Foreign firms snap up Chinese companies despite political tensions as Beijing opens its doors

As global uncertainty escalates, more foreign businesses are buying into China, including deals in the more sensitive industries of finance and technology.

“Over the past 18 months, we have recorded levels of foreign M&A (mergers and acquisitions) into China that were not seen in the previous decade,” research firm Rhodium’s partner Thilo Hanemann and founding partner Daniel H. Rosen wrote in an online report released Thursday.

“Most of that activity has been driven by American and European firms taking advantage of looser foreign ownership limits or betting on Chinese consumer demand,” the report said.

Amid the economic and geopolitical pressures, Chinese companies are investing less overseas, according to data disclosed Thursday by China’s Ministry of Commerce. But foreign investment rose 7.5% from a year ago in May to 68.63 billion yuan ($9.87 billion).

The Rhodium report pointed out that another factor behind the investment trend is that in some industries, Chinese businesses have now become leaders – partly through the rise of start-ups and government policy support.

“For the first time, therefore, it is attractive for foreigners to buy technology and industrial assets rather than build from scratch,” the authors wrote.