Hot and cold

China’s relationships with the US and Canada have a history of running hot and cold, depending mostly on the swirling winds of politics for the fine or stormy atmospheres that intermittently prevail. The until very recently volatile investment climate for Chinese companies in the US appears to be clearing as investment is on the uptick, while frosty winds prevail in Canada, but for how long, given that nation’s wealth of desirable energy resources?

Chinese overall outbound M&A didn’t break any records in 2013 but remained healthy, comparing well with the past few years. There were 200 deals announced in 2013 versus 191 in 2012, however the announced deal value fell from over US$66 billion in 2012 to US$51.5 billion in the following year. But it’s predicted that 2014 will be a record year for China outbound investment, driven by bigger deals, the increasing sophistication of Chinese investors, and national government support.

According to Fang Jian, a partner specialising in China-related M&A at Linklaters, Shanghai: “The US and Canada remain attractive M&A jurisdictions for Chinese investors, given the presence of leading players, the width and depth of the market, the relatively weaker American and Canadian currencies, the recent discovery of huge shale reserves in the North America region, and the promising signs of recovery of the US economy.

“The successful execution and completion of a few Chinese investments in the US during the past year or so also send positive signals to Chinese investors and raise their confidence level in overcoming the legal and regulatory obstacles that drove many Chinese investors to favour other markets such as the EU in the past few years.”