China M&A: ‘Relative normalcy’ from Biden, pent-up demand from coronavirus could reignite Chinese interest in US deals, advisers say

Mergers and acquisitions by Chinese companies seeking deals in the United States, particularly in less politically sensitive sectors, could pick up in 2021 as US President-elect Joe Biden is expected to adopt a more conciliatory tone with Beijing than his predecessor, according to deal advisers.

US-China relations, which have deteriorated to their worst point in decades during Donald Trump’s tenure, pushed China’s 2020 outbound acquisitions to their lowest level since 2007, falling behind inbound transactions for the first time since 2006, according to Refinitiv’s data. Deals into and out of China fell 5.5 per cent last year to US$81.9 billion, following a 40 per cent plunge in 2019.

One litmus test for Chinese deals could be the sale of the US operations of Bytedance’s TikTok to a consortium of investors that include Oracle Corp., Walmart, Sequoia Capital, KKR and General Atlantic.

The Trump administration ordered TikTok to sell its US operations in August over national security concerns or face a US ban.

The administration signed off on the transaction in September on a preliminary basis, but a government-imposed deadline passed last month without a final agreement leaving the deal in limbo. Whilst negotiating a potential sale, TikTok also is challenging the ban on its services in the US in court.