Chart of the Day: China’s Accelerating State-Sector Consolidation
A recent spate of consolidation in the shipping industry has shed light on Beijing’s continued effort to reform its state-owned enterprises (SOEs).
Early this month, the country’s two largest shipbuilders, China State Shipbuilding Corp. and China Shipbuilding Industry Corp., announced a possible merger that if successful would form the world’s largest shipbuilder.
That move was a precursor to another merger last week, in which Shandong province’s biggest port revealed that it is set to gobble up a smaller rival by taking a 100% stake.
Since 2015, Beijing has embarked on an effort to consolidate the country’s bloated state-owned sector to pare down leverage and increase global competiveness. Most of China’s major SOEs were carved out from former monopolies that executed Beijing’s directives when the country’s economy was subject to a greater degree of central planning than today.
More mergers and acquisitions (M&A) in the SOE sector are likely this year, according to data from Hithink RoyalFlush Information Network, a financial news service provider.
There were 644 proposed M&A deals in the state sector from January to June this year, versus 281 in the same period last year, the data showed. The estimated transaction amount of such deals in the first six months is expected to triple year-on-year to 590.3 billion yuan ($85.8 billion).
Contact reporter Jason Tan (firstname.lastname@example.org)
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