Potevio was integrated into China Electronic Technology Group Corporation as a wholly owned subsidiary after the State Council approved the move. It will no longer be directly supervised and administrated by the State-owned Assets Supervision and Administration Commission, the commission announced on Wednesday via its news center WeChat account.

AVIC Securities said the joining of Potevio will strengthen CETC advantages in scale, innovation and market, making CETC's strategic role more prominent. Potevio and CETC are both centrally administered State-owned enterprises whose businesses cover communication industry and other related fields.

CETC is regarded as the "national team" of the internet and information industry, and plays a leading technical role in military electronics industry in China.

Data on the website of CETC showed as of June 23, the enterprise owned 11 listed firms with a total market value of 666.19 billion yuan ($102.85 billion).

As of June 23, Potevio owned four listed firms, with market value of 13.8 billion yuan, 522 million yuan, HK$392 million and 5.54 billion yuan, respectively, according to its website.

ChinaFund calculated the total market value of the two central SOEs reached up to nearly 700 billion yuan.

The integration of Potevio and CETC is thought by insiders of significant meaning for SOE reform, the ChinaFund reported. First, it helps to concentrate resources, tackle key problems and solve the supply shortage of China's high-end industrial chain.

Second, it will take advantages of national policies and industrial orientation to have State-owned enterprises cooperate with each other, so they could make breakthroughs in basic materials and key core technologies in promoting China's capability to solve the cutthroat problems.

Third, it facilitates the application of military technology to civilian use and the form of a virtuous cycle of technology conversion into products guided by market demand.