China is preparing a fresh round of mega-mergers between state-owned behemoths in the energy, heavy machinery and steel sectors, as hopes fade for a more fundamental overhaul of the state sector, the Financial Times reports. State-owned enterprises account for more than a third of total investment and receive almost 30% of bank loans but generate less than a tenth of total gross domestic product, according to Gavekal-Dragonomics, a Beijing-based research provider. In a landmark economic reform blueprint approved in late 2013, top Communist party leaders pledged to “raise corporate efficiency” at SOEs while also ensuring that they “undertake social responsibility.” Analysts say the inherent tension between these two goals has never been resolved. Since then, government-orchestrated mergers have emerged as the primary focus of SOE reform, while progress has been slow in implementing other changes that could boost efficiency, including privatization and increased competition.
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