China State Grid Cuts Investment for 2016?

The State Grid Corporation of China (SGCC) cut its 2016 investment budget because the timing of its power transmission projects means less capital is required than last year, its chairman said on Thursday.

The investment cut by SGCC, China’s dominant state power grid builder and operator and a major consumer of copper and aluminium, has added to concerns over dwindling Chinese demand, but Chairman Liu Zhenya said it was just a timing issue.

“(We) do not intend to cut investment, it is just what (our) projects need,” Liu told reporters during a news conference in Hong Kong.

SGCC’s investments in China will rise to 2.3 trillion yuan ($349.68 billion) over the 2016-2020 period, Liu said, up from the 1.8 trillion yuan invested over the last five years.

For 2016, however, investment will fall to 439 billion yuan from 452.1 billion yuan last year.

Liu said the company’s annual investment plans were linked to the progress of its projects. Normally, lower levels of spending are needed during the early stages of a project.

SGCC’s lower 2016 spending comes at a time global investors are worried about China after the world’s second largest economy grew at its weakest pace in a quarter of a century last year.

The State Grid would continue to seek investment projects overseas, its chairman said, saying that while he saw the European market as mature Africa was full of opportunities, without elaborating.

SGCC is seeking partners to develop a global power transmission network, which could cut costs and ease pollution, said Liu, who is also chairman of the power industry body, the China Electricity Council.

He said the construction of any future global grid would need help from governments and enterprises.