BEIJING (Reuters) – China will likely cut the number of its central government-owned conglomerates to 40 through massive mergers, as Beijing pushes forward a sweeping plan to overhaul the country’s underperforming state sector, state media reported on Monday.
The consolidation will first take place in commercial sectors, especially in competitive industries, said the official newspaper Economic Information Daily, quoting an anonymous authority.
“Resources will be increasingly concentrated on large enterprises to avoid cut-throat competition, like what CSR Corp Ltd and China CNR Corp Ltd did when competing against each other for projects overseas,” the newspaper said.
The restructuring plan is critical to President Xi Jinping’s broader push to raise the performance of China’s lumbering state sector, at a time when Beijing struggles to find the right policy mix to support the world’s second-largest economy that grew in the first quarter at its slowest pace in six years.
The policy-directed merger of state-owned CNR and CSR, China’s top two train makers, created a $26 billion company able to win global rail deals from rivals such as Germany’s Siemens AG and Canada’s Bombardier Inc.