(Beijing) — Two of China's largest steel makers have received regulatory approval to merge by the end of this month — part of Beijing's plan to cut overcapacity and nurture bigger, more-competitive industry leaders.

The planned merger of China's second-largest steel maker, Shanghai-based Baosteel Group Corp., and smaller rival Wuhan Iron and Steel (Group) Corp. (WISCO), won approval for the deal in late August from the State-owned Assets Supervision and Administration Commission (SASAC), which overseas state-owned companies. The plan has been submitted to the State Council, China's cabinet, for final review and approval, which is expected later this month, several sources close to the merger told Caixin.