Abstract
China’s rapid GDP growth has been driven by exports and investment. Households’ share of GDP is comparatively low, however, accounting for just 36.2% of GDP in 2013, far lower than that in the U.S. (68.0%) or India (60.4%). China’s current investment- and export-led economy has caused a “lack of balance, coordination, and sustainability.” As a result, China has been boosting domestic demand to provide more stability in the future. This paper is an attempt to find out how such change in China’s economic structure might affect its energy use? We decompose energy used indirectly by households into six factors: changes in total population, changes in the urbanization rate, changes in energy efficiency, changes in sub-industrial production structure, changes in household consumption structure, and changes in per capita household consumption. Doing so yields insights into how changes in China’s technology, urbanization, and lifestyle have affected energy use in the production of goods and services for use by households. Also, it gives policy suggestions on how China might guide such lifestyle changes toward a low carbon economy as domestic demand replaces both exports and investment to become main driver of China’s economy.