(Yicai Global) Jan. 19 -- Dongfeng Motor poured cold water on speculation that the recent appointment of Changan Automobile’s former chairman as one of its outside directors is a prelude to a merger between China’s three state-owned carmakers. 

An insider at Dongfeng told Yicai Global today that “there is no inevitable relationship between the two and there is no need to over-interpret it.”

Zhang Baolin made his first appearance as an outside director at Dongfeng’s annual work conference on Jan. 15, Yicai Global learned from the Chongqing-based company. His appointment had renewed conjecture about a mega-merger of Dongfeng, Changan and FAW Group.

Zhang, who worked at Changan’s parent company China South Industries Group for 30 years, became Changan’s chairman in September 2017. He stepped down last June and was appointed by the State-owned Assets Supervision and Administration Commission as a full-time outside director of central enterprises.

The SASAC devised these outside directorships to improve the board system at central enterprises. The positions are mainly held by executives with a rich management experience who have retired from state-owned firms.

Speculation over a merger began in 2015 when Xu Ping, Dongfeng’s then chairman, swapped positions with FAW Chairman Zhu Yanfeng. Two years later, Xu exchanged roles again with Xu Liuping, the chair of China South Industries. In addition to the rotation of top executives, the three firms have also put through several personnel exchanges and cooperated over the past five years.

Central enterprises are SOEs directly managed by the SASAC. The State Council set up the SASAC in 2003 to lead the consolidation of central enterprises in a bid to boost their efficiency and turn around long-term losses. After nearly 20 years of work, the number of central enterprises has fallen to 97 from 196.

FAW, Dongfeng and Changan ranked second, third, and fifth among Chinese automakers last year, with annual sales of 3.71 million, 3.46 million and 2 million, respectively, according to data from the China Association of Automobile Manufacturers.

Editors: Dou Shicong, Peter Thomas