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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)

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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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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
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Handle: RePEc:mtu:wpaper:09_02

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

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Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hengyun Ma & Les Oxley & John Gibson, 2009. "China’s Energy Situation and Its Implications in the New Millennium," Working Papers in Economics 09/01, University of Canterbury, Department of Economics. [Downloadable!]
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