New | Chinese merger and acquisition deals in US down in first half of 2017

Merger and acquisition (M&A) activity by mainland Chinese companies in the United States dropped in the first half to just 22 per cent of the combined value of such deals a year earlier, due to the double whammy of Washington’s protectionist leanings and Beijing’s tighter capital outflow scrutiny, according to an industry report.

In the first six months of this year, the mainland ranked as the ninth biggest M&A investor in the United States with US$6.1 billion worth of deals, compared with US$27.5 billion in the same period in 2016, said the joint report from law firm White & Case and M&A data provider Mergermarket.

The result was in sharp contrast to last year, when the mainland was the third biggest M&A investor into the US, trailing only Canada and Ireland.

The sharp decline this year was due to the tighter scrutiny from regulators in both jurisdictions, though for different reasons, the report said.

In the world’s largest economy, heightened concern around US national security amid the Trump administration’s “America First” rhetoric has given regulators greater reason to rigorously scrutinise investments from China and other countries perceived to have more liberal trade relationships with countries less friendly to the US, said Christopher Kelly, a White & Case partner leading the firm’s M&A practice in Asia.

While in China, Beijing has signalled tighter scrutiny of capital outflow since last year against a weakening yuan, which lost nearly 7 per cent in 2016 as the worst performing major Asian currency.