(Yicai Global) Aug. 5 -- Chinese companies were involved in 6,177 mergers and acquisitions in the first half of the year, the highest semi-annual figure since the first six months of 2018, thanks to China’s rapid economic recovery, according to a new report.

Due to air travel restrictions amid Covid-19 and state-owned enterprises turning their focus back to the domestic market, the number of overseas M&A deals was at a record low, PricewaterhouseCoopers China also said in the report published yesterday.

Industrial and technical upgrades and the demands of increasing consumption were the main driving forces behind the rising number of deals, according to PwC China, with high tech, industry, consumer goods and healthcare remaining the most attractive investment fields for Chinese firms and institutions.

There were 45 M&As worth over USD1 billion in the first half, down 10 from a year earlier, the report showed. Those deals were mostly in the areas of industrial goods, consumer products and energy, and were in line with the economic trends of industrial upgrading, dual circulation and environmental protection.

The value of China's first-half M&A deals totaled USD312.1 billion, down 29 percent from the first half of last year, as fewer projects were backed by state capital and government policies and there were fewer massive M&As by private businesses. 

In terms of foreign direct investment, China moved ahead of the United States for the first time in 2020 with USD163 billion, and PwC China expects more FDI will enter China as an alternative to M&A deals as more and more free trade zones are set up. 

China's second-half M&A activity will slow slightly from the first half, said Roger Liu, Chinese mainland and Hong Kong private equity leader at PwC China. For the full year, M&As will exceed 2020, but not 2019, he added. 

Editor: Tom Litting