China is now experiencing rapid development and has become the second largest energy consumer. China has presented the objectives of building a well of society in an all round way at the 16th National Congress of the Communist Party of China in 2002. Without question, the future society, with higher level of modernization and standard of living, will consume more energy. In this paper, the LMDI (Log-Mean Divisia Index) method is used to analyze the nature of the factors that influence energy consumption during the period 1980-2006. Another contribution of this paper is to develop a forecasting model (LMDIED) based on the LMDI method, in which the effects from each factor can be displayed.
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