Electricity Demand Defies China Slowdown Fears
China's economy is set to grow at lower rates than previously expected as the U.S.-China trade war will take its toll on the GDP of the world's second-largest economy after the United States.
Yet, figures about Chinese power generation and consumption haven't dropped—consumption has even held strong at the start of the year.
The manufacturing sector, which accounts for two-thirds of China's power demand, continues to grow, but growth slowed in April to 6.1% from a year earlier, from a 7.7% increase in March.
The real impact of the trade and tariff war is set to be felt in the coming months.
For now, China's economy appears to be not as gloomy as feared. Power consumption shows resilience, and certain figures in the electricity sector support the view that Chinese growth may not be as soft as predicted.
Some data points in the electricity sector show a more resilient Chinese economy than previously expected.
China's growth in electricity generation, in particular, doesn't look weak at all, considering a warmer winter with lower power demand and the fact that official Chinese statistics exclude small-scale electricity generators and residential rooftop solar, Reuters columnist Clyde Russell notes.Data from the National Energy Administration (NEA) of China showed that the country's power consumption rose at a much higher rate compared to the power generation growth in figures by the National Bureau of Statistics (NBS).
In March, China's power consumption rose by 4.8%. The pace of growth held in April, too, with power demand up by 4.7%. Chinese use of electricity increased to 772.1 billion kilowatt-hours (kWh) in April, according to the National Energy Administration.
Electricity consumption in the primary and secondary industries increased by 13.8% and 3% year on year, respectively, while power demand in the services sector rose by 9%, according to China's official data.
Total power consumption also rose in the first four months of the year, by 3.1% from a year earlier.
Power demand is often viewed as a key indicator of a manufacturing-oriented economy. So far this year, China's electricity generation and consumption signal that the effects of the trade war will be seen further down the road.
The fact that small-scale generators and residential rooftop solar are not included in generation data could suggest that the Chinese power sector could be stronger than it appears to be.
China installed a record 60 gigawatts (GW) of new solar photovoltaic (PV) capacity in the first quarter of 2025 – the highest ever recorded in a first quarter in the country's history, Rystad Energy said in new research last week. Rooftop PV accounted for 60%, or 36 GW, of that total, marking the largest quarterly capacity addition for distributed PV in China's history.
Rystad Energy also believes that the surge in rooftop PV installations will continue into the second quarter of the year, pushing total distributed solar capacity additions for 2025 to 130 GW, comprising 92 GW from commercial and industrial (C&I) projects and 38 GW from residential projects.
Chinese industrial output rose by 6.1% in April, beating analyst estimates of 5.5% growth. This signaled that the effects of the U.S. tariffs – now at 30% during the 90-day trade truce announced last week – were not as severe as expected, at least for now.
Sure, most uncertainties remain even after the U.S.-Chinese agreement to pause the 100%-plus tariffs on each other's goods.
Even the Chinese national statistics bureau said, 'We should be aware that there are still many unstable and uncertain factors in [the] external environment.'
Uncertainty is the keyword in all economic and global energy and oil demand analyses in recent months. China appears to be handling the initial tariff shock well, but the next few months will show where the world's second-biggest economy is headed.
By Tsvetana Paraskova for Oilprice.com
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