Do urbanization, income, and trade affect electricity consumption across Chinese provinces?

The aim of this paper is to investigate the short- and long-run links among urbanization, output (Gross Domestic Product, GDP), trade openness, and electricity consumption in China, using a rich dataset at the provincial level. Short-run Granger causality analysis discloses a unidirectional causal relationship running from electricity to output and weak feedback effects between trade and urbanization. Long-run Granger causality analysis shows output, urbanization, and trade trigger electricity consumption whereas trade, urbanization, and electricity cause output. Group Mean and Lambda-Pearson causality tests reveal a large heterogeneity in the long-run effects which suggests there is no “one-size fits all” policy and each region should formulate a differentiated urbanization/growth strategy based on its own characteristics to control electricity utilization.