China is starting to see a rebound in its mergers and acquisition scene after years of decline as the government’s stimulus measures start to bear fruit, while pressure from Donald Trump’s tariffs is also driving industry consolidation.
In 2024, China’s M&A activity was on course to log its fifth straight year of decline, until the final quarter of the year, which saw a sudden acceleration in activity. The value of deals conducted during that period jumped 78.5% to $129 billion from $72 billion in the previous quarter, data from Dealogic showed.
And deal-making is about to pick up more, according to industry watchers whom CNBC spoke to.
The uptick in deal flow in the fourth quarter of 2024 was in part fueled by stimulus efforts introduced by policymakers in late September, said Vivian Wong, head of M&A Analytics at ION Analytics, which is under the same group as Dealogic. Those measures aimed to consolidate domestic industries in order to enhance competitiveness in China’s slowing economy, added Wong.
China’s M&A volume has been trending downward since 2020. Furthermore, the total value of deals logged in 2024 is about 45% less than the $553 billion generated in 2020, according to data from Dealogic.
This was largely because of weak overall economic activity in China and the ensuing bearish sentiments, said Theodore Shou, chief investment officer at Skybound Capital, an alternative assets manager.
The conservative positioning of Chinese corporations also led to less appetite for private market transactions in the past couple of years, he added.
