Foreign M&A in China remains strong as investors remain optimistic despite coronavirus, decoupling
- American and European investors are taking advantage of looser foreign ownership limits, while also betting on rising Chinese consumer demand, Rhodium Group says
- Foreign appetite for Chinese assets remains ‘robust’ despite widespread talk of decoupling and reshoring as China recovers from the coronavirus pandemic
Despite talk of decoupling and shifting supply chains, foreign investment deals in China have remained strong so far this year, offering some confidence that the world’s second largest economy can recover from the coronavirus pandemic.
In the first five months of 2020, foreign capital flowing into China via mergers and acquisitions (M&A) totalled US$9 billion, surpassing the volume and value of Chinese deals made overseas during the same period for the first time in a decade, according to a report from US-based research firm Rhodium Group.
“Over the past 18 months, we have recorded levels of foreign M&A into China that were not seen in the previous decade. Most of that activity has been driven by American and European firms taking advantage of looser foreign ownership limits or betting on Chinese consumer demand,” said Rhodium’s Thilo Hanemann and Daniel Rosen.
If China remains an important source of global demand growth, they will exert themselves to invest into that opportunity
“Over the past century, these [American and European] firms have continued to do business in challenging locations like Venezuela, Burma [Myanmar] and Libya. If China remains an important source of global demand growth, they will exert themselves to invest into that opportunity.”