China's Energy Economy: Technical Change, Factor Demand and Interfactor/Interfuel Substitution

39 Pages Posted: 12 Mar 2009

See all articles by Hengyun Ma

Hengyun Ma

Massey University - Applied and International Economics; Henan Agricultural University

Leslie T. Oxley

University of Canterbury

John Gibson

University of Waikato; Motu Economic and Public Policy Research

Bonggeun Kim

Hanyang University - Economics

Date Written: February 2009

Abstract

With its rapid economic growth, China's primary energy consumption has exceeded domestic energy production since 1994, leading to a substantial expansion in energy imports, particularly of oil. China's energy demand has an increasingly significant impact on global energy markets. In this paper Allen partial elasticities of factor and energy substitution, and price elasticities of energy demand, are calculated for China using a two-stage translog cost function approach. The results suggest that energy is substitutable with both capital and labour. Coal is significantly substitutable with electricity and complementary with diesel while gasoline and electricity are substitutable with diesel. China's energy intensity is increasing during the study period (1995-2004) and the major driver appears to be due to the increased use of energy intensive technology.

Keywords: China, Interfactor/interfuel substitution, Technology, Energy intensity decomposition

JEL Classification: D24, O33, Q41

Suggested Citation

Ma, Hengyun and Oxley, Leslie T. and Gibson, John and Kim, Bonggeun, China's Energy Economy: Technical Change, Factor Demand and Interfactor/Interfuel Substitution (February 2009). Available at SSRN: https://ssrn.com/abstract=1358656 or http://dx.doi.org/10.2139/ssrn.1358656

Hengyun Ma

Massey University - Applied and International Economics ( email )

Private Bag 11 222
Massey University
Palmerston North, 4442
New Zealand

Henan Agricultural University

Zhengzhou
China

Leslie T. Oxley (Contact Author)

University of Canterbury ( email )

Department of Economics
Private Bag 4800
Christchurch
New Zealand
+64-3-3642134 (Phone)

John Gibson

University of Waikato ( email )

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Hamilton, 3240
New Zealand

Motu Economic and Public Policy Research

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New Zealand

Bonggeun Kim

Hanyang University - Economics ( email )

Seoul 133-791
Korea
+82-2-2220-1025 (Phone)

HOME PAGE: http://www.hanyang.ac.kr/search/new/eindex.html

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