CHINA Trends and Developments Contributed by: Joanna Jiang, Richard Qiang, Greg Guo and Dimitri Phillips, DaHui Lawyers
Introduction In 2024, China’s M&A activity experienced a well-known decline in terms of domestic and cross-border transactions. According to Wind, China recorded 271 fewer domestic deals in the first three quarters of 2024 than it did in the same period in 2023 (ie, 5,830 deals compared to 6,101). Furthermore, in the first half of 2024, the total value of overseas M&A announced by Chi- nese companies was USD13.06 billion, which was a year-on-year decline of 20.4%. However, despite the general downturn, the TMT sector remains remarkably active, reflecting a sustained interest in technology and innovation within the M&A space. Domestically, the elec- tric vehicle maker NIO Ltd received a staggering RMB13.3 billion capital increase thanks to the involvement of investors such as the Anhui Pro- vincial Investment Group Holding Co Ltd Inter- nationally, the deal value of China’s total out- bound M&A in the TMT industry soared by 100% during the first two quarters of 2024 compared with the first two quarters of 2023. The resilience of the TMT sector suggests that it continues to be an area of strategic focus for Chinese investors, both in the country and on a global scale. Foreign Investment Foreign investment restrictions During the course of 2024, China has maintained its commitment to opening up its markets to foreign investors, with a particular focus on the technology sectors. Although certain sectors of the economy remain subject to foreign invest- ment restrictions, these restrictions are progres- sively easing. In September 2024, China’s National Develop- ment and Reform Commission (the “NDRC”) and
the Ministry of Commerce (“MOFCOM”) released the revised Special Administrative Measures (Negative List) for Access to Foreign Investment (the “Negative List”), which details sectors pro- hibited from foreign investment and establishes the maximum allowable foreign shareholding percentages in certain restricted sectors. The updated Negative List has notably: • removed the requirement for Chinese control in publication printing industries; and • lifted the ban on foreign investment in certain medicine manufacturing that uses techniques commonly employed in traditional Chinese medicine. These revisions are clear examples of China’s ongoing efforts to liberalise its investment envi- ronment. Meanwhile, foreign investment in China’s tech- nology sectors continues to show robust growth. According to Sina Finance, FDI has markedly shifted away from real estate and manufacturing towards hi-tech industries. The collective share of FDI in transportation, finance, wholesale and retail, TMT, scientific research, and business ser- vices has risen from less than 20% of China’s total FDI before 2010 to between 58 and 60% of total FDI as of 2022. The hi-tech manufacturing industry’s share of FDI noticeably increased by 1.9% from 2023 to 2024 alone, according to a MOFCOM press conference. Foreign investment in TMT On 10 April 2024, China’s Ministry of Industry and Information Technology (“MIIT”) announced the Notice on Carrying Out the Pilot Work of Expanding Opening-Up to Foreign Investment in Value-Added Telecommunication Services
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