MNI: China's Energy Efficiency Push Squeezes Demand

China’s industrial electricity demand growth is likely to remain subdued through the rest of the year, as tighter usage rules aimed at curbing consumption make earlier forecasts of around 6% economy-wide growth increasingly difficult to achieve, local analysts told MNI.

Authorities are likely pressuring energy-intensive sectors to cut power use by 13.5% from 2020 levels, said Qin Qi, China policy analyst at the Centre for Research on Energy and Clean Air, noting the National Development and Reform Commission recently summoned officials from eight provinces for missing targets. “The renewed emphasis could partially explain industrial consumption slowing to 2.3% y/y from January to April,” Qin said. 

Industrial consumption grew 7.5% over the same period in 2024, and 5.1% for the full year.

Meeting the 14th Five-Year Plan’s energy intensity targets will be challenging, as the government still needs a 3% intensity cut this year despite a 2024 calculation change excluding renewables, after earlier years fell far short, Qin added.

LESS INTENSE

A decoupling of industrial power demand from GDP growth this year suggests a structural shift in the economy, with a greater share of output from less energy-intensive sectors, said David Fishman, principal at Shanghai-based energy consultancy Lantau Group.

Qin noted that appetite from the four major energy-intensive sectors – chemicals, non-metallic mineral products such as cement and ferrous and non-ferrous metals – rose by just 1.4% in total from January to April. Demand from high-value-added manufacturing, such as automotive, general equipment, and specialised equipment, grew faster at 8.5%, 6.4%, and 5.3% respectively, she said.

“Despite robust factory output from copper and aluminium, and chemicals which increased 6.9% and 8.9% during the first four months, they make up a smaller share of total electricity demand compared to steel and cement, which grew 0.4% and -2.8%,” she added.

HOUSEHOLDS

Total electricity consumption nationwide increased 3.1% from January to April, down from 9.0% over the same period in 2024, official data showed.

A mild winter helped drive the slowdown, curbing consumption growth across the board, Fishman said, noting household demand expanded 10.6% last year but dropped to 2.5% during the first four months of 2025.

Additionally, the slowdown in services consumption – down to 6.0% from January to April 2025 – was largely due to high-base effects, following 2024’s strong 9.9% growth, the first full year without COVID-related disruptions, he added.

“The government’s outlook of around 6% electricity demand growth for the whole of this year looks ambitious if current trends persist, especially if industrial activity continues shifting towards lower energy-intensity segments,” Qin added.

Overall demand growth remains weather-dependent, with potential summer heatwaves likely to spike consumption in household and services, Fishman said, noting industrial appetite also remains uncertain, with the outcome of tariff talks between China and the U.S. a key variable.