By staff reporter Li Qiyan

On November 5, the State Council, China's cabinet, announced that a total of 4 trillion yuan will be invested in infrastructure and social welfare by the end of 2010, with the aim of boosting domestic consumption and growth amid the worsening global economic situation.

Spending will focus on 10 areas, with emphasis given to construction of low-cost housing, rural infrastructure and transportation, as well as power grids.

A senior analyst of power industry told Caijing that "construction of power grid is a major point in the government's stimulus plan." The State Council announcement outlined a plan to target funds toward improving power the grid system in rural and urban areas, as well as accelerating power grid restoration in the regions affected by the May earthquake.

Despite the stimulus package, many in the power industry say the government's plan still falls short of what was anticipated.

Caijing learned that the State Grid Co. submitted a proposal to further expand investment in grids after the November 5 announcement. The request estimated that the company's new investments in new projects and equipment purchase will reach 100 billion yuan by the beginning next year.

A report from Shenyin & Wanguo Securities said that China's power grid industry will need an additional 48.6 billion to 50.8 billion yuan in investment – on top of the already-planned 760 billion yuan – between 2008 and 2009.

According to Xinhua News Agency, by the end of this year, the State Grid Co. will spend 2.7 billion yuan on equipment purchase, while the Southern Grid Co. will invest an extra 4 billion yuan in construction and 60 billion yuan in renovation projects for power grids over the next two years.

The China Electricity Regulatory Commission (CERC) also suggested the government to expand its investment in new energy development.

"We are conducting research and will soon submit a report to the State Council," said an official from the CERC, adding that the commission will propose strengthening support for new energy, hydropower and nuclear power to the government's stimulus plan.