Electricity–Economy Interactions: Implications for Electricity Policy and Pricing Reform in China

Journal of Money, Investment and Banking ISSN 1450-288X Issue 21 (2011)

10 Pages Posted: 20 Jun 2015

See all articles by Ismail Soile

Ismail Soile

University of Lagos; University of Dundee - Centre for Energy, Petroleum and Mineral Law & Policy (CEPMLP)

Date Written: May 20, 2011

Abstract

With no dependable and reasonably priced electricity, the vehicles that steer industrial productivity and other essential socioeconomic activities will remain redundant. But for an economy as large as China, the task of electricity price reform will require a balance of conflicting socioeconomic interest. To this end, the study examined the direction of causality between electricity consumption and economic growth using Granger causality test on China’s annual data for the period of 1971 to 2009. The test revealed a one-way causation running from electricity consumption to economic growth. The study therefore cautioned against the pursuance of electricity conservation policies and major pricing reforms such as abrupt removal of subsidy or changes in tariff structure as these could constrained consumption and exert far reaching consequences on electricity access by the rural poor and subsequently harm economic growth. Better targeting and or gradual removal of subsidy is advocated.

Suggested Citation

Soile, Ismail, Electricity–Economy Interactions: Implications for Electricity Policy and Pricing Reform in China (May 20, 2011). Journal of Money, Investment and Banking ISSN 1450-288X Issue 21 (2011). Available at SSRN: https://ssrn.com/abstract=2621000

Ismail Soile (Contact Author)

University of Lagos ( email )

Akoka
PMB 4491
Akoka, Lagos State 00234
Nigeria
+2348076184184 (Phone)

University of Dundee - Centre for Energy, Petroleum and Mineral Law & Policy (CEPMLP) ( email )

Nethergate
Dundee, Scotland DD1 4HN
United Kingdom

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