Abstract: Based on VEC model, the long-term dynamic relationship between Chinese economic growth and energy use was examined by using unit root test, co-integration analysis, impulse response and variance decomposition analysis, with data on GDP and industrial energy consumption in China from 1985 to 2011. Results found that economic output is the major driver of energy consumption, energy inputs of primary and secondary industries should keep increasing at a proper ratio, and energy consumption in tertiary industry would be the main driver for China`s economic growth in the future through its long-term co-integration relationship with economic output. Build on these conclusions, several suggestions were proposed on energy input structure, energy consumptions of three industries, and negative effects of the rebound effect.

Key words: economic growth, energy use, VEC model, industrial structure, rebound effect