An Empirical Analysis Of The Impact Of Coal De-capacity Policy On Total Factor Productivity In Industrial Sector

The coal industry of China has been in serious difficulties due to the low coal prices and oversupply since 2015.In order to solve the chaotic competition in the coal market and resolve the excess capacity of the coal industry,the state announced the coal de-capacity policy in 2016.All provinces set de-capacity objective and specific scheme.There were two objectives of the policy.On the one hand,the government wants to improve the status of the coal industry.On the other hand,they want to improve total factor productivity of China by implementing de-capacity.The increase in total factor productivity(TFP)is an important approach for Chinese economy to maintain high quality growth in the future.In essence,total factor productivity is resource allocation efficiency.In addition to technological progress,the improvement of the market environment and the rational allocation of resources can improve the total factor productivity.This paper examines the impact of coal de-capacity policy on total factor productivity in the industrial sector.As primary energy industry,the coal industry not only affects the production efficiency of the coal industry itself,but also affects the total factor productivity of the entire industry by affecting resource allocation in the coal and industrial sectors.Market factors such as coal supply and price also have the spillover effects to the industries.Coal de-capacity as an important policy affecting total factor productivity,its actual effect will have a far-reaching impact on Chinese economic development in the future,and it is also useful for the formulation of other industrial policies.This paper first introduces the implementation of coal industry's de-capacity policies in various provinces.According to the differences in coal production and coal reserves in each province,the 25 coal-producing provinces in China are divided into different groups.Then,the changes in coal production and capacity after the implementation of the policy of different coal province are analyzed.Second,based on the Cobb-Douglas production function,the total factor productivity of the industrial sectors represented by the Solow Residual is calculated.Then,the impact of coal de-capacity policy on industrial sector for different types of coal provinces is studied.The coal de-capacity policy is regarded as a quasi-natural experiment and some provinces which are weak affected because of its small coal production and small proportion of coal industry are used as a control group.Therefore,the extended difference-in-difference model and the 2008-2017 provincial industrial sector panel data can be used to research policy effect on total factor productivity of the industrial sectors in different coal-producing provinces such as important coal provinces and general coal provinces.This paper also conducts a robustness test and a placebo test.It is concluded that the coal de-capacity policy has a positive impact on the total factor productivity of the industrial sectors in important coal-producing provinces.