BEIJING -- China has approved the merger of top chemical makers Sinochem Group and ChemChina, creating the world's largest player by far with combined sales exceeding 1 trillion yuan ($152 billion), as Beijing fosters their further growth amid rising tensions with the U.S.
The integration was authorized by the State-owned Assets Supervision and Administration Commission. The two state-owned businesses will go under a new holding company to be wholly owned by the commission.
Sinochem, whose businesses range from chemicals to energy and financial services, earned 13.3 billion yuan in net profit on sales of 586.3 billion yuan in 2019, according to local media.
ChemChina, which has grown through acquisitions including Italian tire maker Pirelli and Swiss pesticide producer Syngenta, posted net profit of 2.7 billion yuan on sales totaling 454.3 billion yuan.
Sinochem and ChemChina have been caught in the trade conflict between Beijing and Washington. The two were among the 11 businesses added in August to the U.S. Defense Department's list of "Communist Chinese military companies" operating directly or indirectly in the U.S. The order bans American investment in those named on the list, including Huawei Technologies.
China had pursued the chemical merger preparations for some time. Ning Gaoning, who took the post of Sinochem chairman in 2016, also became chairman of ChemChina in 2018. The two companies integrated their agribusinesses last June, and Ning in September confirmed that they were "going forward with the merger plans."
The move comes as China intensifies its emphasis on state-run enterprises under the leadership of President Xi Jinping.
"While resolutely consolidating public ownership," the government also will "encourage, support and guide the development of non-public sectors," Premier Li Keqiang told the annual session of the National People's Congress in March.