State Grid, China’s largest utility company, is bracing itself for the rate of economic growth to fall to as low as 4% over the next five years in the world’s second-largest economy, reported the Financial Times.
The state-owned monopoly, which generates and distributes most of China’s power, was known for its bold economic forecasts. But it is now more cautious after being caught off guard by slower-than-expected economic growth and government-ordered cuts in electricity prices in recent years.
Last year at least 10 of the company’s 27 regional operations reported a loss — a record number according to company insiders. As a result, the monopoly is slashing infrastructure spending.
“We used to be more bullish than the market consensus,” said a State Grid official, who asked not to be identified. “Now we are doing the opposite.” State Grid’s capital expenditure has traditionally been seen as a barometer of China’s investment driven economy.