Overview of China outbound investment of the first three quarters of 2023

In the first three quarters of 2023, the top three sectors were TMT, advanced manufacturing & mobility, and real estate, hospitality & construction, collectively representing 58% of the total M&A value. In terms of deal volume, the top three sectors were TMT, advanced manufacturing & mobility, and financial services, representing 58% of the total. TMT continued to be the leading sector, with 109 announced deals, accounting for over 30% of the total, surpassing other sectors significantly. In this period, only TMT and power & utilities sectors recorded a YOY increase in deal volume. The power & utilities sector saw the highest growth in both M&A value and volume. In contrast, the health care & life sciences sector has experienced a rapid decline in overseas M&As in recent two years; the number of announced deals, in the first three quarters of this year, is only about one-third compared to the same period in 2021, with the amount being less than one-fifth.

• North America: The announced M&A deal value by Chinese enterprises in North America reached US$6.4 billion, up 78.5% YOY; the deal volume was 68, up 1.5% YOY. Mainly invested to the TMT (77% share) and health care & life sciences (15% share) sectors by deal value. Canada emerged as the most popular destination for M&A in this period, driven by a US$3.8 billion acquisition of a Canadian electronics distributor. Recently, the summit between China and the United States (US) in San Francisco resulted in various agreements to enhance high-level exchanges and initiate consultations in fields such as business, economy, finance, and export controls. In addition, both parties agreed to renew negotiations on the China-US Science and Technology Cooperation Agreement, establish a government dialogue on artificial intelligence, and launch the China-US Enhanced Climate Action Working Group. The recent IMF report indicates an improved outlook for economic growth in the US, with resilience observed in both consumption and investment. As a result, its growth forecast for 2023 has been revised upward by 0.3 percentage points to 2.1%⁴.    
• Europe: The announced M&A deal value by Chinese enterprises in Europe was also US$6.4 billion, up 3.5% YOY; the deal volume was 96, down 25.6% YOY. By deal value, the main sectors were TMT, real estate, hospitality & construction, and advanced manufacturing & mobility. The primary destinations were the United Kingdom (UK), Poland, and Germany, accounting for 78% of the total deal value. The top Chinese M&A in Europe in this period is an acquisition of majority stake in a Polish gaming company for around US$1.5 billion. Currently, the European economy continues to face challenges, leading the IMF to revise down the 2023 economic growth forecast for the Eurozone by 0.2 percentage points to 0.7%. Spain is projected to outperform the Eurozone with a 2.5% growth, whereas Germany is expected to undergo a 0.5% contraction. A modest rebound to 1.2% is anticipated for the Eurozone next year⁴.
  
• Asia: The announced M&A deal value by Chinese enterprises in Asia was US$5.1 billion, marking a sharp decline of 43.8% YOY; the deal volume was 130, down 8.5% YOY. By deal value, top sectors were advanced manufacturing & mobility, consumer products, and real estate, hospitality & construction. However, in terms of deal volume, TMT remains the leading sector, comprising 35% of the total. The top M&A destinations were Singapore and South Korea, accounting for 64% of the total deal value of the same period. In recent years, China’s economic and trade ties with Asian countries have deepened, with nearly 90% of Asian countries participating the Belt and Road Initiative. The Third Belt and Road International Cooperation Summit Forum held in mid-October yielded fruitful results, expected to further boost regional economic coordination. Additionally, negotiations for the upgraded version of the China-ASEAN Free Trade Area 3.0 and cooperation with Shanghai Cooperation Organization member countries⁵ have progressed positively, mainly focusing on digital and green economies, supply chain connectivity, and trade and investment facilitation. The IMF predicts a robust 5.2% economic growth for Asia’s developing economies in 2023, well above the global average of 3.0%. India and the ASEAN-5⁶ are anticipated to achieve growth rates of 6.3% and 4.2%, respectively⁴.
• Latin America: The announced M&A deal value by Chinese enterprises in Latin America was US$3.3 billion, up 185.9% YOY; deal volume was 13, down 40.9% YOY. Main investments are directed towards the power sector in Peru and the advanced manufacturing & mobility sector in Brazil. Currently, China remains Latin America’s second-largest trading partner, and the region is gradually becoming a crucial economic and trade partner for Chinese enterprises. In early November, the 16th China-Latin America Business Summit was successfully held in Beijing. Over 300 Chinese and 100 Latin American companies reached preliminary cooperation intentions in fields such as electronics, cross-border e-commerce, agriculture, healthcare, culture and tourism, logistics, solar energy, and automotive, signaling broad prospects for future collaboration between the two regions. The IMF predicts a 2.3% overall economic growth in the Latin American region this year, led by Mexico (3.2%) and Brazil (3.1%), while Argentina's economy is expected to contract by 2.5%⁴.
• Oceania: The announced M&A deal value by Chinese enterprises in Oceania was US$2.6 billion, up 127.8% YOY; There were 25 announced deals, down 26.5% YOY. Main investments are directed towards the consumer products, mining & metal, and real estate, hospitality & construction sectors in Australia. In early November, the Prime Minister of Australia paid the first visit to China in seven years, taking a positive step for stable bilateral relations. During the visit, the Australian Prime Minister expressed willingness to actively promote bilateral economic and trade exchanges, strengthen cooperation in clean energy, climate change, and further advance the implementation of the Regional Comprehensive Economic Partnership (RCEP). The IMF forecasts Australia and New Zealand’s economies to grow by 1.8% and 1.1% in 2023, respectively, below the global average⁴.
• Africa: The announced M&A deal value by Chinese enterprises in Africa was US$730 million, down 9.2% YOY; the deal volume was 8, down 20% YOY. Main investments targeted the advanced manufacturing & mobility and financial services sectors. Key M&A destinations include Egypt, South Africa and Liberia. The IMF predicts that Ethiopia, Kenya, and Egypt will lead economic growth among major African countries, with projections of 6.1%, 5.0%, and 4.2%, respectively⁴.