Liaoning province in northeastern China will form a new company to run its ports, and State-owned China Merchants Group will purchase a controlling stake－in the latest example of the government's intensified efforts to integrate the nation's ports and increase their efficiency.
According to stock filings lodged by three ports on Tuesday night, the restructuring will center on the province's two biggest ports, Dalian Port and Yingkou Port, and there will be a move to integrate the operations of all the ports.
According to the framework agreements, the establishment of the new company and the wider mixed ownership reform is expected to be completed in the current year and the integration of other port operators would be finished by the end of 2018.
"The group will optimize the structure of the assets and boost its bargaining power, greatly enhancing its competitiveness," said Liu Bin, an economist with Dalian Maritime University.
"It has significant meaning for the construction of the Liaoning Pilot Free Trade Zone, the revitalization of the old industrial base in Northeast China and the Belt and Road Initiative," he added.
Currently, Liaoning ports mainly import and export crude oil, liquefied natural gas, iron ore, grains and automobiles.
In 2016, the operating revenue of Dalian Port totaled 12.81 billion yuan (1.88 billion U.S. dollars), three times that of Yingkou Port, but the combined net profits of both were about 531 million and 492 million yuan.
There are several other ports in other cities such as Jinzhou, Dandong, Huludao, and Panjin. Jinzhou Port posted a net profit of 56 million yuan in 2016.
Shares of Dalian Port, Yingkou Port and Jinzhou Port resumed trading on Wednesday and all surged to daily limits.
According to the framework agreement, China Merchants Group will control the Liaoning port group, which will move to promote the development of a major shipping center and related industry in the province.
CMG is a leading State-owned conglomerate headquartered in Hong Kong, under direct supervision of the State-owned Assets Supervision and Administration Commission of the State Council.
At the end of 2016, the company had total assets under management of 6.81 trillion yuan.
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