Study of the Relationship between Electricity and National Economy Growth in China from the Angle of Production

From 2003 to 2004, the power shortage has severely hold back the development of Chinese economy, and the study on the relationship between Chinese power and economic development can supply scientific evidences for the economic decisions. The paper raises that studying the relationship should base on the electricity consumption which can produce the value added, not on the total electricity consumption that includes the residential consumption. Based on the GDP and electricity intermediate input during the period of 1986-2005 in China, the Granger -Causality and Error Correction Model are used to examine the relationship by Eview software. The results show that the Granger causality is running from electricity intermediate consumption to GDP, the shortage of the electricity will constraint the increase of GDP. When the electricity intermediate consumption grows I percent, the real GDP will rise 1.21 percent, which is higher than the approach based on the total electricity consumption.