Electricity intensity across Chinese provinces: New evidence on convergence and threshold effects

Energy intensity has gone through different stages across Chinese regions. In this paper, we investigate the stochastic electricity-intensity convergence across the Chinese provinces. Unlike previous work, this paper highlights the relevance of the level of technology of each province and takes into account the economic geography through the examination of club convergence. We perform several unit root tests that introduce structural breaks, nonlinearities and time variation, with the aim to capture the economic transformation of the Chinese economy. Results indicate that the majority of the Chinese regions have converged according to the unit-root tests in time-series analysis, indicating that technological differences diminish over time. However, this convergence pattern occurs within groups of regions, according with club convergence test. Indeed, we find a dominant club and others smaller clubs that few regions belong. However, it is observed that there are regions that still diverge. These findings support our argument that special policy attention is required for those regions displaying divergence.