Mergers and acquisitions (M&A) of foreign companies by Chinese investors last year plummeted to their lowest level in more than a decade, as tighter financing conditions and heightened scrutiny have weighed on dealmaking.

Cross-border deals worth $18.3bn were agreed by Chinese investors in 2022, according to data provider Refinitiv — around half that of the $38.9bn recorded in the previous year and the lowest level since 2006. A total of 380 cross-border M&A deals were made by Chinese investors last year, marking the lowest annual total since 2012.


While overall global M&A in 2022 fell by about 37.5% compared to 2021, the decline in Chinese overseas dealmaking has been far greater.

The reinstatement of very strict capital controls in 2016 has helped drive this huge drop, says Agatha Kratz, a director at research firm Rhodium Group, which just published a study showing Chinese greenfield foreign direct investment has overtaken Chinese M&A in Europe.

“Chinese companies have not had as much space and leeway as before 2016 to do big M&A transactions. They have been given less permission by the government to do this,” she says. The so-called ‘deleveraging campaign’ aimed at reducing risk in China’s financial system has also made it much harder for Chinese companies to obtain loans for cross-border M&A.

The value of Chinese outbound M&A has fallen by 90% since deals worth an all-time high of $200bn were recorded in 2016, according to Refinitiv data. 

More data trends you might have missed: 

Heightened scrutiny of foreign attempts to buy Western companies in sensitive or strategic sectors, such as semiconductors, biotechnology or defence, has also led Chinese investors to shy away from pursuing cross-border M&A deals. 


"With cross-border acquisitions requiring approval from regulatory bodies, Chinese acquisitions overseas in industries like technology, resources, and other sectors have fallen apart and have led to fewer megadeals as deals were blocked and withdrawn due to regulatory concerns especially those deemed critical to national security," says Elaine Tan, a senior analyst at the London Stock Exchange Group (LSEG).

Ms Kratz says there is also potential that “some Chinese investors are self-censoring” by not pursuing overseas takeovers, for fear of them getting banned and avoiding the rigmarole of overcoming the high barriers to get the deals approved by Western regulators. 

The majority (49) of the 89 countries that have at least $100m worth of Chinese cross-border M&A have seen a decline in the value of deals in the last five years. This analysis allows for a clearer picture of volatile Chinese outbound M&A flows than looking at a year-on-year basis, where single transactions can massively skew the figures. 

Between 2018 and 2022, Chinese investors agreed M&A transactions in the US worth about $26bn, down by 71.7% from the previous five years (2013–17), Refinitiv data shows. By comparison, Canada has seen an increase of 31.8% to $7.4bn over the same period, but that was still lower than the $41.2bn of Chinese M&A recorded between 2008-2012.

In Hong Kong, a special administration region of China that has historically attracted the highest value of Chinese M&A deals of any location, has seen a less steep fall than the US, dropping 42% to $62.2bn, according to Refinitiv data. 

Other major target markets for Chinese investors have also witnessed a significant decline, including Switzerland (–96.7% to $1.76bn), Australia (–77% to $5.6bn) and the UK (–75.9% to $8.8bn).

In Europe, there has been a divergent picture with Germany (–18% to $12.8bn) and France (–15% to $6.15bn) witnessing a much smaller fall in Chinese M&A transactions than countries like Italy (–86.6% to $2.2bn). On the flipside, the Netherlands recorded $10.6bn worth of Chinese M&A transactions in the five years to 2022, an increase of 80.6% on the previous five-year period.

Ms Katz says that Chinese cross-border M&A flows have fallen to such a low level that one large transaction can make it look like a rebound: “The previously high level of Chinese investment in Europe is gone and it will not recover as long as geopolitical tensions remain high and capital controls and deleveraging are in place.”

While the US remains an important target, Chinese companies have turned their attention to other parts of Europe, Asia and the Middle East, according to Ms Tan of LSEG. "As China’s post-Covid reopening starts to take effect, deal making overseas by Chinese buyers could see gradual improvement, but perhaps not to the record levels seen in 2016," she says.