The value of China mergers and acquisitions dropped 18 percent to $348 billion in the first six months of the year, while the volume of transactions increased slightly, according to a recent report.

The report from multinational professional services firm PricewaterhouseCoopers expects a further moderate decline in M&As in the second half of the year.

Between January and June, deal values fell across the four main sub-sectors of M&As: domestic strategic buyers, foreign strategic buyers, private equity deals and Chinese mainland outbound. For example, domestic strategic M&As declined 27 percent in value. Nevertheless, the deal volumes were still the second highest on record.

Waikay Eik, PwC Chinese Mainland and Hong Kong deals leader, said outbound M&As declined for four consecutive half-year periods, since the record highs of 2016. The value of these deals is still about a third higher than the levels before 2016.

PwC's findings showed that Europe displaced Asia as the primary outbound destination in terms of value. Shrinking investment into the United States accounts for a significant proportion of the overall decline in China outbound M&A from its peak in 2016, according to the report.

In the same period, strategic M&As fell 27 percent by value. The report said the slowdown to some extent reflects the Chinese government's commitment to deleveraging, which has had some impact on M&As, particularly among listed companies, the report said.

"Looking at M&A activity by industrial sector, we see that strategic buyer deals in the industrial, metal and chemicals sectors hit record highs," said Leon Qian, PwC China deals north clients & markets leader.

"The technology and finance sectors accounted for more than half the deals for financial buyers, though the $14 billion fundraising for Ant Financial had a big impact on the finance sector in this period."

The report expects a further moderate decline in M&A in the second half of the year. China outbound will continue to slow, but the other sectors (domestic strategic buyers, foreign strategic buyers, PE deals) may remain steady, it said.