China’s financial authorities are cracking down on outbound deals, but not all deals are off-limits, says business analyst Ben Cavender. Especially smaller deals seem to avoid political scrutiny, he tells CNBC.
So far this year, about 70 percent of China’s outbound deals have been valued at $1 billion or less, according to Dealogic data. Experts said they expect the trend of smaller acquisitions to continue.
That’s because with larger acquisitions, “you start getting questions on national security … and overall stability and growth of the Chinese economy, so there’s a lot more scrutiny over large, marquee deals,” said Benjamin Cavender, principal at consulting firm China Market Research.
But “when you’re talking about small, medium enterprises, there’s a little less pressure — the government doesn’t see that as having any way to shape the economy, or cause issues with policy,” he said.
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