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No hard landing for economy: KPMG report

By BAO CHANG (China Daily)

08:47, August 16, 2012

KPMG LLP, the global accounting firm, said it does not see a hard landing ahead for China's economy, and has predicted that the economy is set to see stable growth in the second half of 2012.

In its latest research on China's economic globalization, the firm said that Chinese companies have transferred their merger and acquisition ambitions to European and American markets, mainly targeting investment in the energy, power and mining industries.

Peter Fung, global chairman of KPMG Global China Practice, which provides consulting services to Chinese companies investing abroad, said that emerging Chinese enterprises are now shifting their attention to technology investment, and targeting markets in developed economies.

The report said that China's outbound M&A activity is now taking place in 34 countries, and the United States and Canada received the largest investment flows in the first half of the year.

It said that 117 overseas M&A deals by Chinese enterprises were announced during the first half of the year. Some 87 of the deals disclosed had a combined transaction value of $21.63 billion.

"Thanks to the rebound in investment and export demand in the first half of the year, we don't see a hard economic landing in China," Fung said, adding that the economy is likely to see stable growth in the second half of the year.

"Yuan appreciation, government policy encouragement and financial crises in Europe and the US, which reduced purchasing cost, have been the impetus for China to accelerate its overseas M&A," Fung added.

The report showed that China's M&A targets were mainly concentrated in developed countries in Europe and America, but that North America attracted the largest share.

Transactions in North and South America accounted for more than half the total number of deals, followed by Europe's 24 percent, according to the report.

The US received the largest amount of Chinese overseas investment, at a total investment value of $5.74 billion, 27 percent of all investment overseas.

For the first six months, China's non-financial outbound investment reached $35.42 billion, increasing 48.2 percent year-on-year.

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