Chinese investor sentiment toward mergers and acquisitions has cooled further amid concerns of slowing economic growth, according to an Ernst & Young survey released on Tuesday.

With corporate finances and funding conditions improving and valuations declining somewhat over the past few months, the deal-making climate has become increasingly favorable. However, Chinese investors' appetite for M&As is lackluster as they become less optimistic about the domestic economy.

In fact, Chinese executives expressed reduced interest in engaging in M&A activities in the coming months, according to the survey, in which 1,500 executives across the globe were interviewed in April.