Blog post

China's targeted corporate shopping spree to continue, especially in Europe

Expect small, below the radar deals to continue to flourish and, by the same token, Europe to lose part of its edge in industrial technology and other

Publishing date
17 July 2020

China’s enthusiasm for overseas acquisitions waned in 2019. The series of negative economic shocks, from the US-China trade war to the tightened regulation of shadow banking, made financing of certain economic activities much tougher, including outward foreign direct investment. The worsening of the domestic and international environments took a toll on China’s business sentiment, cooling corporates’ interest and ability to expand overseas, especially through purchases of foreign companies. As if this were not enough, in early 2020 China took another unprecedented hit from the coronavirus outbreak. Heightened US-China tensions suggest that the post-pandemic environment could become harsher for Chinese investors who are considering buying companies overseas.

Does this mean that China is retreating from mergers and acquisitions (M&A) overseas? It may look like it when observing headline M&A figures, but the devil is in the details.

After all, the economic incentives behind China’s outbound foreign direct investment still exist. Chinese corporates that suffer from structurally lower domestic growth and return on assets are pushed to seek new business opportunities abroad. The need for industrial upgrades remains obvious in some sectors such as the semiconductor industry. Furthermore, liquidity conditions have turned much laxer in 2020 thanks to the monetary stimulus in response to the pandemic. Finally, the very low valuation of companies overseas is another important pull factor.

In fact, tighter screening of foreign buyers, especially Chinese, has not deterred Chinese companies from their interest in the M&A market. A deeper look into the micro-level transactions suggests that the decline in 2019, typically measured in terms of total deal value, is mainly explained by the reduction of large-scale transactions, while smaller deals have remained in place. In other words, the number of outbound M&A transactions conducted by Chinese corporates has remained rather stable. This seems to indicate that the response of Chinese corporates to the tougher screening for their acquisitions has been to pursue smaller deals. In other words: keep acquiring foreign companies, but do it discreetly, below the radar.

China’s target choices have also changed in response to the new global environment. Over the past few years, M&A transactions into the United States have waned, while Europe clearly gained importance, followed by Asia Pacific. To note though: while Asia Pacific received more deals than the EU, their total value was significantly smaller. Therefore, against the backdrop of declining average deal size, the EU remained the most important target for bigger acquisitions. For example, the Netherlands was China’s biggest target in 2019 because of Wingtech’s acquisition of the semiconductor company Nexperia. Russia also moved up as the second largest target for China in 2019 because of the acquisition of 20% of the Arctic LNG project in the first half of 2019.


In terms of sectors, consumer, information and communication technology, and industrial sectors account for nearly 70% of the total value of China’s overseas M&A. China clearly considers the industrial field to be strategic, as confirmed by its prominent role in the China Manufacturing 2025 policy guidelines. As the EU remains an important manufacturing hub for global production chains and a high-technology supplier, EU companies are likely to be targeted for potential purchase by Chinese corporates, all the more so as the EU’s investment-screening mechanisms are clearly laxer than those of the US and advanced Asian countries such as Korea and Japan. Last but not least, while privately-owned companies have increased their participation in overseas M&A transactions, this is not the case in the EU. State-owned enterprises continue to be the main Chinese buyers of European companies.


All in all, notwithstanding the recent series of shocks and the tensions following the COVID-19 outbreak, we should not forget Chinese corporates’ enthusiasm for foreign expansion in the longer term. The business incentive still plays a key role, especially now that the liquidity environment and the valuation of the targets are likely to become more accommodative. Expect small – below the radar – deals to continue to flourish and, by the same token, also expect Europe to lose part of its edge in industrial technology and other strategic sectors.

Recommended citation
García-Herrero, A., J. Xu (2020) 'Chinese targeted corporate shopping spree to continue, especially in Europe', Bruegel Blog, 16 July, available at…

About the authors

  • Alicia García-Herrero

    Alicia García Herrero is a Senior fellow at Bruegel.

    She is the Chief Economist for Asia Pacific at French investment bank Natixis, based in Hong Kong and is an independent Board Member of AGEAS insurance group. Alicia also serves as a non-resident Senior fellow at the East Asian Institute (EAI) of the National University Singapore (NUS). Alicia is also Adjunct Professor at the Hong Kong University of Science and Technology (HKUST). Finally, Alicia is a Member of the Council of the Focused Ultrasound Foundation (FUF), a Member of the Board of the Center for Asia-Pacific Resilience and Innovation (CAPRI), a member of the Council of Advisors on Economic Affairs to the Spanish Government, a member of the Advisory Board of the Berlin-based Mercator Institute for China Studies (MERICS) and an advisor to the Hong Kong Monetary Authority’s research arm (HKIMR).

    In previous years, Alicia held the following positions: Chief Economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria (BBVA), Member of the Asian Research Program at the Bank of International Settlements (BIS), Head of the International Economy Division of the Bank of Spain, Member of the Counsel to the Executive Board of the European Central Bank, Head of Emerging Economies at the Research Department at Banco Santander, and Economist at the International Monetary Fund. As regards her academic career, Alicia has served as visiting Professor at John Hopkins University (SAIS program), China Europe International Business School (CEIBS) and Carlos III University. 

    Alicia holds a PhD in Economics from George Washington University and has published extensively in refereed journals and books (see her publications in ResearchGate, Google Scholar, SSRN or REPEC). Alicia is very active in international media (such as BBC, Bloomberg, CNBC  and CNN) as well as social media (LinkedIn and Twitter). As a recognition of her thought leadership, Alicia was included in the TOP Voices in Economy and Finance by LinkedIn in 2017 and #6 Top Social Media leader by Refinitiv in 2020.

  • Jianwei Xu

    Jianwei Xu is non-resident fellow at Bruegel. He is a senior economist at Natixis, Asia Pacific. He worked as a professor at Beijing Normal University. He was also a guest researcher at China Academy of Social Science and a youth member of the China Finance Forum 40.

    His research mainly focuses on international economics and labor economics. He is particularly interested in topics related to the Chinese economy. He has published many papers in academic journals and also writes policy articles for the media.

    He received his Ph.D. in economics from China Economic Research Center, Peking University in 2011. He was also a visiting student in Stern Business School, New York University, from 2009 to 2010.

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China Economic Database

Repository of what we consider to be the most relevant macroeconomic data for China and EU-China relations.

Alessia Amighini, Alicia García-Herrero, Michal Krystyanczuk, Robin Schindowski and Jianwei Xu