China will encourage mergers and acquisitions in the steel, non-ferrous metal, construction material, vehicle and shipbuilding industries next year to accelerate the reform of the industrial structure to boost efficiency and create market leaders.

China will encourage mergers and acquisitions in the steel, non-ferrous metal, construction material, vehicle and shipbuilding industries next year to accelerate the reform of the industrial structure to boost efficiency and create market leaders.

It will also work to reduce obstacles and cut costs in cross-regional or cross-provincial M&As by coordinating with the Ministry of Finance, the Ministry of Land and Resources and the Ministry of Human Resources and Social Security, according to a statement on the Website of the Ministry of Industry and Information Technology.

"These industries are pivotal to China's manufacturing sector," said Li Maoyu, an analyst at Changjiang Securities Co. "The consolidation can greatly enhance their competitiveness and increase their influence on the global market."

Li Yizhong, the minister of industry and information technology, said a guideline to direct M&As in these industries will be announced soon.

One effective method to curb overcapacity is through M&As, and Li has urged steel makers in China to eliminate outdated capacity and refrain from expanding for the next three years to curb excessive production.

Shandong Iron and Steel Group is reported to be planning a significant asset restructuring by merging its listed units, Laiwu Steel Corp and Jinan Iron and Steel Co, into a single company. Its plan follows the merger by Hebei Iron and Steep Group of its three listed arms in September.

(Shanghai DailyDecember 26, 2009)