Big is beautiful? State-owned enterprise mergers under Xi Jinping

Press release

Chinese SOE mergers raise fears of ‘too big to regulate’ companies

 

The past two years have seen a dramatic wave of mergers among China’s central state owned enterprises (SOEs), intended to improve China’s international competitiveness by reducing duplication and damaging price competition between rival companies. These mergers have occurred primarily in the industries of shipping, commerce, construction, steel, services, and energy.

Figure 1: Mergers of Chinese central state-owned enterprises, 2012-2016

However, a new report from the European Council on Foreign Relations reveals domestic criticism in China that these mergers are instead exacerbating existing organisational problems, such as low efficiency, weak oversight, and communication gaps.

More importantly, they are creating giant new monopolies, which the government will find it hard to constrain. ECFR’s Francois Godement said,

“Unquestionably, the job will be harder for regulators and overseers of these giants. But it is equally possible that the central Party-state has simply decided it cannot track and control a plurality of companies.”

Ends

Notes to editors

Francois Godement is available for interview. You can reach him at Francois.Godement@ecfr.eu. Or alternatively, contact the press office.

 

Figure 2: Central State-Owned Enterprise Mergers 2012-2016

Year

Central State-owned Enterprise

Merged Into / Became

2012

China Printing Group Corporation

China Reform Holdings Corporation Limited

2013

Caihong Group Corporation

China Electronics Corporation

2013

China Grain & Logistics Corporation

China National Cereals, Oils and Foodstuffs Corporation (COFCO)

2014

China National Erzhong Group Corporation

China National Machinery Industry Corporation (Sinomach)

2014

China Huafu Trade & Development Corporation

China National Cereals, Oils and Foodstuffs Corporation (COFCO)

2015

CNR Corporation

China Railway Rolling Stock Corporation (CRRC)

CSR Corporation

2015

China Power Investment Corporation (CPI)

State Power Investment Corporation

State Nuclear Power Technology Corporation (SNPTC)

2015

China Ocean Shipping Group Corporation (COSCO)

China COSCO Shipping Corporation Limited

China Shipping Group Company

2015

China Metallurgical Group Corporation

China Minmetals Corporation

2015

Zhuhai Zhenrong Company

Nam Kwong (Group) Company Limited

2015

Sinotrans & CSC Holdings Company Limited

China Merchants Group Company Limited

2016

Chinatex Corporation

China National Cereals, Oils and Foodstuffs Corporation (COFCO)

2016

China International Travel Services Group

China National Travel Service (HK) Group

2016

Wuhan Iron and Steel Corporation

Shanghai Baosteel Group Corporation

2016

China National Building Materials Group Corporation (CNBM)

China Construction Materials Group

China National Materials Group Corporation Limited (Sinoma)

2016

China National Cotton Reserves Corporation

Sinograin

Read the publication online

Read more publications