The Impact Of Energy De-subsidize Policy In China

As a policy and financial tool,energy subsidy has been regarded as an important means to promote economic development,alleviate energy poverty and safeguard social stability for a long time.According to the statistics of The Global Subs idies Initiative,the amount of subsidy in the world reached 500 billion USD annually,accounting for 1% of the world's GDP.In developing countries,energy subsidies are mainly used for stimulating energy consumption while in developed countries subsidies mainly are used in energy production industry.However,a large number of studies and economic practices showed that the implementation of energy subsidy policy would cause negative effects on the contrary,such as distorting economic development and causing uneven social distribution.Especially for developing countries which consumed energy a lot like China,energy subsidies will accelerate energy consumption,increase carbon emissions and aggravate environmental pollution.Therefore,since the G20 summit in September 4,2016,the leader of China had confirmed that the energy subsidy policy were going to be phased out in the future.The purpose of this paper was to analyze the impact of energy de-subsidization policy on China's economy and the environment.This paper employed the price-gap approach to estimate the scale of energy subsidies for coal,petroleum products,natural gas and electricity in China.Then,a computable general equilibrium(CGE)model was constructed to simulate the impact of energy d e-subsidization policy on China's economy and the environment.In the process of simulation,15 scenarios were set according to the different subsidy reduction intensity and path,after which the simulation results were analyzed and interpreted.The results suggested that with the increase of the intensity of de-subsidization,the gross domestic product(GDP)appears to be declining and showed a nonlinear relationship with energy subsidies;domestic output and consumption will be reduced with increasing int ensity of subsidy cuts,which would appear to be a recession and rising prices in macroeconomic consequently.The impact of energy de-subsidization policy on environment was mainly reflected in the changes of d carbon emissions and energy consumption in China: the total CO2 emissions and energy consumption gradually decrease in the wake of energy subsidies reduction.In addition,it was also indicated that the effects of various subsidy policies were quite distinguished while different reduction paths under the same subsidy reduction target had little impact on economy and energy.But if this execution completely abolished energy subsidies within a year,consequences will be quite different from phasing out energy subsidies policy: the implement would encourage domestic consumption and economic development as well as cause the reduction of energy consumption and CO2 emissions in China.Finally,according to conclusion of scenario analysis,it was believed that a moderate degree of energy de-subsidization policy--taking 50%-90% as the ultimate goal and gradually reducing energy subsidies yearly within 2010-2030,was suitable for China's economic and environmental development.