China M&A 2022 ​review and 2023 outlook

Looking forward, PwC’s M&A Review and Outlook sees some positive signs for 2023. These include: the release of pent-up demand with the removal of Covid-19 restrictions; measures from China’s leadership to address the real estate crisis; relaxation of curbs on the internet economy; and a re-prioritisation of economic growth more generally. Ongoing record levels of ‘dry powder’ and pressure to deploy this capital should also lead to more active IPOM&A markets in 2023. The economic dislocations associated with Covid-19 and geopolitical trends will also give rise to transactional and transformational activity – including related to distressed situations.

We expect to see some improvement as China’s post-Covid reopening starts to take effect, but it will be rather cautious and gradual, with a few stops and starts due to the various uncertainties in play. As a result, we think that the M&A market in China will become even more domestically orientated, at least in the short term. We also expect to see increased demand for outbound investment, especially into the Asia-Pacific region. We forecast full-year 2023 numbers to be close to last year’s. Activity is likely to be weaker in the first half, but stronger in the second.