Does Economic Growth Target Set by Local Governments Drive Energy Consumption in China?

Abstract

The strategic formulation of Chinese-style economic growth targets is of great significance for economic and social development, but it may also affect energy consumption. Using provincial data from 2000 to 2018 in China, this study empirically analyzes the impact of economic growth targets on energy consumption. The results show that the economic growth targets significantly increase energy consumption, and the effect is more obvious in the central and western regions. Meanwhile, the unreasonable industrial structure and extensive urbanization model are the important influencing mechanisms that the economic growth targets affect the energy consumption. Government intervention and fiscal decentralization strengthen the role of the economic growth targets, while marketization development helps to weaken the impact of the economic growth targets. Besides, the top-down amplification and overfulfillment of economic growth targets further stimulate energy consumption. In conclusion, the theoretical and empirical evidence of this study indicates that deepening the reform of government target-based management system is helpful to stimulate the enthusiasm of local governments in energy conservation and emission reduction.

Keywords: Economic growth target, Energy consumption, Influencing mechanisms, Government target-based management system