What China’s Electricity Usage Says About Growth

Although China’s economic growth remained unchanged in 2013 from 2012 at 7.7%, the country’s electricity data tell a more positive story.

Chinese electricity production grew 7.6% last year to 5.2 trillion kilowatt hours, according to data released Monday by the National Bureau of Statistics. That was faster than growth of 4.7% in 2012.

The country’s electricity consumption also corresponded with the increase in production. Electricity usage grew 7.5% last year to 5.3 trillion kilowatt hours, faster than a pace of 5.5% in 2012, according to data released last week by the country’s National Energy Administration, as energy-intensive industries such as steel production boosted power demand.

Most of the increase in last year’s power consumption was due to the industrial sector, which accounts for nearly three-quarters of total power consumption. China’s industrial sector consumed 3.9 trillion kilowatt hours of electricity last year, up 7% from a year earlier and accelerating from a growth rate of 3.9% in 2012. China’s steel output, for example, grew 7.5% in 2013, faster than a pace of 3.1% in 2012.

Meanwhile, although the services sector accounts for only 12% of Chinese electricity demand, it has posted annual double-digit growth rates since 2010 as a result of central government efforts to pivot the economy away from the industrial sector. Electricity consumption by the services sector grew 10.3% to 627.3 billion kilowatt hours in 2013.

Chinese Premier Li Keqiang once said he believed electricity output was a better indicator of economic growth than GDP data. If that were true, the country’s economic outlook might be more positive than official numbers suggest.