The influence path and dynamic relationship between economic development, industrial structure upgrading, urbanization, urban-rural income gap, and electricity consumption in China

Considering China's goal of carbon neutrality, understanding the influence path and dynamic correlation between electricity consumption and relevant factors is essential for formulating a reasonable electricity development strategy and promoting high-quality socio-economic development. Based on panel data of 30 provinces in China from 2000 to 2019, this study adopts the panel VAR model for research, with four notable findings. (1) Economic development, urbanization, and the urban-rural income gap directly affect electricity consumption. Industrial structure upgrading can affect electricity consumption through economic development and urbanization. Electricity consumption only directly affects economic development, whereas the effect on the other three variables could be transmitted through economic development. (2) Electricity consumption first inhibits and then promotes industrial structure upgrading, and it inhibits the urban-rural income gap. (3) Industrial structure upgrading first promotes and then inhibits electricity consumption. The urban-rural income gap inhibits electricity consumption. (4) Industrial structure upgrading and the widening income gap might hinder economic development through the adverse effect on electricity consumption. Based on these findings, several policy suggestions are proposed.