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

  • 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)

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
Date of revision:
Handle: RePEc:mtu:wpaper:09_02
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