Advanced Search
MyIDEAS: Login

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

Contents:

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.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://motu-www.motu.org.nz/wpapers/09_02.pdf
Download Restriction: no

Bibliographic Info

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

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

Contact details of provider:
Postal: Level1, 93 Cuba Street, P.O. Box 24390, Wellington
Phone: 64-4-939-4250
Fax: 64-4-939-4251
Email:
Web page: http://www.motu.org.nz
More information through EDIRC

Related research

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

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. Zou, Gaolu & Chau, K.W., 2006. "Short- and long-run effects between oil consumption and economic growth in China," Energy Policy, Elsevier, vol. 34(18), pages 3644-3655, December.
  2. Hing Lin Chan & Shu Kam Lee, 1996. "Forecasting the Demand for Energy in China," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 19-30.
  3. Hu, Jin-Li & Wang, Shih-Chuan, 2006. "Total-factor energy efficiency of regions in China," Energy Policy, Elsevier, vol. 34(17), pages 3206-3217, November.
  4. Magnus, Jan R, 1979. "Substitution between Energy and Non-Energy Inputs in the Netherlands, 1950-1976," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(2), pages 465-84, June.
  5. Cho, Won G. & Nam, Kiseok & Pagan, Jose A., 2004. "Economic growth and interfactor/interfuel substitution in Korea," Energy Economics, Elsevier, vol. 26(1), pages 31-50, January.
  6. Sinton, Jonathan E & Levine, Mark D & Qingyi, Wang, 1998. "Energy efficiency in China: accomplishments and challenges," Energy Policy, Elsevier, vol. 26(11), pages 813-829, September.
  7. Griffin, James M & Gregory, Paul R, 1976. "An Intercountry Translog Model of Energy Substitution Responses," American Economic Review, American Economic Association, vol. 66(5), pages 845-57, December.
  8. Paul Crompton & Yanrui Wu, 2004. "Energy Consumption in China: Past Trends and Future Directions," Economics Discussion / Working Papers 04-22, The University of Western Australia, Department of Economics.
  9. Fisher-Vanden, Karen & Jefferson, Gary H. & Liu, Hongmei & Tao, Quan, 2004. "What is driving China's decline in energy intensity?," Resource and Energy Economics, Elsevier, vol. 26(1), pages 77-97, March.
  10. Richard F. Garbaccio & Mun S. Ho & Dale W. Jorgenson, 1999. "Why Has the Energy-Output Ratio Fallen in China?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 63-91.
  11. Shiu, Alice & Lam, Pun-Lee, 2004. "Electricity consumption and economic growth in China," Energy Policy, Elsevier, vol. 32(1), pages 47-54, January.
  12. Christopoulos, Dimitris K. & Tsionas, Efthymios G., 2002. "Allocative inefficiency and the capital-energy controversy," Energy Economics, Elsevier, vol. 24(4), pages 305-318, July.
  13. Woodland, A D, 1975. "Substitution of Structures, Equipment and Labor in Canadian Production," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(1), pages 171-87, February.
  14. Welsch, Heinz & Ochsen, Carsten, 2005. "The determinants of aggregate energy use in West Germany: factor substitution, technological change, and trade," Energy Economics, Elsevier, vol. 27(1), pages 93-111, January.
  15. Pindyck, Robert S, 1979. "Interfuel Substitution and the Industrial Demand for Energy: An International Comparison," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 169-79, May.
  16. Kui-Wai Li, 2003. "China's Capital and Productivity Measurement Using Financial Resources," Working Papers 851, Economic Growth Center, Yale University.
  17. Ozatalay, Savas & Grubaugh, Stephen & Long, Thomas Veach, II, 1979. "Energy Substitution and National Energy Policy," American Economic Review, American Economic Association, vol. 69(2), pages 369-71, May.
  18. Berndt, Ernst R & Wood, David O, 1979. "Engineering and Econometric Interpretations of Energy-Capital Complementarity," American Economic Review, American Economic Association, vol. 69(3), pages 342-54, June.
  19. Caloghirou, Yannis D. & Mourelatos, Alexi G. & Thompson, Henry, 1997. "Industrial energy substitution during the 1980s in the Greek economy," Energy Economics, Elsevier, vol. 19(4), pages 476-491, October.
  20. Debertin, David L. & Pagoulatos, Angelos & Aoun, Abdessalem, 1990. "Impacts of technological change on factor substitution between energy and other inputs within US agriculture, 1950-79," Energy Economics, Elsevier, vol. 12(1), pages 2-10, January.
  21. Sinton, Jonathan E. & Fridley, David G., 2000. "What goes up: recent trends in China's energy consumption," Energy Policy, Elsevier, vol. 28(10), pages 671-687, August.
  22. Berndt, Ernst R & Wood, David O, 1975. "Technology, Prices, and the Derived Demand for Energy," The Review of Economics and Statistics, MIT Press, vol. 57(3), pages 259-68, August.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  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 and Finance.
  2. 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.
  3. 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.
  4. Stern, David I., 2009. "Interfuel Substitution: A Meta-Analysis," MPRA Paper 13734, University Library of Munich, Germany.
  5. Ma, Hengyun & Oxley, Les, 2011. "Are China's energy markets cointegrated?," China Economic Review, Elsevier, vol. 22(3), pages 398-407, September.
  6. You, Jing, 2013. "China's challenge for decarbonized growth: Forecasts from energy demand models," Journal of Policy Modeling, Elsevier, vol. 35(4), pages 652-668.
  7. 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.
  8. Lin, Boqiang & Zhang, Guoliang, 2013. "Estimates of electricity saving potential in Chinese nonferrous metals industry," Energy Policy, Elsevier, vol. 60(C), pages 558-568.
  9. Salim, Ruhul A. & Rafiq, Shuddhasattwa, 2012. "Why do some emerging economies proactively accelerate the adoption of renewable energy?," Energy Economics, Elsevier, vol. 34(4), pages 1051-1057.
  10. Gao, Jing & Nelson, Robert & Zhang, Lei, 2013. "Substitution in the electric power industry: An interregional comparison in the eastern US," Energy Economics, Elsevier, vol. 40(C), pages 316-325.
  11. 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.
  12. 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.
  13. Zhaohua Wang & Bin Zhang & Jianhua Yin, 2012. "Determinants of the increased CO 2 emission and adaption strategy in Chinese energy-intensive industry," Natural Hazards, International Society for the Prevention and Mitigation of Natural Hazards, vol. 62(1), pages 17-30, May.
  14. 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.
  15. Beckman, Jayson & Hertel, Thomas & Tyner, Wallace, 2011. "Validating energy-oriented CGE models," Energy Economics, Elsevier, vol. 33(5), pages 799-806, September.
  16. Lin, Boqiang & Wesseh, Presley K., 2013. "Estimates of inter-fuel substitution possibilities in Chinese chemical industry," Energy Economics, Elsevier, vol. 40(C), pages 560-568.
  17. 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.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:mtu:wpaper:09_02. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tui Head).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.