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China just approved the world's largest power company with more than 225 gigawatts of capacity

Key Points
  • Electricity producer China Guodian and coal company Shenhua Group to merge.
  • Most energy of new entity generated from coal.
  • Beijing on drive to cut waste at huge state-owned enterprises.
Workers unload coal at a storage site along a railway station in Hefei, Anhui province.
Jianan Yu | Reuters

The Chinese government approved the merger of electricity producer China Guodian and coal company Shenhua Group on Monday in a move that will create the world's largest power company by capacity.

Beijing authorities confirmed the deal in a one line statement posted Monday from The state-owned Assets Supervision and Administration Commission.

According to Bloomberg data, the joint companies will command combined assets of $271 billion and will have installed capacity of more than 225 gigawatts.

Both Guodian and Shenhua have subsidiaries with shares traded on stock exchanges in Hong Kong and Shanghai.

The company will reportedly generate most of its energy from coal.

Reforming SOEs

China is in the midst of a drive to make its state-owned giants less wasteful.

In May 2016, Beijing ordered state firms to trim their management to three or four layers and cut subsidiaries by a fifth in three years.

And in July this year, Chinese authorities said they wanted to turn all big companies owned by the central government into limited liability firms or joint-stock firms by the end of 2017.

Beijing has said the restructuring will help firms set up operations that can react more quickly to market demand.

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