In the process of industrializing, countries typically increase energy consumption during periods of rapid economic growth. China has been no exception, until recently. According to official statistics, China's energy consumption rose at an average annual rate of 6% between 1990 and 1996, flattened in 1997, and then suddenly dropped by more than 9% over the next two years before beginning to rebound in 2000. This paper is a preliminary examination of the causes of this decline, examining the energy forms, economic sectors, and localities for which the decline was most pronounced. It attributes the decline in energy consumption solely to a decline in coal enduse, primarily in the industrial sector. Between 1996 and 2000, GDP continued to increase—both at the national aggregate level as well as in the industrial sectors of the provinces that experienced the largest magnitudes of decline in industrial energy use: Hunan, Liaoning, Jilin, Sichuan, Shaanxi, and Jiangsu. This paper also identifies the subsectors of industry where the decline was most pronounced, including textiles, chemicals, ferrous and nonferrous metals production, building materials, and coal extraction, where state control allowed for greater intervention. The paper concludes that government industrial policy was a primary factor in the energy decline, supported by ongoing programs to increase energy efficiency. Implications of this decline for international climate change efforts are offered.