Economic Transition, Technology Change, and Energy Consumption in China: A Provincial-Level Analysis

Abstract

This paper conducts panel analysis to evaluate the effects of a structural economic shift from the industrial to the tertiary sector, a reduction in industrial overcapacity, and improvements in energy efficiency on energy consumption using data for 30 Chinese provinces from 1995 to 2015. We find that, at the national level, the structural shift to the tertiary sector, the reduction in cement and steel production, and the increase in energy efficiency in the industrial sector all have statistically significantly negative effects. We also divide the sample into three geographic and economic regions to evaluate regional differences. We find that the gross domestic product (GDP) share of the tertiary sector shows its greatest impact on reducing energy consumption in the eastern region, a decline in heavy industry production would reduce energy demand more in the central region, and improvement in industrial electricity efficiency would also help reduce energy consumption the most in eastern China. We also forecast energy consumption in China will reach 4.8–4.9 billion tonnes of coal equivalent (tce) in 2020 and further grow to 5.0–5.4 billion tce in 2030.