The plans were revealed in a statement on the website of the state-owned Assets Supervision and Administration Commission of the State Council, China’s cabinet.
The announcement comes six months after both companies denied plans on merger.
The merger would enable China to establish a shipbuilding giant with a combined revenue up to 1 trillion yuan (US$141.5 billion), building from warships to oil tankers, according to local media.
This move would create a significant risk for put South Korean rivals, which are already struggling as a result of Chinese competition.
An earlier report from Bloomberg indicated that if this merger is completed, the revenue of the new entity will be twice than this of South Korea’s three largest shipbuilders, Hyundai Heavy Industries, Daewoo Shipbuilding & Marine and Samsung Heavy Industries.
CSIC and CSSC were part of the same group until 1999, when they were split into two separate entities.
Since then, China has overtaken South Korea and Japan to become the world’s largest builder of merchant ships.