China will merge two of its biggest state-owned shipping companies, official media reported Friday, as the government seeks to reform lumbering public companies to try to bolster growth.

The State Council, China's cabinet, approved the restructuring of China Ocean Shipping Group, known as Cosco, and China Shipping Group, the State-owned Assets Supervision and Administration Commission (SASAC) said on its website.

It did not detail how the restructuring will be carried out, but the official Xinhua news agency said the two would merge.

"Both COSCO and China Shipping have struggled to be competitive, with overlapping investments, high costs, similar business operations and industrial chains," it quoted their chairmen as saying in a joint statement.

Cosco is the largest shipping company in the country by fleet size, and China Shipping Group has total assets of 200 billion yuan ($31.1 billion), according to their official websites.

Under a merger the new entity would have a 7.7 percent share of the global container market and become the fourth-biggest company in the industry, Bloomberg News reported earlier, following APM-Maersk, Mediterranean Shg Co and CMA CGM Group, according to Alphaliner's ranking.

But the global shipping industry is in the grip of a long-term downtrend and a merger will give the Chinese firms an opportunity to benefit from economies of scale.

It was not clear whether the move might be subject to regulatory approval in the European Union or United States, even though Western multinationals have had to secure the green light from Chinese authorities for some of their deals.

The approval followed news of the merger of two of China's largest metals firms, China Minmetals Corp and China Metallurgical Group Corp, announced earlier this week.

China, the world's second-largest economy, says it is overhauling its dominant state-owned sectors as it grapples with stalling growth.

SASAC said separately that loss-making state-owned enterprises (SOEs) would be given two years to improve their performance, and that firms which made losses for three years could face closure, Bloomberg News reported.

Beijing has already merged its top two train makers -- China CNR Corp and CSR Corp -- into a single conglomerate, aiming to avoid competition between the two as China vies for lucrative rail contracts overseas against industry giants such as Germany's Siemens and Bombardier of Canada.

Xinhua said in April that China was considering merging scores of its biggest SOEs to create around 40 national champions.

Total revenue from national SOEs dropped 7.1 percent year-on-year to 13.21 trillion yuan ($2.16 trillion) in the first half of 2015, data from the finance ministry showed.

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