Research on Relationship between Cycles of Electric Power and the Economy Growth in China Based on Maximum Entropy Method

Electric power is a basic industry in the national economy in China. It influences the economy growth in China seriously owing to the surplus and shortage of electric power supply from time to time. Thus, the exigent issue that the strategy development plan of Chinese power industry confronted now is that how to predominate the development and cycle changes of the economy and the electric power. Firstly, the paper studies their causality based on the Granger-causality tests. Then, based on the maximum entropy method, it gives an elementary study and discussion of interaction relationship of the electric power and the national economy cycles in China. The results show that the electricity consumption, the newly added installed capacity, the electricity investment are all the Granger causality of GDP and the electricity investment is the Granger causality of the installed-capacity. The main development cycles of electric power and GDP are both middle ones, thirteen years or so, and the development of power is almost in the same pace of the economy during 1965-2002. The growth of the electricity investment will increase the new added installed-capacity with nearly three years´ lead time; the installed-capacity will influence the GDP growth and the lead time is nearly two years at the main cycle. In the mean time, the GDP growth will also influence the development of the electricity consumption with nearly one years lead time at the nearly ten years cycle, but almost at the same pace at the less than ten years cycle. GDP can promote the electricity investment with nearly two to three years lead time at the main cycle and almost at the same step at the less than ten years cycle. The development plan of the electric power should be established upon the development cycle relationship between the electric power and the economy in order to avoid the power surplus and shortage cycle and further promote the sustainable economic development in China