Crossing the cross-subsidy: Evidence from China's electricity sector

Wei Wu, Naishan Zhang, Yingying Hu, Dengli Zhou and Houyin Long

Utilities Policy, 2023, vol. 84, issue C

Abstract: Electricity cross-subsidy poses a challenge to the reform of China's electricity system in terms of marketization. This paper measures the size of electricity cross-subsidy in China and examines the impact of eliminating it using the CGE model. In addition, we calculate a compensation variance so that household welfare is not affected. The results show the sum of cross-subsidy was 392.34 billion CNY, of which the subsidies from secondary and tertiary industries were 308.73 and 83.61 billion CNY. If the cross-subsidy were eliminated, GDP, exports, interest rates, and most sectors' output would increase, but the price level would also rise.

Keywords: Electricity price; Cross-subsidy; Compensation variance (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:84:y:2023:i:c:s0957178723001522

DOI: 10.1016/j.jup.2023.101640

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