By reorganizing Xidian, Xuji, and Pinggao, China will give birth to a power‑equipment group with revenues in the hundreds of billions.

middle A hundred-billion-yuan‑scale industry giant is poised to emerge in China’s power equipment sector.

According to a July 27 report by the Nengjian app, a new state-owned enterprise formed through the restructuring of power‑equipment companies—including China XD Group Co., Ltd. (hereinafter referred to as China XD Group), Xuji Group (hereinafter referred to as Xuji), Pinggao Group (hereinafter referred to as Pinggao), and Shandong Electric Power Equipment Group—is set to be officially listed.

The report stated that the listing is expected to be announced in August, and the new central state-owned enterprise will be named China Electric Power Equipment Group.

Financial data show that the combined total assets of the aforementioned four companies approach RMB 120 billion.

“The power transmission sector is now experiencing overcapacity, and the restructuring has long been finalized,” an insider at State Grid Corporation of China (hereinafter referred to as State Grid) told Interface News. The China XD Group’s business overlaps significantly with that of XJ Electric, Pinggao, and Shandong Electric Power Equipment Group, making this merger essentially a consolidation among industry peers.

At a press conference held on July 16 by the State Council Information Office on the economic performance of central enterprises in the first half of the year, Peng Huagang, Secretary-General and Spokesperson of the State-owned Assets Supervision and Administration Commission, stated that the restructuring and consolidation of central enterprises in sectors such as steel and power transmission and distribution equipment manufacturing will be advanced steadily, and that new central enterprise groups will be actively cultivated and established at an appropriate time in relevant fields.

Peng Huagang noted that, in terms of specialized integration, the goal is to strengthen and refine core businesses, with leading enterprises taking the lead. Through methods such as gratuitous transfers, paid acquisitions, and equity‑based partnerships, vigorous efforts are being made to advance specialized consolidation. He also urged newly established, newly incorporated, and newly restructured central enterprises to intensify the internal integration of their resources, fully tap synergistic benefits, enhance the efficiency of resource allocation, and promptly achieve the anticipated objectives of the reform.

The strategic restructuring of power‑equipment enterprises will be a pivotal step in State Grid’s ongoing divestiture of non‑grid assets, and it also represents a challenging milestone in the “separation of core and ancillary businesses” phase of the power‑sector reform.

XJ Group, Pinggao, and Shandong Electric Power Equipment Group are all directly affiliated industrial companies under the State Grid Corporation of China’s manufacturing business segment.

Among them, Xuji is a leading enterprise in the high-voltage direct current transmission sector and in secondary equipment, focusing on power, automation, and intelligent manufacturing. Its core business spans five major areas: ultra-high-voltage transmission, smart grids, new‑energy generation, electric‑vehicle charging and battery‑swapping, rail transit, and industrial intelligence.

Pinggao is a leading enterprise in China’s switchgear sector, founded in 1970, and serves as both a manufacturer of power equipment and a systems integrator.

Zeng Ming, a professor at North China Electric Power University and director of the Energy Internet Research Center, told Interface News that grid operations constitute a natural monopoly, while equipment manufacturing—represented by companies such as XJ Group and Ping An—is a market‑competitive sector. Mixing these two sectors could give rise to cross-subsidization and related-party transactions, thereby undermining the prospects for more robust and equitable market competition.

Following the separation of companies such as Xuji and Ping’an from the State Grid, tendering and bidding will become more equitable, helping to reduce transmission and distribution costs and aligning with the reform agenda while responding to the broader trend of reform and development.

The power transmission, distribution, and control equipment industry is a key strategic sector in China, closely linked to the electric power industry, and bears the responsibility of supplying the electrical equipment necessary for national economic development, national defense, and the electrification of people’s daily lives.

In recent years, the long-term growth potential of China’s power industry has provided ample room for development for manufacturers of transmission, distribution, and control equipment.

However, certain segments of China’s power‑equipment industry are currently experiencing overcapacity. According to a report by the EPTC Power Technology Collaboration Platform, some enterprises with relatively weaker competitiveness may face restructuring, mergers, or acquisitions.

China XD Group is the only central enterprise in China whose core business is the complete transmission and distribution industry, established in July 1959. The Group has successively supplied complete sets of transmission and distribution equipment and services for numerous first‑of‑their‑kind AC and DC transmission projects nationwide, as well as for major national projects such as the Three Gorges Project, the West-to-East Power Transmission Program, and ultra‑extra‑high‑voltage AC/DC systems.

In addition to Xuji, Pinggao, and Shandong Electric Power Equipment Group, the State Grid’s manufacturing business segment also includes NARI Group and State Grid Information & Communication Industry Group as its directly affiliated industrial companies.

By the end of 2018, reports indicated that the aforementioned five companies were slated to be partially or fully spun off from State Grid Corporation of China, with the relevant plans still under development.

On December 23, 2020, China XD Electric (601179.SH), XJ Electric (000400.SZ), and Pinggao Electric (600312.SH) announced that XJ and Pinggao are in the process of planning a strategic restructuring with China XD Group. This marked the first official disclosure of signals regarding the restructuring.

Compared with Xuji and Pinggao, NARI Group is a key entity that State Grid is determined to safeguard.

Regarding whether NARI Group will be acquired, a senior power industry insider who asked not to be named told Interface News, “At present, negotiations are still ongoing; reportedly, a portion of the company is slated to be spun off into State Grid.”

According to Interface News, NARI Group’s scale surpasses the combined size of Xuji, Pinggao, Shandong Electric Power Equipment, and State Grid Communications. The company is also heavily involved in non‑traditional electrical equipment manufacturing, with core businesses spanning relay protection, automation, and information‑digitalization technologies, and has long been regarded as the State Grid’s flagship enterprise.

Founded in 1993, NARI—also known as State Grid Electric Power Research Institute Co., Ltd.—is a research and industrial entity directly affiliated with the State Grid Corporation of China. It owns the listed company NARI Technology (000406.SZ).

In March 2020, State Grid Corporation of China accelerated its efforts to divest non-core businesses. To date, it has successively transferred shares in Luneng Group and Guozhong Kangjian Group Co., Ltd., and has also transferred, without compensation, a 40% stake in Luneng Taishan Football Club and a 40% stake in Shandong Luneng Table Tennis Club Co., Ltd., among others.