On August 20, a report titled "China Outbound Investment Overview H1 2026" was released, indicating that China's total outbound direct investment across all industries reached $86.5 billion in the first half of 2026, marking an 8.1% year-on-year increase. The total value of overseas mergers and acquisitions announced by Chinese companies amounted to $21.4 billion, a 3.6% increase compared to the previous year, although the number of deals fell 13% to 191, keeping transaction activity near historically low levels.
A senior partner at the firm noted that China's economy demonstrated considerable resilience during this period, with GDP growing 4.7% year-on-year. This was complemented by an 8.1% rise in outbound direct investment, a 3.6% increase in overseas M&A value, and a substantial 17.6% surge in total goods exports, underscoring the sustained momentum behind Chinese enterprises' global expansion.
On the policy front, July 1 marked the implementation of China's first administrative regulation governing outbound investment. This regulation provides a comprehensive institutional framework for foreign investment, outlining measures for service, management, and protection to safeguard investors' legitimate rights. It also extends regulatory oversight from the initial filing and approval stage to the entire overseas operational process, placing particular emphasis on cross-border technology, data, and personnel flows, as well as security review requirements.
Internationally, the spillover effects of geopolitical conflicts in the Middle East persist, with ongoing disruptions to Red Sea shipping and a sluggish global economic recovery potentially triggering a new round of adjustments in global supply chains. Looking ahead to the second half of the year, Chinese companies venturing overseas should closely monitor policy shifts and market volatility risks in key regions, proactively preparing contingency plans and emergency mechanisms to strengthen their operational resilience amid complex geopolitical dynamics.
Macro Environment: Divergent Global Recovery, Multilateral Diplomacy and Institutional Guidance Solidify Foundation for Outbound Expansion
During the first half of 2026, the global economy experienced moderate growth but at a slowing pace, with the IMF revising its full-year global growth forecast down to 3.0%, a 0.5 percentage point decline from 2025. Five major challenges confront corporate operations: geopolitical economic fragmentation, financial market turbulence, constrained fiscal policies, the accelerating application of AI investment, and population aging. For Chinese enterprises pursuing globalization, balancing resilience and efficiency is paramount. This requires accelerating supply chain diversification, reshaping operations through AI and digitalization, and enhancing global compliance and risk management systems.
Against this complex external backdrop, China has continued to deepen high-level institutional openness and provide clear policy guidance. Through multi-layered high-level diplomacy, regular economic and trade communication channels have been established with multiple nations, broadening cooperation in areas such as green energy, digital technology, and mineral resources. These efforts have created a stable and predictable development environment for Chinese companies to differentiate their overseas market strategies and steadily advance their globalization efforts.
Steady Growth in Overall Outbound Direct Investment, with a Significant Surge in Financial Investment
In the first half of 2026, China's total outbound direct investment reached $86.5 billion, an 8.1% year-on-year increase. Non-financial outbound direct investment totaled $65.7 billion, a 9.0% decline, while non-financial investment in countries participating in the Belt and Road Initiative reached $17.5 billion, down 7.4% and accounting for 27% of the total.
Overseas M&A Sees Modest Growth, Yet Deal Volume Remains at Historic Lows
The total value of overseas M&A announced by Chinese companies in the first half of 2026 stood at $21.4 billion, a 3.6% year-on-year increase, marking the third consecutive quarter with M&A value exceeding $10 billion. However, the number of announced deals dropped 13% to 191, keeping activity levels near historical lows.
Sector Analysis: Mining & Metals and Consumer Products Emerge as Most Popular Industries
By deal value, Mining & Metals emerged as the most popular sector in the first half, with M&A reaching $5.75 billion, a 63% year-on-year increase. This involved coal, silicone, aluminum, copper-cobalt, and gold among various minerals and resources, reflecting Chinese companies' intensified efforts to secure mineral and resource positions. The Consumer Products sector ranked second with M&A totaling $3.48 billion, though its momentum notably slowed in the second quarter, recording only $430 million, an 86% quarter-on-quarter decline. Medical & Life Sciences experienced significant growth of 179%, primarily driven by a single large transaction in Australia during the second quarter.
By deal count, Advanced Manufacturing & Transportation, TMT, and Medical & Life Sciences registered more transactions. Advanced Manufacturing & Transportation led in deal volume for the first half, with M&A activity primarily focused on industrial products manufacturing.
Regional Analysis: Asia Maintains Dominance; Europe Hits Five-Year High as Second-Largest Destination
Asia remained the primary destination for Chinese overseas M&A, with deal value reaching $6.9 billion, though this represented a 43% year-on-year decline due to a high base in the first half of 2025, accounting for approximately 32% of the total. By transaction count, Asia continued to rank first, holding a 46% share and being the only continent to record year-on-year growth, driven by increased deal activity in Consumer Products and Medical & Life Sciences.
Europe ranked as the second-largest M&A destination with deals totaling $6.1 billion, a substantial 86% year-on-year increase and a five-year high, accounting for 28%. Oceania was the third-largest destination with M&A value reaching $5.6 billion, an increase of more than tenfold year-on-year and representing 26% of the total, propelled by two major transactions. North America saw M&A activity of $1.8 billion, a 24% decline and only 8% of the total, marking its lowest level for the period.
By country, Australia, Singapore, and Germany were the top three destinations by deal value. Among the top ten destinations, Australia, Germany, Austria, Norway, South Korea, and the UK recorded significant growth. Driven by warming bilateral relations and large-scale transactions, Australia became the most popular M&A destination for the first time. By transaction count, despite an overall decline, Japan, South Korea, Indonesia, Canada, and Italy among the top ten destinations experienced notable growth, with Japan ranking first in transaction numbers for the first time.
Overseas Engineering Contracting: New Contracts Slightly Decline, Completed Turnover Maintains Steady Growth
In the first half of 2026, the value of newly signed overseas engineering contracts by Chinese companies reached $125.6 billion, a 3.3% year-on-year decrease. Among these, contracts signed in Belt and Road partner countries amounted to $114.2 billion, a 0.7% increase, with their share rising to 91%. The completed turnover for overseas engineering contracting totaled $88 billion, up 12.6% year-on-year. In Belt and Road countries specifically, completed turnover reached $75.5 billion, a 16.5% increase, raising their share to 86%.