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Would the decoupling of electricity occur along with economic growth? Empirical evidence from the panel data analysis for 100 Chinese cities

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  • Hao, Yu
  • Zhang, Tianli
  • Jing, Leijie
  • Xiao, Linqi

Abstract

In recent years, the rapid development of China’s economy has significantly stimulated demand for electricity consumption. After China’s economy entered the phase of “New normal” with moderately lower growth rates, the growth of electricity consumption has also slowed down, and there seemed to be a trend of gradual decoupling between these two variables. To investigate whether and how electricity consumption changed along with economic growth, 100 prefecture-level cities’ dynamic panel data are used in this study to examine the relationship between the decoupling indicator of electricity consumption and economic growth. To control for the potential endogeneity, the first-order difference Generalized Method of Movements (GMM) estimator is employed. The empirical results indicate that the relationships between the decoupling indicator of electricity consumption and real GDP per capita differs across different regions. For the whole nation and the eastern region, there is a significant “inverted N-shaped” relationship between the two factors, and decoupling indicators are still rising along with economic development. In contrast, in the central and western regions, there is a significant “N-shaped” relationship between the two factors. Besides, other macroeconomic factors, including industrial structure, FDI and financial investment in technology, may also affect the decoupling indicator of electricity consumption.

Suggested Citation

  • Hao, Yu & Zhang, Tianli & Jing, Leijie & Xiao, Linqi, 2019. "Would the decoupling of electricity occur along with economic growth? Empirical evidence from the panel data analysis for 100 Chinese cities," Energy, Elsevier, vol. 180(C), pages 615-625.
    • Handle: RePEc:eee:energy:v:180:y:2019:i:c:p:615-625
    DOI: 10.1016/j.energy.2019.05.014
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