China is considering combining Xinxing Cathay International Group Co. with the parent of China First Heavy Industries as part of the government’s overhaul of state-owned enterprises, people with direct knowledge of the discussions said. Shares of the listed units jumped. The plan is preliminary and subject to change, the people said, asking not to be identified because the discussions are private. The two unlisted heavy-industry groups had combined assets of about 170 billion yuan ($26 billion) last year, according to the companies. A merger would follow similar moves in other heavy industries such as railways, with two train-equipment makers combining last year to form CRRC Corp. The government is consolidating state firms—in industries as diverse as asset management, airlines and power-generation—to make them more lean and nimble as China’s economy decelerates to its slowest pace in a quarter century. The two groups didn’t immediately respond to separate e-mailed requests for comment. China’s State-owned Assets Supervision and Administration Commission, the government arm overseeing the largest state enterprises, didn’t immediately respond to a faxed request for comment. Share Surge Jihua Group Corp., a Xinxing Cathay unit that manufactures necessities such as uniforms and shoes for the People’s Liberation Army, reversed from earlier losses and soared as much as 10 percent to 9 yuan, the highest intraday price since April. The stock traded at 8.76 yuan as of 1:16 p.m. in Shanghai. Xinxing Ductile Iron Pipes Co., which makes cast-iron pipes, gained as much as 5.7 percent, the biggest intraday advance since May 25. China First Heavy Industries jumped as much as 8.1 percent to 5.59 yuan in Shanghai, also reversing from a loss earlier in the session, and traded at 5.39 yuan. Liu Mingzhong is chairman of both groups, which may facilitate discussions on any restructuring, the people said. It’s rare for state enterprises controlled by China’s central government to share the same chairman, they said. Xinxing Cathay’s main businesses include metal smelting and processing, as well as textiles and garments, according to its website. First Heavy group provides products and services for industries such as steel and iron, electricity, energy, automobiles and mining, its website shows.