Two sub-businesses of the State Postal Bureau (SPB), or China Post, are expected to amalgamate within the year, according to sources from one of them, China Post Logistics Co Ltd (CNPL), on Tuesday.

The merger of Express Mail Service (EMS) and CNPL is intended to create a logistics giant to contend with four international firms, DHL, UPS, Fedex and TNT, that have stepped up efforts to penetrate China's market in recent years.

The aim is to reduce operation costs and enhance competitiveness, and experts have called the move urgent as China will open up all its logistics industry to foreign capital at the end of this year.

The new China Post Group Corp is hoped to be an important profiting-making service, and its formation is a part of long-awaited reforms endorsed by the State Council late last month.

The wider reform package focuses on separating the government's administration of the sector from the running of its constituent businesses.

The SPB, currently both regulator and profit-making company, will become responsible for making rules and setting standards independent of business operations. China Post Group Corp will run postal services.

Postal savings, which now contribute 39 percent of total revenue, will also be separated and a new bank formed to run them.

(Beijing Morning Post, translated by Yuan Fang for China.org.cn, August 12, 2005)