In early November, Beijing issued a new set of draft guidelines aimed to make outbound M&A easier. As part of those new rules, China is streamlining a process for domestic companies investing over $300 million overseas to gain the required approval from authorities, Reuters reported.
Yet at the same time, Beijing will also increase oversight on the investment practices of overseas subsidiaries of Chinese companies. Previously, businesses could set up foreign companies and use funds through them to do deals, thereby skipping many of China's capital outflow restrictions.
Beijing's recent draft followed guidelines it issued in August dictating what kind of overseas investments would be banned, restricted or encouraged. The move formalized Beijing's attempts beginning last November to control what it called "irrational" foreign investments.
But the Chinese government is doing more than just limiting some kinds of deals, it's also explicitly encouraging other kinds: Experts agreed that the government's strong support for the Belt and Road Initiative, which was written into the Communist Party constitution last month, will mean some redirection to related activities in outbound M&A.
The Belt and Road Initiative involves 65 countries, which together account for one-third of global GDP and 60 percent of the world's population, according to Oxford Economics. As such, experts say certain sectors, and countries, are expected to benefit from the expansion efforts of Chinese companies.
Lian Lian, JPMorgan's managing director and co-head of North Asia M&A, told CNBC investments that can "create need for China's industrial capacity [and] manufacturing capabilities" will likely benefit. Those sectors include infrastructure, natural resources, agriculture, trade, culture and logistics. "These are clearly what they outlined as favored industries," she said, referring to the August guidelines.
Overseas deals in those areas are likely to get faster approvals from the government.
Lian added that a few other sectors will also receive government support, even if they were not mentioned in the August guidelines. Those sectors include food safety, health care and investments that can create more employment in China. "These, although they were not specifically listed in the encouraged list, we believe also will bring benefits to China's economy and should receive support," she said.
Overall, Lian said she is optimistic about deal activities next year, but mega deals will remain more challenging than before Beijing's intervention.
Citi's Banfield added that Beijing would also favor investments that enhance China's manufacturing capabilities in equipment and technology, and provide access to exploration and development of offshore resources.
Meanwhile, although the U.S. and the European Union have always been favored destinations for Chinese overseas M&A, there was interest emerging in countries falling under the Belt and Road Initiative, according to Alicia Garcia-Herrero and Jianwei Xu, economists at French investment bank Natixis. Association of Southeast Asian nations, particularly Singapore, as well as South Korea and South Asia have become focal points since the announcement of the initiative, the economists added.
Garcia-Herrero told CNBC that it would be "really impossible" for Chinese overseas spending to exclusively fit into a Belt and Road framework, but investments in heavy assets like industrials and infrastructure would be "mainly Belt and Road-related." On the other hand, she said, more asset-light targets such as health care, retail, services or technology will "continue to be West-driven."