This article was first published in the Chambers Global 2026 Guide by Chambers and Partners. JunHe LLP was invited to contribute the professional overview for the Corporate/M&A (PRC Firms) section.
China’s M&A market rebounded strongly in 2025, amid its economic structure optimisation driven by three key forces: the shift to high-quality development, supportive policy rollouts and restored global capital market confidence. M&A has become a core tool for enterprises to reposition competitively and seize strategic opportunities.
This article reviews the overall landscape of China’s M&A market in 2025 and projects its development trends for 2026, so as to provide market participants with valuable insights and a systematic analytical framework.
Market Overview
Per data from Wind, China’s M&A market saw the disclosure of 8,151 transactions in 2025 (encompassing cross-border deals), a modest 0.72% year-on-year dip. By contrast, the total transaction value soared to CNY2.5894 trillion, marking a robust 16.12% year-on-year surge. Notably, 28 mega-M&A deals – each valued at over CNY10 billion – graced the market; a clear testament to the growing vitality of large-scale transactions across the sector.
Participants: SOEs spearhead key sectors, foreign capital aligns with industrial trends
In terms of market participants, state-owned enterprises (SOEs) continue to take the lead in driving strategic restructuring and specialised integration within key sectors such as energy, telecommunications and high-end manufacturing. While inbound M&A activities by overseas private equity funds and institutional investors have moderated amid geopolitical uncertainties, these investors remain closely attuned to opportunities tied to China’s consumption upgrading and industrial digitalisation trends – two pivotal drivers of long-term market growth.
Industry distribution: strategic emerging industries arise as the core engine
M&A transactions in 2025 were highly concentrated in strategic emerging industries, with sectors including semiconductors, new energy, artificial intelligence, robotics, biomedicine, and high-end equipment manufacturing witnessing particularly vibrant activity. A striking highlight is that the number of major restructuring cases involving listed companies on the STAR Market (note: the Sci-Tech Innovation Board of the Shanghai Stock Exchange, tailored to serve technology and innovation-driven enterprises) reached 36 in 2025 – surpassing the cumulative total of such cases over the six-year period from 2019 to 2024. This milestone underscores a significant acceleration in the restructuring and integration of technology and innovation-focused enterprises.
Cross-border flow: a new two-way flow pattern fuelled by technological dynamics
Against the backdrop of intensifying global technological competition, cross-border M&A has taken on distinct technology-oriented traits. Chinese enterprises’ overseas M&A endeavours have increasingly shifted toward acquiring advanced technologies, core intellectual property rights and high-end brands – strategic moves to enhance their global competitiveness. Concurrently, foreign investment in China’s domestic high-tech enterprises, which boast core technologies and considerable market potential, has seen a corresponding rise. Together, these developments have fostered the emergence of a new pattern characterised by the two-way flow of technology, capital and markets, ushering in a new phase of cross-border M&A development.
Highlight Policies
The resurgence of China’s M&A market in 2025 is inextricably linked to the systematic refinement and guidance of policies and regulations. The optimisation of merger and restructuring rules for listed companies in the capital market, coupled with adjustments to M&A loan policies at the financial level, has furnished robust support for M&A transactions from both institutional and capital standpoints.
Systematic optimisation of major asset restructuring rules
In September 2024, the China Securities Regulatory Commission (CSRC) issued a directive proposing to refine the relevant legal framework governing the merger and restructuring of listed companies. Building on this foundation, the CSRC revised its Major Asset Restructuring Rules, introducing a suite of pragmatic measures, including the following.
Simplify review procedures and improve transaction efficiency
An expedited review mechanism has been put in place for two categories of cases: (i) absorption and merger by qualified listed companies, and (ii) large-cap listed companies issuing shares to acquire assets. This mechanism has drastically shortened the review cycle and alleviated transaction time costs.
Innovate payment mechanisms and enhance transaction flexibility
A phased share payment mechanism for restructuring has been established. Listed companies are permitted to complete one-time registration and conduct phased issuance of shares to purchase assets, with the registration validity period extended to 48 months. This empowers listed companies to flexibly adjust share issuance and payment arrangements in light of the subsequent operating performance of the target assets.
Optimise fund lock-up period and improve exit channels
A reverse linkage mechanism between the private equity fund lock-up period and investment period has been introduced. For private equity funds with an investment period exceeding four years, the lock-up period for their held shares has been shortened from 12 months to six months. This adjustment has effectively boosted the liquidity of private equity funds and widened their exit pathways.
Increasing regulatory flexibility and focus on industrial support
Regulatory flexibility has been enhanced in areas such as changes in listed companies’ financial conditions, horizontal competition and related transactions arising from mergers and restructurings. Simultaneously, greater support has been extended to key domains, including mergers and acquisitions in the technology innovation industry and state-owned asset consolidation.
New M&A loan regulations strengthen financial support
In 2025, China successively rolled out a special M&A loan policy for tech enterprises and updated regulations on commercial banks’ M&A loans. These policy initiatives have significantly fortified financial support for M&A transactions in terms of loan ratios, tenures and scope of application.
- Expand the scope of application – enterprises may apply for “equity-participating M&A loans” when acquiring a target company for the first time with a shareholding ratio of no less than 20%. Enterprises already in control of a target company can apply for “controlling M&A loans” when acquiring an additional 5% or more of the company’s shares.
- Increase loan-to-value ratios – the upper limit of the loan ratio for controlling M&A loans has been raised to 70%, with the maximum loan tenure extended to ten years. For equity-participating M&A loans, the upper limit of the loan ratio is set at 60%, with the loan tenure not exceeding seven years in principle.
- Establish a loan replacement mechanism – if an enterprise has paid part of the M&A consideration with its own funds in the early stage, it may subsequently apply for an M&A loan to replace such funds, provided it meets the upper limit of the loan ratio and specified time interval requirements.
- Pilot policy for M&A loans to tech enterprises – the pilot programme is being implemented in selected commercial banks and pilot cities. The ratio of M&A loans for tech enterprises to the total M&A transaction consideration has been increased to 80%, with the maximum loan tenure extended to ten years. This policy effectively addresses the challenges of insufficient funding and maturity mismatch in M&A activities of tech enterprises.
Future Outlook
Looking ahead to 2026, against the backdrop of sustained policy support and improving economic fundamentals, China’s M&A market is poised to maintain its vibrancy. Industrial chain integration and cross-border synergy will deepen further. Aligned with China’s 15th Five-Year Plan, industries such as artificial intelligence, integrated circuits, intelligent vehicles, medical and pharmaceutical sectors, and new energy are expected to remain the focal points of M&A activity.
While global uncertainties persist, China’s vast market scale and well-established industrial chain continue to exert a powerful allure for global capital. Many multinational enterprises are re-evaluating and recalibrating their strategies in the Chinese market – a process that is anticipated to spawn more transaction opportunities through joint ventures, asset divestitures and mergers and acquisitions.
For all market participants, particularly foreign investors, compliance risk management will ascend to the forefront in 2026. When investing in China’s key technology sectors and sensitive industries, investors must adhere to dual regulatory requirements: on one hand, complying with the foreign investment review rules of their home jurisdictions; on the other hand, closely monitoring China’s evolving regulatory landscape regarding export controls, national security reviews, cybersecurity and cross-border data flows. Establishing a robust cross-border compliance system has thus become an indispensable prerequisite for the successful execution of M&A transactions.
For further information, please contact:
CHEN, Wei, Partner, JunHe
chenwei@junhe.com
