China’s outbound mergers and acquisitions, or M&A, will rebound this year, thanks to more clarity on relevant policies and a stronger yuan, according to a report from global accounting firm PricewaterhouseCoopers or PwC.

Sectors like technology, industrial products and consumer products will continue to be the main overseas M&A targets of Chinese players.

The latter will seek to bring foreign technologies to the domestic market in order to upgrade the industrial base, and to introduce new intellectual property, brands and products to China, PwC said.

“That will bring the whole M&A levels in 2018 close to－or possibly exceeding－that of 2017. PE (private equity) and financial buyer activities, both domestic and outbound, will also increase under pressure to defray large amounts of capital,” said Wei Guo, PwC’s China transaction services partner.

China’s M&A activities in 2017 were down 11 percent in value terms compared to the record high of 2016, mainly due to a reduction in outbound deals from the Chinese mainland. At $671 billion, the total value of deals last year was roughly equal to the previous record set in 2015.

“While deals are down by both value and volume compared to a bumper 2016, the trend is still strongly upward on a five-year view,” said Wei.

Last year has seen the decline of the value of deals for the China outbound, foreign inbound and financial buyer segments. But the value of domestic strategic deals experienced an increase of 14 percent.

The number of mega-deals (those with a value in excess of $1 billion) declined from 103 in 2016 to 89 last year, mainly because of the fall in China’s outbound deals.

“The government’s policy guidance on outbound deals has had an undoubted effect,” said Wei. “There has been a re-focusing on strategic outbound deals and away from passive or trophy assets. That said, the total value of outbound deals still exceeds 2014 and 2015 combined.”

Traditional private equity and venture capital fundraising, however, continued a strong upward trend in 2017. The Asset Management Association of China reported $1.5 trillion of assets under management by private equity funds at the end of 2017－a sevenfold increase over the last three years.

“Shenzhen and Shanghai were the favored venues, because of higher valuations,” said Effie Yang, PwC’s China transaction services partner.