China's state-owned asset regulator yesterday approved the merger of China National Machinery Industry Corp and China High-Tech Group Corp, a step to deepen the country's reforms of state-owned enterprises.
Textile conglomerate China High-Tech has become a wholly owned subsidiary of Sinomach, as China National Machinery is also known, and will no longer be directly supervised by the State-owned Assets Supervision and Administration Commission, the regulator said in a statement.
Sinomach is China's largest machinery group, covering full-scale services and production related to industrial equipment manufacturing. It ranked 293rd in the Fortune 500 in 2016, with 2015 profit totaling 4.8 billion yuan (8 million) on revenue of 222.7 billion yuan.
It has not released its 2016 annual report.
China High-Tech's main business is textile equipment making. It reaped 43.4 billion yuan in sales and 100 million yuan in profit last year.
The merger echoes China's calls for enhanced industrial concentration amid the SOE reforms, especially in thermal power, heavy machinery and steel industries.
China High-Tech's revenues for several years have been relatively small compared with other centrally administered SOEs, said Li Jin, chief researcher at the China Enterprises Research Institute. China's textile manufacturing output will shrink as the country upgrades its industrial sector, he said.
The industry's output grew 5.5 percent last year, below national gross industrial output growth of 6 percent, according to the National Bureau of Statistics.
Although China High-Tech's textile machinery business may be softening, its other businesses such automobiles and heavy machinery could synergize with Sinomach — "a measure to help upgrade China's manufacturing structure and technologies," Li said.
The merger brings down the number of China's central SOEs to 101.
SASAC Vice Chairman Zhang Xiwu said at the end of last year that the number of central SOEs would be cut to under 100 this year.
In March, China National Nuclear Corp and China Nuclear Engineering & Construction Corp announced their merger plans to forge a nuclear giant.