<article>After a <a id="_mce_temp_anchor" style="color: #000080;" title="China's $1 Trillion Money Exodus Isn't About Capital Controls" href="http://www.bloomberg.com/news/articles/2016-01-27/china-s-1-trillion-money-exodus-isn-t-about-capital-controls" target="_blank">$1 trillion river of capital</a> flowed out of China during 2015, the government has been working furiously to avert a flood.</article>

After a <a id="_mce_temp_anchor" style="color: #000080;" title="China's $1 Trillion Money Exodus Isn't About Capital Controls" href="http://www.bloomberg.com/news/articles/2016-01-27/china-s-1-trillion-money-exodus-isn-t-about-capital-controls" target="_blank">$1 trillion river of capital</a> flowed out of China during 2015, the government has been working furiously to avert a flood.
There was a clampdown on offshore purchases of <a id="_mce_temp_anchor" style="color: #000080;" title="China Unleashes New Steps to Control Financial Risks, Outflows" href="http://www.bloomberg.com/news/articles/2016-02-02/china-unleashes-new-steps-to-control-financial-risks-outflows" target="_blank">insurance policies</a>, and restrictions on <a id="_mce_temp_anchor" style="color: #000080;" title="Here's What China Is Doing to Tighten Noose on Capital Flows" href="http://www.bloomberg.com/news/articles/2016-01-27/here-s-what-china-is-doing-to-tighten-the-noose-on-capital-flows" target="_blank">currency trading by branches of overseas banks</a> and <a id="_mce_temp_anchor" title="Macau Casinos Slump on Reported China Crackdown on Money" href="http://www.bloomberg.com/news/articles/2014-12-17/casino-stocks-drop-on-reported-china-crackdown-on-money" target="_blank">withdrawals using UnionPay cards.</a> Beijing is even thrashing out plans for a <a id="_mce_temp_anchor" style="color: #000080;" title="China Said to Draft Rules for Tobin Tax on Currency Transactions" href="http://www.bloomberg.com/news/articles/2016-03-15/china-said-to-draft-rules-for-tobin-tax-on-currency-transactions" target="_blank">Tobin tax on foreign-exchange trading</a>, according to people with knowledge of the matter.
While the nation has been pulling up the drawbridge for retail money flowing out, things look rather different at the top end of town.
ChemChina made a <a id="_mce_temp_anchor" style="color: #000080;" title="http://www.bloomberg.com/news/articles/2016-03-10/chemchina-s-syngenta-deal-divides-credit-raters-on-debt-risks" href="http://www.bloomberg.com/news/articles/2016-03-10/chemchina-s-syngenta-deal-divides-credit-raters-on-debt-risks" target="_blank">$43 billion bid for the Swiss agritech company Syngenta</a> last year, without waiting for its <a id="_mce_temp_anchor" style="color: #000080;" title="Pirelli Delisting Nears as ChemChina Extends Takeover Offer" href="http://www.bloomberg.com/news/articles/2015-10-14/pirelli-delisting-nears-as-chemchina-extends-offer-for-tiremaker" target="_blank">$8.4 billion offer for tiremaker Pirelli</a> to complete, and then threw in the $1 billion purchase of <a id="_mce_temp_anchor" style="color: #000080;" title="ChemChina Agrees to Buy German Machinery Maker KraussMaffei" href="http://www.bloomberg.com/news/articles/2016-01-11/chemchina-to-acquire-machinery-maker-kraussmaffei-from-onex" target="_blank">Germany&#8217;s KraussMaffei</a> in January. That month, Haier <a id="_mce_temp_anchor" style="color: #000080;" title="China's Haier to Buy GE's Appliance Unit for $5.4 Billion" href="http://www.bloomberg.com/news/articles/2016-01-15/haier-said-to-be-near-4-billion-deal-to-buy-ge-unit-wsj-says" target="_blank">paid $5.4 billion</a> for General Electric&#8217;s appliances unit, more than $2 billion above what Electrolux was prepared to pay before its bid was blocked by the U.S. Justice Department.
Now the hitherto low-profile Anbang Insurance Group is turning itself into a global hotels brand. Fresh from buying New York&#8217;s Waldorf-Astoria from Blackstone Group last year, it agreed to pay the same seller $6.5 billion for the Strategic Hotels luxury chain, according to people familiar with the matter, and muscled in on Marriott&#8217;s <a id="_mce_temp_anchor" style="color: #000080;" title="Anbang Muscles in on Marriott" href="http://www.bloomberg.com/gadfly/articles/2016-03-14/starwood-investors-await-sweetened-marriott-bid-after-anbang-offer" target="_blank">attempt to take over the Starwood group</a> with a $12.8 billion counter-offer.
<h3 class="pullquote">ANBANG&#8217;S STARWOOD BID : $12.8 billion</h3>
The scale of this outbound investment wave is so great that the value of deals announced in the third quarter of 2015 exceeded China&#8217;s current-account surplus for the same period, according to data compiled by Bloomberg. That trick will be repeated in the current quarter, unless China puts in its best current-account performance since 2008.
