Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

Last Friday's formal codification of Chinese outbound investment rules may serve as the starting gun for a new wave of cross-border dealmaking in the technology sector.

China's State Council and its National Development and Reform Commission released statements clearly outlining what's allowed and what's not.

There weren't too many surprises, since Xinhua News Agency singled out industries that regulators were monitoring and that had a tendency toward "irrational" overseas investment back in December. They included real estate, hotels, film, entertainment and sports clubs.

Last Friday's statement also mentioned obsolete equipment and investments that contravene environmental standards. So gambling, sex and other things contrary to national security are out.

Valiant Attempt
Chinese investors have made a play for some reasonably big ticket foreign technology deals
Source: Bloomberg
Note: Data shows a selection of major Chinese outbound deals, including those completed, withdrawn and pending.

Importantly, authorities also published a list under the label encouraged. Anything that furthers President Xi Jinping's One Belt, One Road initiative is naturally at the top of that list, along with measures that enhance China's technical standards, and research and development.  

China's State Council wants to ensure stability in its financial system, but it recognizes the value in using its economic clout to further the national agenda:

Profound changes are taking place in international and domestic situations, and Chinese enterprises face not just relatively good opportunities but also various risks and challenges in overseas investments.

Companies from China were once very active in pursuing foreign technology firms such as Synaptics Inc., Fairchild Semiconductor International Inc. and even Koninklijke Philips NV's Lumileds unit. And let's not forget the interest in Micron Technology Inc. shown by Tsinghua Unigroup Ltd., the Beijing-based fund with government ties and buckets of money to buy chip manufacturers.

But outbound investment from China dropped 46 percent in the first half, Bloomberg News's Enda Curran wrote last week. Technology was hit even harder than property and entertainment deals: The value of proposed, completed and terminated tech transactions was just 6 percent of the level a year ago, data compiled by Bloomberg show.

Cooling Off Period
After a deal frenzy, Chinese outbound investment in technology has dwindled significantly
Source: Bloomberg
Note: Includes proposed, completed and withdrawn M&A deals of non-Chinese technology targets by Chinese buyers.

A big reason for that freeze is the chilly reception many deals have faced from the Committee on Foreign Investment in the U.S., and which has extended to policy uncertainty under the Trump administration.

Yet China's formal codification will likely rekindle the fires of nationalism among business leaders and bankers. There will be plenty of funds available should a technology investment be successful.

Although it's not clear whether President Donald Trump will even allow inbound deals to close, with State Council encouragement there's a good chance patriotic Chinese investors will once again take a shot.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Oil and mining exploration, along with agriculture and fishing also make the encouraged investments list.

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Tim Culpan in Taipei at

To contact the editor responsible for this story:
Katrina Nicholas at