Overview of China outbound investment Q1 2023

In Q1 2023, by deal value, the top three sectors were advanced manufacturing & mobility, real estate, hospitality & construction, and TMT, accounting for 73% of the total deal value. Larger increases were recorded in the sectors of advanced manufacturing & mobility, and real estate, hospitality & construction, up 87% and 191% YOY, respectively. Some major deals during this period include: 1) a Chinese enterprise acquired the power conversion division of a known Swiss company located in the US to improve its product portfolio, accelerate its development in the power industry and North American market; 2) a Chinese real estate management enterprise acquired a minority stake of a logistics and industrial new economic real estate platform in Vietnam; 3) a Chinese enterprise acquired partial shares of a container terminal in Egypt, to further strengthen its terminal portfolio; 4) a Chinese company acquired a German automotive parts company to promote its industrial chain integration and consolidate its development advantages in the field of electric vehicles.

By deal volume, 61% of the total took place in the top three sectors, namely TMT, advanced manufacturing & mobility, and financial services. The number of TMT deals increased 34% YOY, but the proportion of undisclosed transactions increased by seven percentage points compared to the same period last year, which is also part of the reason for the decrease in value of TMT deals. 

• Asia: In Q1 2023, the deal value and volume announced by Chinese enterprises in Asia both ranked first, with a deal amount of US$1 billion, down 34% YOY. However, Asia is the only continent to record an increase in deal volume, with a 38% YOY increase to 51 deals. Among the top 10 destinations favored by Chinese enterprises, four were from Asia, namely Vietnam, Oman, Japan and South Korea, collectively accounting for 87% of the total value in Asia. In this quarter, the cooperation between China and ASEAN further deepened, with the President of the Philippines, the Prime Minister of Cambodia, the Secretary-General of ASEAN, as well as the Prime Ministers of Singapore and Malaysia visiting China respectively. Each party explored cooperation intentions in multiple fields. Against this backdrop, ASEAN is expected to remain a key region for the international development of Chinese enterprises in the future, pointing to positive prospect and development opportunities in infrastructure, green and digital economies, and finance. 
• Europe: China overseas M&As in Europe totaled US$952 million, down 39% YOY. There were 32 announced deals, down 24% YOY. Investment to the UK (the real estate, hospitality & construction sector) and Germany (the advanced manufacturing & mobility sector) collectively took up 86% of the total value. In Q1 2023, inflation in Europe has eased, and the IMF forecast a growth of 0.8% for the Eurozone in 2023³, 0.1 percentage point higher than its forecast made in January 2023. Recent frequent interactions of China and Europe brought positivity in the economic and trade areas. These included the visits made by the Prime Minister of Spain, the President of the European Commission and the President of France to China. Bilateral cooperation documents were signed between China and Spain on areas such as education, customs and sports. China and France have agreed to deepen cooperation in traditional areas such as agri-food, aerospace, civil nuclear energy, and cultivate new cooperation in green, technology and innovation.
• North America: China overseas M&As in North America totaled US$903 million, down 6% YOY. There were 21 announced deals, down 9% YOY. Chinese investment in North America was mainly in the sectors of TMT and health care & life sciences, collectively accounting for 94% of the total in the continent. Though the decrease of the China M&As in the US narrowed during the period, geopolitics remained a restrictive impact amid the current Sino-US relations.
• Africa: China overseas M&As in Africa totaled US$375 million, down 11% YOY. There were four announced deals, unchanged YOY. A major deal was the Chinese equity acquisition of a container terminal in Egypt.
• Latin America: Latin America was the only continent that achieved a deal value increase in this quarter, with a total amount of US$134 million, up 13% YOY. There were five announced deals, down 29% YOY. During the recent visit by the newly elected Brazilian President to China, the two countries agreed to deepen their comprehensive strategic partnership, and strengthen investment and cooperation in areas such as infrastructure, energy transformation, logistics, energy, mining, agriculture, industry and high technologies. Being the largest economy and most populous country in Latin America, Brazil’s deepening economic and trade cooperation with China is encouraging and can have a demonstrative effect for further cooperation between China and other Latin American countries.
• Oceania: China overseas M&As in Oceania totaled US$123 million, down 28% YOY. There were three announced deals, down 63% YOY. The investment mainly went to the mining & metals sector in Australia.