Chinese firms likely to boost M&A activity in response to Trump threats: analysts

China’s outbound mergers and acquisitions (M&A) are predicted to increase due to US president-elect Donald Trump’s tariff threats, experts say. With the potential of 60 to 100 per cent tariffs on Chinese goods looming, companies in China are looking for ways to reduce their dependence on the US. This is happening in a challenging global M&A environment marked by high interest rates and geopolitical tensions.

Stanley Lah, Asia-Pacific and China M&A services leader at Deloitte, explained, “More tariffs may mean that the globalisation of Chinese companies is going to get faster. Chinese companies will consider moving more quickly to find alternatives in shipping or selling to the US. That’s pretty clear.”

In this context, M&A activity is seen as a faster and more effective solution for Chinese companies looking to expand in global markets than other methods like setting up new sales offices or manufacturing facilities. Despite a 16.5 per cent decline in outbound M&A deals to US$17 billion this year, compared to the same period last year, there are signs of recovery in some sectors that are supported by Beijing.

Federico Bazzoni, CEO of investment banking at Vantage Capital Markets, noted that there is renewed activity in certain sectors, like manufacturing, technology, new energy (such as solar power and batteries), and to a lesser extent, consumer products. He added, “Valuations are becoming more reasonable.”

Overall, the landscape of Chinese outbound M&A activity is evolving in response to changing trade dynamics, and experts believe that this trend is likely to continue in the near future.