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The integration of major fuel source markets in China: Evidence from panel cointegration tests

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Author Info

  • Ma, Hengyun
  • Oxley, Les

Abstract

The paper tests for energy price co-movement in China over the 'new regime' as part of a strategy to test for the existence of a national energy market. Panel cointegration test statistics suggest that not all energy commodities are spatially homogenous in prices and the processes of energy price cointegration are different over time and over groups of fuels. The statistics demonstrate China's gradual, spatially partial and idiosyncratic energy reform process. Coal and electricity price series have co-moved since 2003, while the national panel cointegration test statistics suggest that gasoline and diesel price series have co-moved since 1997. Regional panel tests also show that there are apparently differences in the emergence of energy price co-movement. This suggests that regional energy markets have emerged in China. One of the important lessons of the research is that an energy market has, to some extent, already emerged in China and, as a consequence, energy prices are much less distorted than previously. If correct, this fact is of major global significance both in terms of future environmental effects and future trade and investment negotiations as China is seen internationally as a 'market driven economy'.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 32 (2010)
Issue (Month): 5 (September)
Pages: 1139-1146

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Handle: RePEc:eee:eneeco:v:32:y:2010:i:5:p:1139-1146

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Web page: http://www.elsevier.com/locate/eneco

Related research

Keywords: China Fuel Energy Market cointegration;

References

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Citations

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Cited by:
  1. Marc Joëts, 2012. "Energy price transmissions during extreme movements," EconomiX Working Papers 2012-38, University of Paris West - Nanterre la Défense, EconomiX.
  2. He, Yongxiu & Wang, Bing & Wang, Jianhui & Xiong, Wei & Xia, Tian, 2013. "Correlation between Chinese and international energy prices based on a HP filter and time difference analysis," Energy Policy, Elsevier, vol. 62(C), pages 898-909.
  3. Herrerias, M.J. & Ordoñez, J., 2012. "New evidence on the role of regional clusters and convergence in China (1952–2008)," China Economic Review, Elsevier, vol. 23(4), pages 1120-1133.
  4. Joëts, Marc & Mignon, Valérie, 2012. "On the link between forward energy prices: A nonlinear panel cointegration approach," Energy Economics, Elsevier, vol. 34(4), pages 1170-1175.
  5. repec:ipg:wpaper:28 is not listed on IDEAS

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