State Owned Enterprises Mergers Planned for Overhaul of Under Performing Sector
Possible mergers among the central State owned enterprises will be speed up over the next couple of years as the country plans for an overhaul for its under performing sector to further deepen economic reforms. Sectors such as electricity, steel and railways will bear the majority of the mergers amid massive restructuring.
The rare earth industry along with the national strategic significance will be consolidated in hopes to streamline the market and improve competitiveness. According to a statement released by the State owned Assets Supervision and the Administration Commission this state owned enterprises will undergo classified consolidation with the numbers brought down from 112 to 40. All mergers and acquisitions among State owned enterprises are surging as the numbers hit 481 last year with a compound average growth rate of 72.9 percent. The scale of merger and acquisitions assets might exceed $30 billion.
The number continues to increase as a a new wave of merger and acquisitions is seen for the second half of this year and boosted by the country’s made in China 2025 strategy along with the Belt and Road Initiative. State owned consolidations are the heart of China’s economic transformation entailing relocation of resources to shorten overcapacity amid meager domestic demand.
The rare earth industry needs the necessary restructuring as it will help enhance competitiveness globally thus ensuring a sustainable and sound development.