Anshan Iron and Steel Group, one of the steel giants in China, would merge with another major steel company soon, General Manager Liu Jie said in Beijing Saturday on the sidelines of the national legislature's annual session.

The merger of Anshan Steel and Benxi Steel, both located in northeast China Liaoning Province, will create China's second largest steel producer with an annual capacity of more than 20 million tons, next only to the Shanghai-based Baosteel, said Liu, without giving any details of the deal.

Baosteel is the first China steel company with annual production exceeding 20 million tons. The company produced 21.38 million tons of steel last year.

Baosteel General Manager Ai Baojun, also a deputy to the national legislature, told Xinhua his company still have a long way to go if it wants compete with multinational steel moguls in production capacity, market share of high-end products, cost advantages, self-owned intellectual property rights and core competitiveness.

Analysts said the merger of the two northeastern steel companies would mark a fresh move of China to sharpen the competitive edge of its large state-owned enterprises, which dominate in major industries concerning the national economy and the people's livelihood.

According to the national state assets watchdog, the State-owned Assets Supervision and Administration Commission, the number of state-owned enterprises of the central government will be cut to 80 to 100, mainly in the industries of resources, energy, metallurgy, automobiles, major plant equipment and commerce and trade.

Li Rongrong, minister in charge of the commission, did not disclose when the 80-100 target could be fulfilled. He said to reach the goal, the state would sell or merge enterprises that deserve it. "Most of them will be transformed into joint-stock companies and the state will not insist that they hold 51 percent of the stakes."

The latest figure, available on the commission's Web site, shows that number of state-owned enterprises of the central government stands at 179.

(Xinhua News Agency March 12, 2005)