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The evolution of China’s global M&A footprint will shape global cross-border capital flows in the coming decade
After a decade of strong outbound investment growth, China is now a key player in global M&A. However, there are significant near- and medium-term risks for Chinese investors, including Chinese capital controls, the level of debt in the Chinese economy, and regulatory and political backlash against Chinese investment in important host countries.

However, based on historical investment trajectories in other large economies, there is still tremendous room for China’s global investment footprint to expand in the years ahead; but that trajectory is contingent on a heavy load of reform in China, confidence building abroad and management of near-term balance of payments problems. The most important benchmark is whether China implements necessary structural reforms at home. Market-oriented reforms are needed to reduce balance of payments volatility, mitigate debt risks and assuage foreign concerns about the security and economic consequences of Chinese acquisitions. In addition to macroeconomic and political challenges, Chinese companies’ capacity and sophistication to execute cross-border transactions will also be important factors for China’s M&A success going forward.

Given its extraordinary size, and the pace at which it has demonstrated an ability to expand into global markets, the evolution of China’s global M&A footprint will not just be important, but definitive for global markets. As the secondlargest economy on the planet, China will be a critical factor shaping the volume, value and character of global investment activity in the coming decade. China and host nations have a joint interest in cooperating in this area, to ensure that the enormous potential economic benefits of the next phase of Chinese globalization can be realized without compromising the deeply held political and security convictions of other nations.
China will be critical in shaping the volume, value and character of global investment activity in the coming decade
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