Embattled financial technology businesses in China, which have come under tightened regulatory scrutiny, are becoming acquisition targets for banks accelerating their digitalization drive, according to global management consultancy McKinsey. Joe Ngai, Managing Partner for Greater China at McKinsey, said that tremendous changes are taking place in China’s fintech sector amid the clean-up campaign by regulators to ward off financial risks. “The fintech businesses originally envisioned mounting a challenge on established banks, but the new trend is that more partnerships and acquisitions will be seen as the lenders count on the latest technologies to bolster their development.”

Since 2011 peer-to-peer (P2P) lending platforms, third-party mobile payment service providers and online insurers rapidly penetrated into people’s daily lives in the absence of efficient supervision. A wave of collapses in the P2P sector is estimated to put several hundred billions of yuan of investors’ money at risk as many of the operators are found to have illegally raised funds from savers while re-lending them to cash-hungry businesses at high interest rates. The People’s Bank of China (PBOC) is also conducting a thorough inspection of online payment firms across the nation to uproot irregularities. Players including Ant Financial Services, Union Mobile Financial Technology and Gopay have been fined.

A stepped-up regulation is a boon for banks as fintech companies, once perceived as a headwind to the lenders, will have to consolidate their ties with the established and licensed financial institutions to survive the crackdown. “They developed financial technologies, only to find that they are not allowed to offer financial services,” said Ngai. “By the end of the day, big banks will come out and buy them over to boost their digitalization drive.” Chinese banks have become increasingly aware of the significance of developing digital banking as the economy moves towards a cashless society spurred by the widespread use of mobile payments among residents, the South China Morning Post reports.

Vice Premier Liu He has called for international collaboration on robotics, a key part of the country’s plan to lead the world in the technology of the future. At the World Robot Conference in Beijing, he said that while China had made advances in the technology, it was still a fair way behind the world’s best. Vice Premier Liu is responsible for science and technology policymaking in China’s cabinet. In his speech he avoided mentioning “Made in China 2025”, China’s industry master plan that has been targeted by U.S. President Donald Trump. Instead, he stressed the need for concerted joint efforts in robotics.

“We live in a new era. Many challenges cannot be solved by a single company or a country on its own. The challenges facing humanity are much bigger than our differences and conflicts. For instance, robotic development raises many new questions that we need to solve together,” Liu said. He added that China would actively pursue development of the robotics industry by opening up to the outside world, welcoming foreign investment, and protect the legal rights of foreign companies in China. He said that given the robotics industry was still at an early stage of development, China would provide more space for entrepreneurs and scientists to explore and think freely while creating a fair and competitive market environment.

China aims to have a full supply chain of robotic production in 2025, with domestically developed industrial robots serving 70% of the Chinese market. China made more than 130,000 industrial robots in 2017, up about 68% from a year earlier. Beijing expects sales of industrial robots to reach 200,000 in 2020 and 300,000 in 2025. The World Robot Conference was organized by the Beijing municipal government, the Ministry of Industry and Information Technology (MIIT), and the China Association for Science and Technology.

Mergers and acquisitions in China are likely to slow further in the second half as private equity investors put transactions on hold amid the escalating U.S.-China trade war. Industry players also say private equity buyers and business owners are beginning to discuss the impact from the U.S. trade tariffs ranging between 10% to 25% on Chinese companies’ gross margins, and their negotiations are increasingly touching on how to split the additional tariff cost. Inbound deal value into China dropped 20% for the first half of 2018 from the second half of 2017, to USD4.91 billion across 206 deals. That figure includes M&A activity from both corporate buyers and private equity and venture capital sponsors, data from Dealogic shows.

Jeffrey Wang, Managing Director of BDA Partners’ Shanghai office, which advises on cross-border M&A deals, said in the first half the escalating trade friction between China and the U.S. had not affected the pace of private equity M&A activity in China, but if the trade war worsens considerably, more deals will get suspended as supply chains get disrupted. “If trade tensions worsen considerably to the extent that imports affect domestic demand, then it’s conceivable that more deals will get suspended,” said Wang. Completed China-inbound deals dropped by 29% in the first half of 2018 from a year ago while pending deals rose 10 times, according to Dealogic.

Lyndon Hsu, global head of leveraged and structured solutions at Standard Chartered in Singapore, said private equity investors looking at capital goods manufacturers or businesses that have a supply chain embedded within China are most likely to be affected by the trade war. These contrast with businesses that have purely domestic exposure, such as retail services and consumption-focused sectors. Hsu said that if the trade war remains unresolved, and tariffs imposed by the two sides stay indefinitely, then sellers and investors would come to accept new valuation benchmarks, as investors’ capital still needs to be put to work, the South China Morning Post reports.

China’s wealthy families are slightly less optimistic over the prospects for the Chinese economy as economic growth slowed in the year’s second quarter, the Bank of Communications (BoCom) said in a report. The bimonthly Climate Index of China’s Wealth came in flat from two months ago at 141 points in July. A reading above 100 indicates growth in wealth, while that below 100 depicts deterioration. The economic climate sub-index dipped 1 percentage point to 140, that for income growth also slipped 1 percentage point to 155, while the investment intention sub-index added 1 percentage point to 126 from May. The reading of the wealth climate index indicated that well-off families are cautious about the future of the Chinese economy, BoCom said.

China’s economy grew at a slower pace in the second quarter of this year at 6.7% year-on-year, which was 0.1 percentage point below the first quarter’s figure. The year-on-year growth in value-added industrial output was 0.2 percentage points slower in the first six months of 2018 compared with the reading in the January-May period. The June figure fell by 0.8 percentage points from May. The sub-index for economic climate slipped as the indicator of the investment climate dipped one point and that of the employment situation was flat. The report attributed the decline to cooler factory and service activities amid severe weather, weaker external demand and slower price increases. China’s southern areas saw the biggest rise in the Climate Index of China’s Wealth and the sub-index for economic climate. BoCom ascribed the growth to the Cooperation Framework Agreement signed jointly by the Ministry of Commerce (MOFCOM) and the Guangdong provincial government in July to support the province to open up further.

The survey covered 1,827 well-off families in Beijing, Shanghai, Shenzhen and Guangzhou, and 22 other major cities. Different annual after-tax incomes were set to define “well-off families,” with Beijing and Shanghai exceeding CNY240,000, and over CNY180,000 in Guangzhou, Shenzhen, Nanjing and Tianjin, the Shanghai Daily reports.

In the first half of the year, 93 newly-licensed general aviation airports were put into service and the aircraft fleet expanded. The number of general aviation airports more than doubled from 80 by the end of 2017 to 173 by June, according to the Civil Aviation Administration of China (CAAC). The country now has a total of 404 airports which support the take-off and landing of general aviation aircraft. General aviation includes industrial and agricultural aviation, emergency medical services, search and rescue, scientific research and sport aviation. In the first half of the year, civil aviation authorities registered 118 new general aviation aircraft, a 9.5% year-on-year increase, to bring the total to 2,415.

The total number of enterprises in the general aviation industry reached 392 by the end of June. They logged 430,000 flight hours for all kinds of general aviation services, up 14.7% year-on-year. The CAAC has set a target to develop the support system, which includes laws and regulations, supervision, and services, within two to three years. By 2020, China is expected to see 200 new general aviation airports, bringing the country’s total to around 500. The figure is expected to reach around 2,000 by 2030, the China daily reports.