Train manufacturers China North Railway (CNR) and China South Railway (CSR) have received governmental approval for their proposed merger.

The China Securities Regulatory Commission (CSRC) and China’s Commerce Ministry have now approved the merger plan between these two state-owned train makers.

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CNR and CSR have also received approval from the CSRC reorganisation vetting committee.

"This merger will help the Chinese companies to compete with rivals in the market such as Bombardier and Siemens."

However, the companies said that the merger is still subject to obtaining relevant approval by the CSRC and the Whitewash Waiver not having been withdrawn or revoked.

In January, both the companies announced the merger plan to form a new $26bn company.

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Reuters earlier reported that this merger will help the Chinese companies to compete with rivals in the market such as Bombardier and Siemens.

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A joint statement by the companies earlier stated that this development is expected to enhance efficiency in the use of resources, effectively reduce operating costs and to realise the internationalisation strategy.

CNR and CSR currently have annual revenues of $16bn each and a combined market capitalisation of $26bn.

It is estimated that the new company will have a combined annual revenue of approximately $32.71bn.

The Chinese Government separated these companies in 2000 in order to increase competition in the country’s train manufacturing market.