Financial Times reports that China is preparing a fresh round of megamergers between state-owned behemoths in the energy, heavy machinery and steel sectors, as hopes fade for a more fundamental overhaul of the state sector. State-owned enterprises account for more than a third of total investment and receive almost 30 per cent of bank loans but generate less than a tenth of total gross domestic product, according to Gavekal-Dragonomics, a Beijing-based research provider..."The ongoing wave of megamergers has both domestic and international aims," says Wendy Leutert, a PhD candidate in government at Cornell University who is completing a dissertation on SOE reform. "At home, the Xi administration hopes mergers will enable state firms to co-ordinate excess capacity cuts and boost pricing power. Abroad, the goal is to increase national champions' market share, eliminate price wars, and integrate upstream and downstream industries." ...Coal producer Shenhua Group is reportedly in merger talks with China Guodian Corp, part of a broader effort to consolidate the power sector. If approved, the combined group would have $262bn in assets. In March, the listed arms of China National Nuclear Corp and China Nuclear Engineering & Construction Corp said their unlisted parent companies would merge, creating an $80bn group.China National Machinery Industry Corp won approval last month to absorb textile machinery producer China Hi-Tech Group, a combination worth $52bn in assets. China National Machinery acquired another central government-owned machinery group, China National Erzhong, in 2013. Following the tie-up of Shanghai Baosteel with Wuhan Iron & Steel last year, which created the world's second-largest producer, local media is rife with rumours about the next steel merger.