Regional Electricity Demand and Economic Transition in China

China’s economy is going through a major transition, characterized by a slower growth rate, a structural shift to the tertiary (service) sector, and industrial deleveraging—a process to reduce overcapacity that has built up in key industrial sectors over the past decades. Given the uncertainties that China is facing during its current economic transition, it is important to examine whether future electricity consumption will continue to grow rapidly or grow more slowly in the medium term. This analysis examines the relationship between electricity consumption, gross domestic product (GDP), economic structure, and overcapacity in heavy industries in China, using provincial-level data from 1995–2015. The results provide valuable insight on the trend in future electricity demand, given that key features in China’s economic transition are likely to continue in the foreseeable future.