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China's Energy Economy: Technical Change, Factor Demand and Interfactor/Interfuel Substitution

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Author Info

  • Hengyun Ma

    () (University of Canterbury)

  • Les Oxley

    () (University of Canterbury)

  • John Gibson

    () (Motu Economic and Public Policy Research and The University of Waikato)

  • Bongguen Kim

    () (The University of Waikato)

Abstract

With its rapid economic growth, China's primary energy consumption has exceeded domestic energy production since 1994, leading to a substantial expansion in energy imports, particularly of oil. China's energy demand has an increasingly significant impact on global energy markets. In this paper Allen partial elasticities of factor and energy substitution, and price elasticities of energy demand, are calculated for China using a two-stage translog cost function approach. The results suggest that energy is substitutable with both capital and labour. Coal is significantly substitutable with electricity and complementary with diesel while gasoline and electricity are substitutable with diesel. China's energy intensity is increasing during the study period (1995-2004) and the major driver appears to be due to the increased use of energy intensive technology.

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Bibliographic Info

Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number 09_02.

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Length: 29 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:mtu:wpaper:09_02

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Keywords: China; Interfactor/interfuel substitution; Technology; Energy intensity decomposition;

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References

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Citations

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Cited by:
  1. Hengyun Ma & Les Oxley & John Gibson, 2009. "China’s Energy Situation and Its Implications in the New Millennium," Working Papers 09_04, Motu Economic and Public Policy Research.
  2. Chai, Jian & Guo, Ju-E & Wang, Shou-Yang & Lai, Kin Keung, 2009. "Why does energy intensity fluctuate in China?," Energy Policy, Elsevier, vol. 37(12), pages 5717-5731, December.
  3. Cattaneo, Cristina & Manera, Matteo & Scarpa, Elisa, 2011. "Industrial coal demand in China: A provincial analysis," Resource and Energy Economics, Elsevier, vol. 33(1), pages 12-35, January.
  4. David I.Stern, 2009. "Interfuel Substitution: A Meta Analysis," Environmental Economics Research Hub Research Reports 0933, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
  5. Yuan, Chaoqing & Liu, Sifeng & Wu, Junlong, 2009. "Research on energy-saving effect of technological progress based on Cobb-Douglas production function," Energy Policy, Elsevier, vol. 37(8), pages 2842-2846, August.
  6. Ma, Hengyun & Oxley, Les, 2011. "Are China's energy markets cointegrated?," China Economic Review, Elsevier, vol. 22(3), pages 398-407, September.
  7. Beckman, Jayson & Hertel, Thomas & Tyner, Wallace, 2011. "Validating energy-oriented CGE models," Energy Economics, Elsevier, vol. 33(5), pages 799-806, September.
  8. Michael Hübler, 2009. "Energy Saving Technology Diffusion via FDI and Trade: A CGE Model of China," Kiel Working Papers 1479, Kiel Institute for the World Economy.
  9. Yang, Mian & Yang, Fu-Xia & Chen, Xing-Peng, 2011. "Effects of substituting energy with capital on China's aggregated energy and environmental efficiency," Energy Policy, Elsevier, vol. 39(10), pages 6065-6072, October.
  10. Qu, Mei & Tahvanainen, Liisa & Ahponen, Pirkkoliisa & Pelkonen, Paavo, 2009. "Bio-energy in China: Content analysis of news articles on Chinese professional internet platforms," Energy Policy, Elsevier, vol. 37(6), pages 2300-2309, June.
  11. Thomas Michielsen, 2013. "Brown Backstops Versus the Green Paradox," OxCarre Working Papers 108, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.

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