French train manufacturer Alstom (ALSMY) is merging with the transportation unit of Germany's Siemens (SIEGY) to fend off Chinese competition.

The German company has been pursuing partners for its railway business, reportedly holding talks with Swiss manufacturer Stadler Rail and Canadian rival Bombardier (BDRAF).

The moral of the deal is to tackle China’s growing business in global markets.

Beijing stepped up its efforts in 2015 by merging two big companies into state-backed giant CRRC, which describes itself as "the world's largest supplier of rail transit equipment."

Since the merger, CRRC has won major contracts to supply metro cars to Boston, Chicago, Melbourne and other cities.

"With CRRC seeking to expand into overseas markets, a note to clients.

French President Emmanuel Macron has been pushing for closer economic cooperation in Europe, including the creation of regional "giants" capable of competing with Chinese and American rivals.