Analysis of Electricity Price Policy and Economic Growth

This study presents the dynamic influences and changes of economic development on which the electricity price policy impact through theoretical model in China. The results show that from the static point of view, low electricity price level seems to be good for economic benefits. However, from a long-term and dynamic point of view, low electricity prices and economic development is not only having no obvious positive correlation, but instead a significant negative correlation. The emergence of this situation is mainly affected by short-term GDP and government officials in the pursuit of political achievements. In the short-term, low electricity price may promote the economic development. However, low electricity price will induce the development of high energy-consuming and low value-added industries in the long run, which is not good for the optimization and upgrading of industrial structure. Therefore, the low electricity price policy ultimately goes against economic development.