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Mergers and acquisitions in China

Author

Listed:
  • Jie Lin Dong
  • Jie Hu

Abstract

Mergers and acquisitions are an integral part of any market economy, enhancing an economy's efficiency by reallocating and recombining production resources for better use. In China, the development of mergers and acquisitions activity has played a positive role in privatizing and revitalizing the country's inefficient state enterprises, attracting foreign investment, and rationalizing the industrial structure. The authors of this article discuss this development in the context of China's market-oriented economic reform and provide an outline of the advantages and disadvantages of the country's approach to mergers and acquisitions. ; Three reasons emerge as forces driving mergers and acquisitions activity in China, reasons that are likely to continue fueling its growth: the government's need to restructure and revitalize the state-owned enterprises; the growing needs of enterprises; and the market's potential for attracting more international capital. Because of the importance of the mergers and acquisitions market in restructuring and modernizing the industry of China, the authors expect its development to continue, but they observe that careful handling of many institutional deficiencies and social problems as well as political obstacles will be required to avoid major setbacks.

Suggested Citation

  • Jie Lin Dong & Jie Hu, 1995. "Mergers and acquisitions in China," Economic Review, Federal Reserve Bank of Atlanta, issue Nov, pages 15-29.
  • Handle: RePEc:fip:fedaer:y:1995:i:nov:p:15-29:n:v.80no.6
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    References listed on IDEAS

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    6. David B. Humphrey, 1990. "Why do estimates of bank scale economies differ?," Economic Review, Federal Reserve Bank of Richmond, issue Sep, pages 38-50.
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