Following our European and US tech sector M&A updates, outlook and overview of key regulatory trends, we turn our attention to China, and look at what we’re seeing in the market during 2025, and where we expect the opportunities to be as we head into 2026.

Similarly to the US and Europe, the rise of AI and robotics in China has injected fresh momentum into the technology sector, and contributed to a more optimistic economic outlook. We highlight the four key themes driving M&A in the tech sector. 

What are the trends driving tech M&A in China during 2025 H1? (01:00)

In the first half of 2025, China’s TMT (Technology, media, and telecoms) M&A activity saw a steady increase in both deal value and volume compared to the same period in 2024. This growth was primarily driven by domestic strategic acquisitions, especially in high-tech sectors such as semiconductors and the rise of AI and robotics businesses.

Domestic buyers, including A-share listed companies, state-owned enterprises, and tech giants, were particularly active, while inbound foreign investment remained subdued due to ongoing economic and geopolitical uncertainties. Outbound M&A by Chinese tech companies was also relatively weak, though signs of recovery appeared with several major deals in Europe.

What are the key drivers for TMT tech M&A and investment in China? (03:51)

Four key themes defined China’s tech M&A and investment activity in early 2025:

1. Robust domestic markets and national priorities promoting industrial consolidation and technical innovation.
2. Sectoral focus on advanced manufacturing, semiconductors, and AI, which dominated deal flow.
3. Regulatory support and predictability, with new policies encouraging private sector growth and amending asset restructuring rules.
4. Further opening to foreign investment, with measures to attract foreign capital, such as liberalizing foreign exchange regulations and launching action plans to stabilize foreign investment.

How are regulatory developments in China shaping M&A and investment? (06:47)

Since early 2025, China has introduced a wave of legislative developments signaling stricter governance and deeper compliance requirements. Key regulations include the Network Data Security Management Measures, which clarify compliance expectations for companies handling data, and ongoing revisions to the Cyber Security Law, introducing stricter penalties and enforcement standards. 

New audit measures for personal information protection require companies to conduct comprehensive audits of their data practices, impacting both legal and operational aspects of M&A.

Merger control and national security: Impact on TMT tech M&A and investment in China (08:55)

China has tightened its merger control and national security review frameworks what has particularly affecting technology sector deals. Updated notification thresholds have reduced the number of transactions subject to mandatory review, but regulators retain broad powers to scrutinize deals in sensitive industries. 

Foreign investments in strategic sectors remain subject to pre-closing reviews, with authorities empowered to block or set conditions for deals that may affect national security or public interest. Early regulatory engagement is now critical for deal success.

How are the recent changes to China’s cross-border data transfer regime impacting M&A and investment? (10:33)

China’s cross-border data transfer regime is undergoing transformation. Draft measures on certification for personal information exports aim to facilitate data flows, especially for multinational companies and within pilot free trade zones. Negative lists specify which data exports require prior regulatory procedures, while data not included can be exported more freely. These changes enable more efficient cross-border data flows in sectors like automotive, pharmaceuticals, retail, civil aviation, and AI, and create regional opportunities for deal structuring and compliance optimization.

How are data protection enforcement trends affecting M&A and investment activity in China? (12:24)

Enforcement of data protection is becoming more frequent, coordinated, and transparent. Recent campaigns target smart endpoints, facial recognition in public spaces, and offline data collection. Regulators are using a mix of tools, from fines to criminal liabilities, raising the stakes for buyers who must now factor enforcement risk into due diligence and deal structuring. Recent cases have provided legal clarity on data rights and platform governance, which are key concerns in post-deal integration.

What market opportunities are emerging in China? (13:45)

Regulatory shifts are not just constraints—they are also shaping new market opportunities. AI safety, privacy-preserving technologies, and AI governance frameworks are emerging as strategic assets in M&A. 

The rise of zero trust architecture and cloud-native security is notable, especially in finance, energy, and manufacturing. The data security market itself is expanding rapidly, with new services like data security insurance, privacy computing, and data asset valuation gaining traction, opening up new deal themes and investment angles.

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