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Thursday, 17 August 2017

China clamps down on outbound M&As — with the exception of Belt and Road

China clamps down on outbound M&A — with the exception of Belt and Road: M&A appetite from Chinese companies in nations that are part of China’s Belt and Road initiative appear to have been spared restrictions on outbound capital by the Chinese government. Chinese acquisitions in the 68 countries, which includes Egypt, totaled USD 33 bn as of Monday, surpassing the USD 31 bn tally for all of 2016, according to Thomson Reuters data. On the flipside, outbound M&A from China has dropped 42% y-o-y as Monday. While Beijing has been curbing outbound and leveraged acquisition to prop up the Yuan, but as the USD 124 bn Belt and Road initiative is a key foreign trade policy of President Xi Jinping, the trend will likely continue. “The acquisitions are also policy-driven. There are funds allocated by Chinese banks and state funds for Belt and Road deals,” said Hilary Lau, a corporate and commercial lawyer and partner at the law firm Herbert Smith Freehills.

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