Positive Research On The Relationship Between China's Energy Consumption And Economic Growth

Energy as the driving force of national economy development is the material basis of modern civilization. Safe and reliable energy supply, the usage of efficient and clean energy is of great importance to the sustainable development of economy. In recent years, along with the rapid economic development, China showed a growing trend of energy reliance. Especially in the year 2003 to 2004, the energy consumption incrementspeed hit the highest record since china's reform and opening up. In the year 2003 and 2004, the energy consumption growth rate was 15.28% and 16.14%,that is much higher than the GDP growth rate in the same periods, which was 10% and 10.1%.With the rapid development of industrialization and urbanization, Chinese secondary industry especially the industry is becoming the main driving force of national economy. What's more, heavy industry leads the pattern of industry development the growth of high energy-consuming industry aggravated over-consumption of energy which coursed a huge contradiction between energy supply and demand. At the same time China's current energy development and methods of usage is not suitable to sustainable socio-economic development needs, and the situation is very prominent. Low level of per capita energy share, irrational energy consumption structure, inefficient use of energy and seriously overdrawn environment, are becoming the main problems of energy constraint in economic growth. The "Eleventh Five-Year plan" made the task of China's future energy strategy that energy consumption per unit of GDP is requested to reduce about 20% in the end of "Tenth Five-Year". And China's aim is to build a harmonious society, which is energy-saving and environment-friendly. It is worth studying the relationship between energy consumption and economic growth under these circumstances.This paper draw lessons from the research achievements of relationship between energy consumption economic growth both home and abroad and make an empirical analysis of the relationship between Chinese energy consumption and economic growth primarily use the econometrical methods. The first part of the empirical research use cointegration and vector error correction model to analyze the association between Chinese energy consumption and economic growth. The study results show that there is long-run equilibriums between Chinese energy consumption and economic growth, and Chinese economic development depends heavily on energy consumption. On the overall point of view, Chinese energy consumption efficiency is low. In the short term when the economy is subject to internal and external shocks, the energy consumption and economic growth will deviate from the equilibrium state, and in the meantime the economic system will make a certain degree of adjustment to reduce this kind of bias, but the adjustment is not strong.The second part of this empirical research is based on the first part, considering the conditions that Chinese economic growth faces low energy efficiency, irrational energy consumption structure as well as a large proportion of industrial energy consumption, this part focus on analyzing the change regulation of energy consumption efficiency since the founding of the People's Republic and the main factors that affect energy consumption efficiency.In this section, first we employ the variable-parameter method-the state space model based on Kalman filtering algorithm reveals the change regulation of energy consumption efficiency since the founding of the People's Republic. The results show that Chinese energy consumption efficiency fluctuated greatly and frequently before the reform and opening up. After 1978 as adjustment and optimization of Chinese industrial structure as well as technological advances, Chinese energy consumption intensity reduced and the efficiency of Chinese energy consumption rose. However, in the period of 2002 to 2005 the expansion of resource-intensive industries made the overall efficiency of China's energy consumption began to decline, till the year 2006 through the promotion of energy-saving technologies and eliminate backward production capacity he overall efficiency of energy consumption began to rise.Then we employ the OLS method, mainly from the industrial structure, foreign direct investment, as well as energy consumption structure, to analyze the factors that affect energy consumption efficiency. The results show that China's current industrial-based structure as well as coal-based energy consumption structure is not conducive to China's energy consumption, efficiency, and foreign direct investment as the carrier of international industrial transfer restrained the Chinese industry intensity of energy consumption in a certain extent.