefold to US$30 billion—in part because Chinese companies, which were largely shielded from the negative effects of the global financial crisis, were able to seize opportunities to purchase assets at discounted prices. From 2010 to 2015, the annual value of completed Chinese outbound M&A fluctuated between US$30 billion and US$60 billion and then rocketed 120 percent to US$140 billion in 2016, accounting for a record 14 percent of global cross-border M&A value (Figure 1).
Figure 1: China has become a key driver of global cross-border M&A
Country-of-origin share of the total value of all completed global cross-border acquisitions
: Rhodium Group. Selected economies only. Percent figures in labels are for 2016.
From energy and materials to a broader mix of assets
In the early 2000s, Chinese outbound M&A largely focused on energy and natural resources. China became a net importer of many raw materials amidst a massive housing and infrastructure boom, and the Chinese government encouraged state-owned enterprises to invest overseas in upstream assets such as oil fields, iron ore mines and copper mines. From 2005 to 2013, Chinese companies spent US$198 billion on global acquisitions in energy and basic materials assets, accounting for 67 percent of China’s total outbound M&A value in that period.

After 2013, the mix of industries targeted by Chinese M&A became much more diverse. In 2014, recognizing the importance of outbound investment for global competitiveness and national development goals, the Chinese government further relaxed its policy regime for outbound investment. This liberalization particularly benefited private companies, which had strong rationales to invest overseas to optimize global value chains, upgrade technology and innovation capacities, develop consumer brands and other customer-serving capabilities in their key export markets, and diversify their global investment portfolios. Financial investors including private equity firms, insurance companies
In 2016, Chinese companies spent US$140 billion on global acquisitions. This is almost double the record set in 2015
and conglomerates have also emerged as important outbound investors, broadening the mix of Chinese companies with global ambitions. In 2016, the share of energy and materials assets in total Chinese outbound M&A by value was only 20 percent, and the largest recipient industries of Chinese outbound M&A were high-tech at 24 percent, financial institutions at 13 percent, industrials at 12 percent and real estate at 11 percent (Figure 2).
Figure 2: Chinese buyers are targeting an increasingly diverse industry mix
Aggregate value of global Chinese cross-border M&A by industry (US$ billion)
: Rhodium Group. Dataset includes all completed M&A transactions by ultimately Chinese-owned firms, aggregated by date of completion.
Changing geographical focus
The changing target industry mix also drove a shift in the geographic distribution of Chinese outbound M&A during the last ten years. Earlier in the century, Chinese acquisitions mostly targeted resource-rich economies in the Middle East, Central Asia, Africa and Latin America. As Chinese investors gained appreciation for political risk and the unconventional oil and gas boom opened up new opportunities, investment shifted to politically stable, resource-rich countries such as Canada, Australia and the US. From 2008 to 2013, those three economies accounted for almost half of total Chinese outbound M&A.

From 2013 to 2015, further increasing investment in industrialized countries was largely driven by non-extractive deals in Europe and the US. By 2015, high-income economies were capturing two-thirds of all Chinese M&A by value. These trends continued in 2016, with a particularly significant increase in deal flow to the US and continuously high levels of investment in Europe. Other economies that made it into the top 10 list of target economies in 2016 include Hong Kong, Israel, Brazil and Malaysia (Figure 3).
Figure 3: Most Chinese investment is now flowing to advanced economies
Aggregate value of completed Chinese outbound M&A transactions by region/country of target (US$ billion)
: Rhodium Group. Dataset includes all completed M&A transactions by ultimately Chinese-owned firms, aggregated by date of completion.
From 2013 to 2016, further increasing investment in high-income economies was largely driven by non-extractive deals in Europe and the US
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