Electricity consumption again

12 Aug

Tom Holland (in the South China Morning Post – SCMP) discusses the utility of using mainland  electricity consumption data as a proxy for electricity consumption.

He makes an interesting and valid point that certain industries are very electricity intensive (smelting – especially aluminum).  Holland reports that over the previous months smelting has increased, as has the mainland’s electricity consumption (+4.7% yoy in July).  He argues that the growth figure is distorted.

In a previous post I discussed the merit of electricity consumption as a lead indicator of China’s GDP growth, especially considering the nature of other data points.  Accounting for Holland’s comments, I would temper my additional enthusiasm.  Nonetheless, I still maintain that its a good lead indicator of a direction at least, and as I said last time, it is important to drill down and understand the components of the electricity data point.

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