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Structural Change and Energy Use in China: A SAM-based CGE Analysis

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  • Xiao Jiang
  • Haider A. Khan

Abstract

This article presents a structuralist computable general equilibrium (CGE) model for China based on a three productive activities—agriculture, energy and industry—social accounting matrix. Four simulation exercises are conducted using this model: industrial investment demand increase, industrial wage increase, exchange rate depreciation, and government spending increase in industry. Our results show that structural change associated with raising industrial labor productivity and employment-share are likely to result in simultaneous intensification of per worker energy-use and a slight reduction of energy productivity in China. Industrial wage increase creates cost-push inflation and output contraction, and exchange rate devaluation is expansionary. Furthermore, when the industrial exports are insensitive to relative price changes, currency devaluation becomes contractionary and wage increase results in a slight contraction in real GDP due to the “forced saving” effect. The model illustrates some policy challenges China faces in its attempt to achieve “green growth” objectives with a high level of employment.

Suggested Citation

  • Xiao Jiang & Haider A. Khan, 2017. "Structural Change and Energy Use in China: A SAM-based CGE Analysis," Chinese Economy, Taylor & Francis Journals, vol. 50(6), pages 405-424, November.
    • Handle: RePEc:mes:chinec:v:50:y:2017:i:6:p:405-424
    DOI: 10.1080/10971475.2017.1380021
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    Cited by:

    1. Omer, Ozlem & Capaldo, Jeronim, 2023. "The risks of the wrong climate policy for developing countries: Scenarios for South Africa," Ecological Economics, Elsevier, vol. 211(C).
    2. Khan, Haider, 2023. "Geoeconomics, China, Fourth Industrial Revolution and the Future," MPRA Paper 117362, University Library of Munich, Germany.
    3. Khan, Haider, 2024. "Geoeconomics of a New Eurasia during the Fourth Industrial Revolution: The Role of China’s Innovation System, BRI and Sanctions from the Global North," MPRA Paper 119637, University Library of Munich, Germany.
    4. Khan, Haider, 2023. "Towards a General Complex Systems Model of Economic Sanctions with Some Results Outlining Consequences of Sanctions on the Russian Economy and the World," MPRA Paper 116806, University Library of Munich, Germany.
    5. Khan, Haider, 2023. "China’s Augmented National Innovation System (ANIS) and the Future: A Nonlinear Complex Systems Model with Application to Semiconductors and AI," MPRA Paper 116836, University Library of Munich, Germany.

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