China is poised this week to complete plans for one of the world’s biggest mergers of the year, a $37 billion deal that could be a blueprint for overhauling massive, inefficient state-owned enterprises.

Beijing is using Citic Group, a conglomerate created under Deng Xiaoping as China’s first capitalist enterprise, to change the way the country’s biggest state-owned companies, known as SOEs, are controlled by investors. The merger…