An Analysis of Energy Intensity in China

The energy intensity of the Chinese economy, measured as the ratio of total energy consumed in standard coal equivalent to real GDP, has been declining continuously since 1989. While various studies have been carried out to explain factors driving China’s energy consumption, only a few studies have focused on modelling the causes of China’s decline in energy intensity. The study of Fisher-Vanden et al (2004) used the regression approach to modelling energy intensity based on sample data collected on a large number of industrial enterprises. With two most recent input-output tables at the time, Garbaccio et al (1999) employed the input-output approach to constructing an index on energy intensity. Fisher-Vanden et al found that production structure changes were one of the major factors causing the decline in energy intensity, whereas the study of Garbaccio et al pointed to technological changes being responsible for the decline in energy intensity. A direct comparison between the two studies can be difficult as production structural changes were not explicitly considered in the study of Garbaccio et al.