Such deals are on track to run this year at <a id="_mce_temp_anchor" style="color: #000080;" title="DEALMAKER DILEMMA: MARKET VOLATILITY AND M&amp;A" href="http://www.goldmansachs.com/our-thinking/pages/dealmaker-dilemma.html" target="_blank" data-web-url="http://www.goldmansachs.com/our-thinking/pages/dealmaker-dilemma.html">five times the pace of 2015</a>, according to Goldman Sachs&#8217;s co-head of mergers and acquisitions, Gregg Lemkau. &#8220;It feels like this outbound M&amp;A from China is driven from the top; it&#8217;s a desire to get capital outside of China and invest it around the globe,&#8221; he said in a video <a id="_mce_temp_anchor" style="color: #000080;" title="MACROECONOMIC INSIGHTS DEALMAKER DILEMMA: MARKET VOLATILITY AND M&amp;A" href="http://www.goldmansachs.com/our-thinking/pages/dealmaker-dilemma.html" data-web-url="http://www.goldmansachs.com/our-thinking/pages/dealmaker-dilemma.html">posted on the bank&#8217;s website</a>. A possible motivation could be a desire to acquire assets in dollars and euros ahead of a devaluation of the yuan, he said. 
All this could be seen as a welcome opening of the economy. The preponderance of private money in the recent flood, however, lends a murkier quality to the trend.
Fully 63 percent of the value of outbound deals announced since the start of 2015 was driven by closely held companies, rather than those traded on public markets and accessible to ordinary investors, according to data compiled by Bloomberg. That&#8217;s up from 47 percent over the previous five years, the data show.
<h3>Trickle Becomes a Flood</h3>
Money from closely held companies is accounting for a growing proportion of China&#8217;s outbound M&amp;A
<a href="http://www.dealstreetasia.com/wp-content/uploads/2016/03/Fullscreen-capture-15-03-2016-184055.bmp.jpg" rel="attachment wp-att-34188"><img loading="lazy" decoding="async" width="971" height="436" class="aligncenter size-full wp-image-34188" src="http://www.dealstreetasia.com/wp-content/uploads/2016/03/Fullscreen-capture-15-03-2016-184055.bmp.jpg" alt="bloomberg data" srcset="https://media.dealstreetasia.com/uploads/2016/03/Fullscreen-capture-15-03-2016-184055.bmp.jpg?w=971 971w, https://media.dealstreetasia.com/uploads/2016/03/Fullscreen-capture-15-03-2016-184055.bmp.jpg?resize=768,344 768w" sizes="(max-width: 971px) 100vw, 971px" /></a>
That China is investing overseas rather than hoarding capital at home can only be a good thing. But ordinary Chinese citizens, frustrated by the restrictions on moving relatively small sums out of the country, could be justified in asking who benefits from these transfers by companies with vast pools of cash.
That&#8217;s particularly the case if any devaluation is in the offing. With China potentially facing worryingly low levels of foreign-exchange reserves by July, <a id="_mce_temp_anchor" style="color: #000080;" title="When $3 Trillion Just Isn't Enough" href="http://www.bloombergview.com/articles/2016-02-04/for-china-even-3-3-trillion-may-not-be-enough">according to economist and Bloomberg View contributor Christopher Balding</a>, smaller investors hoping to diversify their exposure to the economy are running out of luck. All those new restrictions on capital flight are clogging up the exits, while <a id="_mce_temp_anchor" style="color: #000080;" title="The Chinese Dealmaker Following Buffett's Lead" href="http://www.bloomberg.com/news/articles/2016-03-14/behind-anbang-s-deal-making-a-bold-buffett-of-china-rises" target="_blank">bigger investors with better connections </a>get on the lifeboats.
Also read:
<a style="color: #ff0000;" title="China’s Bank of Tianjin looking at raising up to $1.23b in HK offering" href="http://www.dealstreetasia.com/stories/bank-of-tianjin-investors-seek-up-to-1-23-billion-from-ipo-34116/" rel="bookmark">China’s Bank of Tianjin looking at raising up to $1.23b in HK offering</a>
<a style="color: #ff0000;" title="Behind Anbang’s dealmaking, a bold Buffett of China rises" href="http://www.dealstreetasia.com/stories/behind-anbangs-dealmaking-a-bold-buffett-of-china-rises-34079/" rel="bookmark">Behind Anbang’s dealmaking, a bold Buffett of China rises</a>
<a style="color: #ff0000;" title="China Overseas Land to buy CITIC property in $4.8b deal" href="http://www.dealstreetasia.com/stories/china-overseas-land-in-4-8b-deal-to-buy-property-assets-from-citic-34026/" rel="bookmark">China Overseas Land to buy CITIC property in $4.8b deal</a>
<h4>Bloomberg</h4>

After a $1 trillion river of capital flowed out of China during 2015, the government has been working furiously to avert a flood.

China deal binge shows biggest investors find lifeboats

Bring stories like this into your inbox every day.

Sign up for our newsletter - The Daily Brief

China deal binge shows biggest investors find lifeboats

Start your deal-making journey now!

Bring stories like this into your inbox every day.

Sign up for our newsletter - The Daily Brief