Barometer of economic transformation
China can foster new quality productive forces by enabling electricity and computing power to reinforce one another
Economic data for the first half of 2026, released by China’s National Bureau of Statistics on July 15, show that China’s economy maintained steady growth while becoming more innovation-driven. GDP reached 69.6 trillion yuan ($10.27 trillion), up 4.7 percent year-on-year at constant prices. New growth drivers, including advanced manufacturing, the digital economy and modern services, contributed more than 40 percent to overall growth.
Electricity consumption was a notable feature. China consumed nearly 5.1 trillion kilowatt-hours of electricity in the first six months of 2026, up 5.3 percent year-on-year. Electricity use by the secondary industry rose 5.1 percent, accounting for more than 60 percent of the total increase, while consumption by the tertiary industry grew by 8 percent.
While the GDP shows how fast an economy is growing, electricity consumption shows where economic activity is taking place and which sectors are gaining momentum. This matters increasingly as China’s economy becomes more electrified and digitized. Advanced manufacturing, electric vehicles, 5G networks, artificial intelligence and data centers all depend on abundant, affordable and reliable electricity.
The pattern behind these figures is more important than the headline rate. High-tech and equipment manufacturing have become major engines of industrial expansion, while traditional industries are accelerating their digital and green transformation. In the first half, high-end manufacturing accounted for 24.3 percent of total manufacturing electricity use.
Shenzhen provides a telling example. Electricity consumption by its high-tech and equipment manufacturing industries increased by 4.26 percent, while consumption by energy-intensive industries fell by 9.08 percent. More electricity is flowing toward sectors that generate greater value with lower energy and emissions intensity.
The service sector offers an even clearer picture. Electricity use by EV charging and battery-swapping services surged 56.9 percent, while consumption by internet data services rose 44 percent, far above the tertiary sector’s average.
The expansion of electric mobility is accelerating the development of charging infrastructure. In the first half of 2026, the retail penetration rate of new energy passenger vehicles exceeded 60 percent for three consecutive months. By the end of April, China had nearly 22 million charging facilities, up 47.4 percent year-on-year.
Electricity is also becoming a direct indicator of the digital economy’s vitality. In March, China’s average daily token usage exceeded 140 trillion, more than 1,000 times the level in early 2024. The rapid growth of AI applications is creating huge demand for computing power and electricity. A large AI data center can consume as much electricity as a medium-sized town.
These new growth drivers did not emerge by chance. Their expansion was supported by China’s electricity supply system, which is the world’s largest. A secure and increasingly low-carbon power system reduces energy costs for existing industries while giving new industries the confidence to invest.
Even amid geopolitical tensions and volatility in international energy prices, China maintained stable energy supplies and broadly stable electricity prices in the first half of this year. This resilience rests on three foundations.
The first is a long-term strategy combining energy security with green and low-carbon development. China has expanded its wind, solar, hydropower and nuclear capacity. By the end of May, total installed power generation capacity had exceeded 4 billion kilowatts, with non-fossil energy accounting for more than 60 percent. A more diversified energy mix has reduced China’s exposure to fluctuations in global fossil fuel markets.
The second foundation is China’s complete industry chain. The country has developed strong domestic capabilities in wind turbines, photovoltaic modules, batteries, energy storage, ultra-high-voltage transmission and smart grids. These supply chains have lowered the cost of renewable electricity and enabled the power system to integrate clean energy on an unprecedented scale. They also provide reliable support for AI, advanced manufacturing and electric transport.
The third is the continued deepening of reform in the power market. China is building a unified national electricity market in which medium- and long-term contracts, spot markets and green electricity trading complement one another. From January to May, electricity traded through the market increased by 24.8 percent year-on-year. Medium- and long-term contracts have helped stabilize electricity costs for businesses, while spot markets improve resource allocation across regions and time periods. More flexible market arrangements are also essential for integrating variable wind and solar power.
Looking ahead, China will further coordinate the development of computing power and electricity. This year, “computing power and electricity coordination” was included for the first time in the Government Work Report and incorporated into the outline of the 15th Five-Year Plan (2026-30). Related policies show that energy will be used to support AI development while AI will be used to improve the energy system.
This relationship should work in both directions. On the one hand, a strong and green power system can support the expansion of AI. Computing infrastructure can be better located in regions rich in wind, solar and hydropower resources. Data centers can participate in demand response, adjust some computing tasks according to the availability of electricity, and make greater use of energy storage and direct green power supplies.
On the other hand, AI can make the power system more efficient. It can improve renewable generation forecasts, optimize grid dispatch, identify equipment faults, manage distributed energy resources and support more accurate matching of electricity supply and demand.
The goal should not simply be to build more data centers or generate more electricity. It should be to coordinate the planning, location, operation and pricing of both systems.
China’s electricity data for the first half of 2026 show that the country’s sources of growth are changing. Advanced manufacturing, electric mobility, digital services and AI are becoming more important, and all depend on a modern power system.
Electricity is therefore both a barometer of China’s economic transformation and one of the foundations making that transformation possible. By using electricity to strengthen computing power and computing power to improve the electricity system, China can build a stronger infrastructure base for new quality productive forces and future growth.
Guo Bowei is an associate professor at the School of Applied Economics and the executive director of the Center for Research on Global Energy Strategy at Renmin University of China. Jin Ye is a PhD candidate at the School of Applied Economics at Renmin University of China.
The authors contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.
Contact the editor at editor@chinawatch.cn.
