How much have electricity shortages hampered China's GDP growth?

How much have electricity shortages hampered China's GDP growth?

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Article ID: iaor20131531
Volume: 55
Issue: 5-6
Start Page Number: 369
End Page Number: 373
Publication Date: Apr 2013
Journal: Energy Policy
Authors: , ,
Keywords: economics
Abstract:

Based on an econometric analysis of the annual growth data for China's GDP and electricity generation from 1953 to 2010, we find that electricity generation growth Granger causes GDP growth, but not vice versa. We also find that the GDP elasticity of electricity generation is about 0.6, implying that a 1% increase in China's electricity generation growth would increase GDP growth by 0.6%. While Deng's reform raised China's GDP growth rate by about 5% per year, it did not alter the GDP elasticity of electricity generation. Hence, an obvious strategy to promote China's economic growth would be accelerating electricity generation expansion. Rapidly adding thermal generation units, however, could have large‐scale, adverse environmental impacts. We therefore support China's 2011 five‐year plan, which calls for expanding investments in renewable energy, conservation and energy efficiency as well as improving China's integrated electricity planning and cost‐based pricing decisions.

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