Yu Yihua, Zhang Hui: An Analysis of the Dynamic Relationship between China’s Urbanization and Residential Energy Consumption

This issue of Special Report Series is An Analysis of the Dynamic Relationship between China’s Urbanization and Residential Energy Consumption by Yu Yihua, researcher at RUC NADS and Zhang Hui with the School of Economics of RUC.

Based on a review of the relationship among urbanization, energy consumption and residential energy consumption, this report measures the dynamic relationship among urbanization, total urban residential energy consumption and electricity consumption by building the Panel VAR Model of prefecture-level cities. According to this empirical study: (1) urbanization level exerts a relatively weak positive impact on total urban residential energy consumption while posing a relatively strong impact on urban household electricity consumption; (2) by 2020, China’s GDP will reach RMB 90.6 trillion, realizing the goal of doubling the GDP; (3) based on model prediction, China’s urbanization rate will arrive at 63% by 2020, meaning an urban population of 880 million and over 50% of population living in cities of China. Meanwhile, over 10 million rural population will move to cities and towns each year; and (4) by 2020, China’s urban household electricity consumption will reach 511.3 trillion kWh, a 92% rise compared to 2010. Elasticity of urban household electricity consumption will be at 0.7.