China is showing a rebound in investment and business cooperation after years of decline as government stimulus measures bear fruit and Donald Trump's tariff pressure supports the industry consolidation.
In 2024, business mergers and acquisitions (M&A) activity in China recorded a fifth consecutive year of decline until the last quarter of the year.
However, it saw a sharp acceleration in early 2025 with deal value jumping 78.5% to $129 billion from $72 billion in the previous quarter.
According to ION's Head of M&A Analytics, Vivian Wong, the increase in deal flows in the fourth quarter of 2024 was partly driven by the stimulus measures introduced by policymakers last September.
The measures are aimed at consolidating domestic industries to improve competitiveness in China's previously sluggish economy.
China’s M&A volume has been on a downward trend since 2020.
Dealogic data shows that the total deal value registered in 2024 is about 45% less than the $553 billion generated in 2020.
Apart from Beijing’s stimulus measures, the jitters over tariff threats ahead of US President Trump’s term and eventual implementation are also key drivers for Chinese companies to adapt by diversifying their supply chains.
The development will push domestic companies towards consolidation as they seek alternative shipping routes to the US that avoid China and try to be more effective in the global market.
This pressure is being felt particularly strongly by smaller companies in China.
In the third quarter of 2024, China’s micro and small enterprises reported an average revenue of $18,700, marking a 4.8% decline compared to the same period in 2023
