The discrepancies in the impacts of COVID-19 lockdowns on electricity consumption in China: Is the short-term pain worth it?

ABSTRACT

The COVID-19 pandemic caused severe economic contraction and paralyzed industrial activity. Despite a growing body of literature on the impacts of COVID-19 mitigation measures, scant evidence currently exists on the impacts of lockdowns on the economic and industrial activities of developing countries. Our study provides an empirical assessment of lockdown measures using 298,354 data points on daily electricity consumption in 396 sub-industries. To infer causal relationships, we employ difference-in-differences models that compare cities with and without lockdown policies and provide quantitative evidence on whether the long-term gain of lockdowns outweighs the short-term loss. The results show that lockdown policies led to a significant short-term drop in electricity consumption of 15.2% relative to the control group. However, the electricity loss under the no-lockdown scenario is 2.6 times larger than that under the strict lockdown scenario within 4 months of the outbreak. Discrepancies in the impacts among industries are identified, and even within the same industry, lockdowns have heterogeneous effects. The impact of lockdowns on small and medium-sized enterprises in developing countries is seriously underestimated, raising concerns about the distributional impact of subsidy measures. This study serves as a crucial reference for the government when facing public health emergencies and shocks to support better policies.