China’s 2025 Investment Banking Fees Rebound: Trends in M&A, ECM & DCM

China’s investment banking industry in 2025 saw a notable recovery following a period of sharp decline in 2024. Total fees climbing to US$15.4 billion across equity, debt, advisory, and lending marks a return toward pre-pandemic levels, although still below the peak breadth of activity seen in 2021 for certain metrics. The primary driver was bond underwriting, which rose by about 11 % YoY to US$11 billion of fees, supported by record primary bond issuance of US$4.1 trillion—suggesting strong demand from government, agencies, and financial institutions.

Equity capital markets (ECM) activity was especially volatile. Having plunged in 2024 (with equity underwriting fees falling as much as ~64 %) to very weak levels, 2025 saw a near-doubling of ECM proceeds to approximately US$124.3 billion, with IPO proceeds up ~82 % (US$26.5 billion) and follow-on offerings surging, especially from a low base. Nevertheless, equity activity remains vulnerable to macro uncertainty, regulatory policy shifts, and pricing pressure. For example, while equity revenues rebounded, they still represent only ~19 % of total fees—far overshadowed by debt markets.

M&A activity featured heavily in the rebound, with US$474.3 billion in announced China-involved deals, up ~62.6 %. A key feature was 18 “megadeals” exceeding US$5 billion, many orchestrated or supported by government injections into state-owned banks. This suggests state-led consolidation is a significant element of this rebound. Cross-border transactions are not rebounding correspondingly: inbound M&A remains extremely low (US$24 billion, lowest since 2009), while outbound has grown modestly. This implies domestic concerns about foreign involvement and regulatory or geopolitical headwinds are still weighing heavily.

From a competitive landscape and margin perspective, however, the recovery masks structural pressures. Earlier in 2024, ECM fees had suffered severe drops, advisory and syndicated lending also weak; in addition, there has been intense price competition especially in bond underwriting, with some underwriters taking mandates with fees near zero to retain or win mandates from large state-dominated issuers. These margin pressures raise questions about profitability even in the face of rising deal count and volume.

Strategic implications:

• Global banks should assess their China presence and client coverage carefully: local firms like CITIC and CICC are dominating underwriting and advisory fees, especially in government-linked transactions.
• Domestic policy and regulatory tone will be critical—especially in cross-border flows, pricing regulations, and how state entities behave in deals. Changes could shift where fees accrue and who wins mandates.
• Margin sustainability is under threat; banks may need to adapt by focusing on advisory offerings, niche sectors, or structuring deals that command premium fees rather than competing on lowest cost mandates.