Electricity consumption and economic growth in China

This paper applies the error-correction model to examine the causal relationship between electricity consumption and real GDP for China during 1971-2000. Our estimation results indicate that real GDP and electricity consumption for China are cointegrated and there is unidirectional Granger causality running from electricity consumption to real GDP but not vice versa. In order to overcome the constraints on electricity consumption, the Chinese government has to speed up the nation-wide interconnection of power networks, to upgrade urban and rural distribution grids, and to accelerate rural electrification.