In the first quarter of 2025, China’s GDP expanded by 5.4% year-on-year, while nationwide electricity consumption grew just 2.5%—a 2.9% divergence that reversed the trend of electricity growth outpacing economic expansion in recent years. Traditionally, robust economic activity would drive higher electricity demand, yet the data suggests a decoupling. What explains this gap?
Two non-recurring variables played a role. First, 2024 was a leap year, adding an extra day to Q1 2025 and inflating the electricity consumption base. Analysts estimate this alone reduced Q1 2025’s electricity growth rate by 1.2%. Second, warmer-than-average temperatures, particularly in central regions like Hubei, Hunan, Henan, and Anhui—where winter residential electricity demand is typically high—curbed heating-related electricity use. Urban and rural residential electricity consumption rose only 0.1% in the first two months. Additionally, milder weather lowered electricity loads in some secondary and tertiary industry sectors nationwide.
Combined, these factors acted as a “brake” on electricity growth. Adjusting for the leap year, daily average electricity consumption growth would have reached 3.7% in Q1 2025, slightly exceeding the 3.6% rate in Q4 2024. This suggests short-term climatic and calendar-related distortions, rather than fundamental shifts, explain the data discrepancy.
Even after excluding these temporary factors, a significant gap persists, driven by structural changes in electricity use. The secondary industry, a major electricity consumer but slower-growing sector, is the primary culprit. Slow electricity demand growth in manufacturing and construction contributed meaningfully to the overall shortfall. For instance, adjustments in the real estate market reduced demand in related industries, while a downturn in the photovoltaic sector lowered electricity use in electrical machinery and equipment manufacturing. Meanwhile, the automotive industry’s shift toward high-end production boosted value-added output but lagged in electricity consumption growth. These dynamics have transformed the secondary industry from a driver of above-GDP electricity growth into a drag.
Some question whether slower electricity growth signals flagging economic momentum. However, this gap should not be misinterpreted as “hollow growth” or statistical anomalies but rather as a hallmark of developmental stage transition. Global experience shows that as economies restructure and growth drivers shift, electricity consumption growth gradually decouples from GDP expansion—a sign of maturity.
China is accelerating industrial upgrades, pivoting from energy-intensive, high-pollution sectors to low-consumption, high-value-added industries. While this transition may temporarily dampen electricity growth, it supports sustainable development by enabling greater economic output with less energy. It reflects a shift toward more efficient, greener growth. Looking ahead, the relationship between electricity and the economy will continue evolving with breakthroughs in energy technology, adjustments to the energy mix, and climate shifts.
