China’s M&A market has displayed signs of revival driven by government stimulus measures and renewed private sector confidence. While technology, healthcare and financial services lead this growth, dealmakers face increasing regulatory complexities and geopolitical tensions that shadow cross-border transactions. 

• China's economy shows renewed vitality with a 24 percent increase in strategic M&A deals, totalling $26.6 billion
• Technology, healthcare, and financial sectors lead M&A growth, driven by government stimulus and private sector support
• Regulatory complexity challenges deals, with geopolitics and security concerns influencing cross-border transactions

Following a period of subdued economic activity in the aftermath of the COVID-19 pandemic, which led to a decline in global investor interest in Chinese assets, China's economy is now exhibiting renewed vitality. 

The growth in China's merger and acquisition (M&A) activity is reflected in the increasing number of deals involving Chinese companies, both domestically and internationally. In 2024, China's M&A landscape witnessed a significant resurgence, with four out of the top ten announced deals in emerging markets involving Chinese parties. A notable transaction was the acquisition of Haitong Securities by Guotai Junan Securities, valued at $14.6 billion, which topped the list of major deals. 

Furthermore, as of March 2025, there has been a 24 percent increase in strategic M&A activity in China, with a total of 480 deals valued at $26.6 billion. This surge in strategic M&A transactions suggests that Chinese companies are actively seeking to expand their operations, diversify their portfolios, and enhance their competitive positions through targeted acquisitions. 

A combination of policy and economic factors is driving the surge in China's M&A activity. According to Joey Chau, M&A partner at Kirkland & Ellis in Hong Kong, the Chinese government's stimulus measures introduced in late 2024 have started to bear fruit. The recent public support shown by the government for the private sector, particularly the technology sector, has also boosted confidence amongst investors and corporates to pursue dealmaking activity. 

Additionally, “The anticipation of U.S. tariffs is prompting Chinese companies to diversify their supply chain overseas to mitigate trade risk and is also prompting sophisticated investors to pursue opportunities that can capitalise on this trend,” adds Chau.

John Xu, corporate partner at Linklaters in Hong Kong, highlights that Chinese firms with substantial financial liquidity are keenly pursuing both domestic and international M&As for strategic diversification, especially in AI and e-commerce. 

In addition, the increasing importance of China in global M&A activity is also reflected in the growing number of international investors and companies looking to invest in China. “However, rising regulatory scrutiny - both domestic and international - might slow down this pace, particularly in sensitive sectors facing more cautious oversight, such as under U.S. CFIUS regulations,” says Xu. 

TECHNOLOGY AND HEALTHCARE

According to Xu, sectors experiencing heightened M&A activity in China include the technology and internet sphere, spurred by rapid technological advances and digitalisation, as well as healthcare, which is benefitting from rising health awareness and an ageing population.  The renewable energy sector is also gaining attention due to its focus on sustainability. “Underlying this trend is a robust push for digital transformation and global expansion by Chinese companies,” he adds.

 “The financial services sector in China is also seeing consolidation as evidenced by the merger of Guotai Junan and Haitong. The growth in such sectors reflects the drivers highlighted above and also China’s broader economic priorities and is expected to further continue in the coming year.” Joey Chau, Kirkland & Ellis

Chau concurs: “Sectors that align with the government’s broader economic and industrial policy, such as advanced manufacturing, technology, renewable energy and healthcare, will likely be favoured.”

Also, “The financial services sector in China is also seeing consolidation as evidenced by the merger of Guotai Junan and Haitong. The growth in such sectors reflects the drivers highlighted above and also China’s broader economic priorities and is expected to further continue in the coming year,” adds Chau.

Xu points out that both state-owned enterprises (SOEs) and private firms are active in dealmaking, with SOEs often backed by the government. In particular, he witnesses an increase in outbound investment by Chinese companies, notably in technology, resources, and consumer sectors. 

These deals are anticipated to heighten competition, notes Xu. “This can lead to more competitive bidding, influencing global deal pricing and structures. The sophistication and financial strengths of Chinese firms are likely to contribute to more complex cross-border transactions.”

Chau points out that many of these transactions are structured as an initial minority investment with the option to acquire control, typically with the local strategic partner remaining onboard. 

“International investors and institutions, in addition to putting up their capital to help share the investment risks, can participate in this trend by offering their overseas operational experience, sharing local know-how and bridging cultural differences,” she adds. 

REGULATORY FOCUS

While the regulatory environment is becoming increasingly complex, Chau expects to see strong growth in China's M&A activity in 2025, driven by supportive government policies. However, whether the upward dealmaking trajectory can continue significantly depends on how dealmakers are navigating the regulatory environment. 

“Geopolitics and national security concerns are now at the forefront of governments’ consideration globally,” says Chau. “Whilst each country has its own regulatory regime, we often see successfully navigating the continuously developing regulatory regime of overseas jurisdictions posing the most significant challenge in getting cross-border deals done.”

Xu notes that regulatory scrutiny has generally reduced, aligning with national interests and economic policies, but sensitive sectors like telecommunications and media continue to face strict controls to safeguard national and data security. Specifically, recent regulatory changes, including the Personal Information Protection Law (PIPL), impact data-centric deals due to stringent data handling and privacy requirements. 

The regulatory environment is also increasingly important for international investors looking to invest in China. “Whilst historically the regulations largely focused on restricting investments by Chinese corporates or investors into sensitive sectors in the U.S., the focus is now starting to expand to also restrict overseas investments by U.S. persons into sensitive sectors in China,” says Chau. 

Xu, on the other hand, highlights the recent reforms in foreign investment laws that aim to streamline processes and encourage foreign participation. 

Navigating complex regulatory compliance can lead to delays or deal cancellations due to non-compliance, and political considerations stemming from geopolitical tensions add another level of complexity. As a result, Xu anticipates that regulatory complexities will increase the need for due diligence and risk management, particularly in sensitive sectors, and may slow down cross-border M&A, especially in areas tied to national security concerns.

Despite these challenges, opportunities arise from attractive strategic assets, such as technological advancements and China's vast consumer market. “Policy incentives also offer avenues for M&A, especially in sectors the government is opening up to foreign investment,” says Xu. 

Additionally, opportunities may exist in penetrating high-growth emerging markets, accessing vital resources and cutting-edge innovations, and expanding global footprints for enhanced brand recognition, he adds. 

For international firms operating in Greater China to capitalise on the evolving M&A landscape, Xu believes they should foster strategic partnerships with local firms, which can ease market access and improve regulatory navigation. Amongst other strategic approaches are thorough due diligence and risk management, development of cultural sensitivity and understanding the regulatory environment. 

“Long-term commitment to China is fundamental, and firms should demonstrate dedication through strategic planning beyond short-term gains,” he adds.