Illustration: Xia Qing/GT

China CSSC Holdings and China Shipbuilding Industry Corp (CSIC) announced on Monday a plan to merge through a share swap. With market values of hundreds of billions of yuan each, these two prominent shipbuilding companies are set to consolidate into a global industry leader in terms of assets, revenue and order backlogs. This merger will cement China's position as the world's largest shipbuilding country in terms of comprehensive competitiveness.

This merger is anticipated to resolve overlaps between the two companies in the shipbuilding assembly sector and avoid ineffective competition. It exemplifies China's continuous commitment to advancing capital market reform and regulation to support the high-quality development of the real economy and industries.

This is another significant asset restructuring case in the A-share market that has recently gained attention. Since the start of this year, there has been an increase in policies promoting mergers and restructurings among listed companies. The State Council Nine-Point Guideline, released in April, specifically encourages listed companies to utilize mergers and restructurings to enhance their development quality.

Since May, nearly 40 major asset restructuring projects have been disclosed by companies listed on the Shanghai and Shenzhen stock exchanges, according to media reports.

Listed state-owned enterprises are actively pursuing mergers and reorganizations, which can enhance their competitiveness and market position while promoting the healthy development of an entire industry as well as the optimization and upgrading of China's economic structure.

Despite challenges posed by increasing protectionism and "decoupling" in global trade, China's shipbuilding industry has established a strong foundation for sustainable growth. With further integration of resources among large shipbuilding companies and the elimination of inefficient competition, the Chinese shipbuilding industry has the opportunity to make further leaps and bounds.

The merger of China's two largest shipbuilding companies, China Shipbuilding Industry Corp and China State Shipbuilding Corp, in 2019, creating the world's largest shipbuilding group, was a milestone for the development of China's shipbuilding industry.

The earlier merger undoubtedly optimized the industrial layout of China's shipbuilding sector, increased enterprise efficiency, boosted industrial competitiveness, and effectively addressed the challenges posed by anti-globalization and protectionism.

As of 2023, China's shipbuilding industry had ranked first in the world for 14 consecutive years in three major indicators. China's leading position in the global shipbuilding industry remains stable, thanks to national policy support and the cluster effect that has been formed in the domestic shipbuilding industry. The related industrial chain is well developed, with constant technological innovation and upgrading.

China continues to lead the global shipbuilding industry in new orders, mainly due to the cost-effectiveness and improving quality of Chinese shipbuilding. The recent report released by the Korea Institute for Industrial Economics and Trade stated that in 2023, China had surpassed South Korea in overall competitiveness in the shipbuilding industry, ranking first in the world.

The US in April launched a Section 301 investigation into China's shipbuilding sector in an attempt to stymie the development of China's shipbuilding industry. Yet, new shipbuilding orders in China soared 44 percent year-on-year in the first six months of this year to 54.22 million deadweight tons, accounting for nearly 75 percent of the global total, according the Ministry of Industry and Information Technology.

Through the continued integration of industry resources and the optimization of the domestic industrial development environment, the industry is expected to achieve high-quality development. China's shipbuilding industry is poised for strong growth, maintaining its leading position in global competition. 

Moreover, China's shipbuilding industry is benefiting from the ongoing cycle of a new technological revolution and industrial transformation in the global market. As old ships are phased out, environmental regulations are implemented, and international demand for new ships remains strong, China's shipbuilding industry is well-positioned to capitalize on these opportunities and drive further growth.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn