The Relationship between Electricity Consumption and Economic Growth in China

This paper examine the short and long terms causal relationship between electricity consumption and real GDP in China through vector error correction model, which can avoid the false causal relationship. The results of the VECM reveal the co-integration relationship between real GDP and electricity consumption and the presence of unidirectional causality from electricity consumption to economic growth in the short-run and long-run, which is subsequently verified in two different sub-phases. And then we come up with some suggestions that China should modulate the supply structure of electric power and pick up speed to adjust industry structures.