Macroeconomic impacts of power sector reforms in China

Govinda Timilsina (), Jun Pang and Xi Yang

Energy Policy, 2021, vol. 157, issue C

Abstract: Many countries have undertaken market-oriented reforms of the power sector over the past four decades. However, the literature has not investigated whether the reforms have contributed to economic growth. This study assesses the potential macroeconomic impacts of following the market-based principle in operating and expanding the power system, an important ingredient of the power sector reform launched in China in 2015. The study uses a hybrid modeling approach by coupling a top-down computable general equilibrium model with a bottom-up energy sector TIMES model. The study finds that electricity prices in China would be 20 percent lower than the country is likely to experience in 2020 if the country follows the market principle to expand and operate the power system. The price reduction would spill over throughout the economy, resulting in an increase in the gross domestic product of more than one percent (or more than a billion US dollars) in 2020. It would also have positive impacts on most economic indicators, including household income and international trade. The findings quantitatively highlight the importance of implementing the 2015 power sector reforms in China and further expanding the initiatives in the future.

Keywords: Power sector reforms; Macroeconomic impacts; Computable general equilibrium modeling; Power sector planning; China (search for similar items in EconPapers)
JEL-codes: C68 Q43 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:157:y:2021:i:c:s0301421521003797

DOI: 10.1016/j.enpol.2021.112509

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