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The Pinnacle Research Journal of Scientific and Management Sciences

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The Role of Cross-Subsidy in Shaping Electricity Prices in China

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Zhao Peiyan 1 , Li Wang 1 , Lingrui Meng 1 , Yang Liu 1 ,
4 School of Economics and Management, North China Electric Power University, Beijing, China
4 School of Economics and Management, North China Electric Power University, Beijing, China
4 School of Economics and Management, North China Electric Power University, Beijing, China
4 School of Economics and Management, North China Electric Power University, Beijing, China

Abstract

This study examines the role of cross-subsidy in shaping electricity prices in China, highlighting the mechanisms, impacts, and implications of this practice within the country's energy sector. Cross-subsidy, where electricity tariffs for different consumer groups are adjusted to balance financial burdens, plays a crucial role in China's electricity pricing framework. The research analyzes how these subsidies are distributed among residential, industrial, and commercial sectors, and their effects on energy consumption patterns, economic efficiency, and social equity. Using a combination of quantitative data analysis and policy review, the study provides insights into the effectiveness of cross-subsidy in achieving policy goals such as energy affordability, economic development, and equitable access. Additionally, it explores the challenges and trade-offs associated with cross-subsidy, including its impact on investment in the energy sector and its implications for long-term sustainability. The findings offer valuable perspectives for policymakers, industry stakeholders, and researchers interested in understanding and optimizing electricity pricing strategies in China.

Keywords

Cross-subsidy, electricity pricing, China, energy policy, tariff structure

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