The deal resurgence mirrors a strong rebound in market confidence and it seems that Chinese companies are pursuing their opportunities before the recovering prices put their target assets out of reach, said the report. Consolidation in many crowded and fragmented sectors like cement and steel has helped trigger an upturn in M&A activities.

The outbound transactions grew to $10.8 billion in the second quarter from $3.9 billion in the first quarter, with the number of deals increasing 17 percent, according to the report.

Outbound investors have not demurred from heading abroad despite Chinalco's headline failure to acquire Australian miner Rio Tinto. Instead, they are taking it as a lesson, said Matthew Phillips, transactions partner at PwC, in the report.

To smooth their way out, Chinese companies need to further improve in risk evaluations and management prowess, or join hands with other investment banks to scoop up distressed assets, said Li Daokui, a senior economist with Tsinghua University.

Listed Companies Profitable

A majority of the listed companies on the mainland reported profit growth in the first half of this year.

A total of 116 listed companies have published their half-year reports and more than 80 percent claim to have made a profit, yet the profit could not match that of last year's.

The 116 half-year reports showed those companies earned 10.2 billion yuan ($1.5 billion) in net profits, down 21 percent year on year.

However, analysts believed with the economic recovery in each industry, company profits will keep a robust growth in the next half of this year. The blue chips have not revealed their reports, but are expected to bring satisfactory reports to the public.

Appliance Program Problematic

Chinese Government program to subsidize rural home appliance purchases seems to be encountering some setbacks.

The subsidies are limited to five kinds of products—TV sets, refrigerators, washing machines, air-conditioners and computers—in a pilot program in nine municipalities and provinces including Beijing and Shanghai. Consumers receive a 10-percent discount when they purchase new appliances.

However, the total sales revenue under the program was $16.23 billion yuan ($2.37 billion) in the first half of this year, making it hard to meet the annual sales target of 100 billion yuan ($14.63 billion), according to the Ministry of Commerce.

Economists blamed the sales gloom on several miscalculations. The complicated and lengthy application procedure for subsidies deterred some farmers from buying, and a majority of farmers still have no idea about the program, according to a survey made by China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

Worse still, some unscrupulous sellers pass used appliances off as new ones, or sell counterfeit products, pouring cold water on the enthusiasm of farmers. Beside this, many grassroots dealers are also losing interest in the program due to tight profit margins.

Liu Haijun, a professor with the Renmin University of China, suggested that the government further strengthen its promotion and regulation of the program, simplify the application procedure, and widen the range of products eligible for subsidies to the real benefits of farmers.