How do the industrial structure and international trade affect electricity consumption? New evidence from China

Abstract

Since the reform and opening up, electricity consumption in China has grown rapidly. However, the energy and environmental problems partly caused by the power generation structure, which is dominated by coal-fired power generation, have deepened, affecting the orderly and sustainable development of electricity. This paper investigates the relationship among electricity consumption, economic output, the industrial structure and international trade at the national and regional levels using 1999–2020 panel data covering 30 Chinese provinces and employing a panel vector autoregression (PVAR) model and quantile regression. The empirical results show that electricity consumption and GDP are mutually reinforcing in the full sample and in the eastern region. Exports have a significant impact on electricity consumption in the short term. A 1% increase in exports in the current period leads to a corresponding increase in electricity consumption of approximately 0.04% in the following period. In the long run, the response of electricity consumption to imports is positive. Establishing a quantity-based renewable energy certificate system and optimizing the export commodity structure in the central region may be effective ways to solve China's current electricity consumption problem.