China's building energy efficiency design standards have been always treated as the base of national energy conservation planning and industrial investment. However, they cannot fully achieve the expected benefits due to the energy rebound effect. This paper verifies the energy rebound effect in China's urban and rural residential buildings based on the LA-AIDS theory, and further estimates the building energy conservation by counterfactual analysis, catching the specific influences of rebound effect on building energy conservation and the corresponding residential building energy conservation potentials of China. The empirical results reveal that: (i) The rebound effect in the rural residential buildings is much larger than that in the urban residential buildings, where presenting the "back-fire" effect. (ii) The rebound effect in the rural residential buildings is weakening while it is enhancing in the urban residential buildings. (iii) Nationally, if energy policies including price polices, technological improvements as well as some other measures were implemented to avoid the rebound effect, we could have conserved about 20% electricity consumption in China's residential buildings each year. The magnitude increased by time to the highest level (107.66 GWh) in 2011, equivalent to the CO2 emission reduction of 0.1 billion tons. (C) 2014 Elsevier B.V. All rights reserved.