Electricity　cross-subsidy　poses　a　challenge　to　the　reform　of　China＇s　electricity　system　in　terms　of　marketization.　This　paper　measures　the　size　of　electricity　cross-subsidy　in　China　and　examines　the　impact　of　eliminating　it　using　the　CGE　model.　In　addition,　we　calculate　a　compensation　variance　so　that　household　welfare　is　not　affected.　The　results　show　the　sum　of　cross-subsidy　was　392.34　billion　CNY,　of　which　the　subsidies　from　secondary　and　tertiary　industries　were　308.73　and　83.61　billion　CNY.　If　the　cross-subsidy　were　eliminated,　GDP,　exports,　interest　rates,　and　most　sectors＇　output　would　increase,　but　the　price　level　would　also　rise.