A long-anticipated strategic merger between two Chinese shipbuilding state-owned enterprises (SOEs), China Shipbuilding Industry Company (CSIC) and China State Shipbuilding Corporation (CSSC), were announced on Monday. This comes 20 years after they first divided into two companies.

CSIC and CSSC are formulating a restructuring plan for relevant administrative departments, according to announcements from the two companies and six affiliated companies, including China Marine Information Electronics Company and CSSC Science & Technology Co. 

Shares of the eight listed companies, which have reported total assets of more than 330 billion yuan ($48 billion), rose by the 10 percent day limit during morning trading on Tuesday.

The merger, which is still awaiting approval, will give short term encouragement to the shipbuilding sector, but further stock movements are dependent on how the plan is carried out, according to analysts.

"Anything could happen," said Xiao Yaqing, director of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) in a press release in September 2017 when he was asked if the CSIC and CSSC would merge.

Feng Liguo, a research fellow at China Minsheng Bank's research center, told the Global Times on Tuesday that the merger plan between the two major SOEs in shipbuilding and military industry is further implementation of China's mixed-ownership reform to build larger and stronger enterprises.

"Only through inside reform aiming to improve the vitality of enterprises can the competitiveness of companies be strengthened," Feng said.

The merger between the SOEs will not simply mean operating as one company, but will require inside integration and cooperation in order to achieve optimal governance, analysts said.

CSIC and CSSC were divided into two companies in 1999. CSIC was designated the "northern ship", and CSSC became the "southern ship" due to their geographical locations.

Along with four other SOEs, the two companies were listed among the first group of mixed-ownership reform subjects by the National Development and Reform Commission. CSSC was reported to be planning major restructuring in September 2017, and industry insiders predicted at the time that they might be aiming to merge with CSIC.