China's Dongfeng denies rumours of merger with FAW and announces Zhu Yanfeng as new chairman

China's second-largest car maker Dongfeng denied rumours of its merger with another auto giant in the country, China FAW Group.

There were media reports that the listed subsidiaries of Dongfeng and FAW would merge, as China's ruling communist party is looking to combine state-owned firms to make them more competitive on an international level.

The rumours led to a surge in the companies' share prices, and the shares were suspended from trading.

In a statement, Donfeng denied the rumours, adding that the company's board had not studied any such merger.

"Neither the company nor its controlling shareholder has received any information... on the above mentioned matters from any governmental authorities, or expressed any relevant intention to any authorities," Dongfeng Motor Group said in a statement to the Hong Kong stock exchange.

Separately, the company said its chairman, Xu Ping, is being replaced by by Zhu Yanfeng, a former chairman of FAW. Zhu is serving as vice secretary of the Communist Party in the northeastern Jilin province.

The company gave no reason for the leadership change, but noted that the decision was made by the ruling party and the State Council.

The Chinese government has the power to shuffle the management of state-owned enterprises at will. Recently, China announced new heads for its three biggest energy companies: China National Petroleum Corp, Sinopec and CNOOC.