Since 1996, China's energy output has dropped by 17%, while primary energy use has fallen by4%, driven almost entirely by shrinking output from coal mines and declining direct use. SinceChina is the world's second-largest emitter of greenhouse gases, it is important to understand thesources of this apparent transformation, and whether it portends a permanent change in patternsof energy use. This remarkable reversal of the long-term expansion of energy use has occurredeven as the economy has continued to grow, albeit more slowly than in the early 1990s.Generation of electric power has risen, implying a steep fall in end uses, particularly in industry.Available information points to a variety of forces contributing to this phenomenon, includingrapid improvements in coal quality, structural changes in industry, shutdowns of factories in boththe state-owned and non-state segments of the economy, improvements in end-use efficiency, andgreater use of gas and electricity in households. A combination of slowing economic growth,industrial restructuring, broader economic system reforms, and environmental and energy-efficiency policies has apparently led to at least a temporary decline in, and perhaps a long-termreduction in the growth of energy use, and therefore greenhouse gas emissions.