Skip to main content

Advertisement

SpringerLink
Log in

On the nonlinear relationship between energy consumption and economic development in China: new evidence from panel data threshold estimations

  • Published:
Quality & Quantity Aims and scope Submit manuscript

Abstract

According to China’s thirteenth “Five-Year Plan (2016–2020)”, the economic and social transition to the sustainable style has become the consensus of the Chinese government and the academic world. Given the important role of energy in China’s economic and social development, it is quite important to understand the effects of energy consumption on economic development. Despite a large body of literature in this field, very few studies have investigated the nonlinear relationship between the two. Based on the neoclassical growth model and the Cobb–Douglas production function, the present study uses the panel threshold regression model and provincial panel data covering the period 1985–2014 to investigate whether a nonlinear relationship exists between energy consumption and economic growth. The estimation results indicate that, although there is no evidence for such a nonlinear relationship for the whole nation, a single threshold exists for both eastern and noneastern regions; however, the elasticity of GDP with respect to energy consumption does not vary significantly either before and after the threshold is reached. Therefore, as China’s economy enters the phase of “new normal,” with a relatively lower growth rate, sufficient and reliable energy input is still required to maintain reasonable and sustainable economic growth.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Notes

  1. At the beginning of 2009, China formulated a comprehensive plan to promote the development of ten major industries that were severely affected by the global financial crisis; these include steel, automobile, shipbuilding, petrochemical, textile, light manufacturing, nonferrous metal, equipment manufacturing, electronic information, and logistics.

  2. On November 9, 2008, the State Council of China announced a stimulus package of four trillion Chinese yuan to shore up China’s economy from the negative impact of the global financial crisis. After this program was launched, a series of infrastructural facilities, such as highways and high-speed railways, were built. At the same time, many small-scale industrial factories and plants were set up, many of which were energy- and pollution-intensive. Therefore, some scholars opined that the “Four Trillion” stimulus program should be blamed for the surge in energy consumption and environmental deterioration in recent years (Hao and Wei 2015).

  3. The term of “new normal” was originally raised by China’s president Xi Jinping in May 2014. To sum up, there are three important features of “new normal”. First of all, China’s economic growth would shift gear from the previous high speed to a medium-to-high speed. Second, there would be consistent and continuous improvement and upgradation of economic structure. Third, the growth engine of China’s economy would change from input and investment to innovation gradually. For more background information of China’s “new normal”, one could refer to http://www.chinadaily.com.cn/china/19thcpcnationalcongress/2017-10/05/content_32869258.htm.

  4. Please refer to the following website for details about the China Energy Statistical Yearbook (2014) http://tongji.cnki.net/kns55/Navi/result.aspx?id=N2015110114&file=N2015110114000049&floor=1.

  5. Please refer to the following website for details about the portal website of the Ministry of Land and Resources in China www.mlr.gov.cn.

  6. Bohai-Rim Economic Circle: The 14th CPC National Congress report demanded acceleration of the development and opening of the Bohai-rim area and listed this area as one of the key development regions in China. Relevant departments also officially established the concept of the “Bohai-Rim Economic Circle” and made separate regional planning.

  7. Yangtze River Economic Circle usually refers to the urban group in the Yangtze river delta. It is one of the most populous regions with the most vigorous economy, the highest opening degree, and the strongest innovation abilities and absorption abilities. As an important convergence region of “One Belt and One Road” and the Yangtze River Economic Region, the Yangtze River Economic Circle has a dominant strategic status in modernization construction and the overall opening-up pattern.

  8. Please refer to the following website for details of the Western Development Eleventh Five-Year Plan

    http://www.agri.cn/cszy/BJ/whsh/ncwh/201202/t20120221_2486222.htm.

References

  • Ali, H.S., Law, S.H., Zannah, T.I.: Dynamic impact of urbanization, economic growth, energy consumption, and trade openness on CO2 emissions in Nigeria. Environ. Sci. Pollut. Res. 23(12), 12435–12443 (2016)

    Article  Google Scholar 

  • Alper, A., Oguz, O.: The role of renewable energy consumption in economic growth: evidence from asymmetric causality. Renew. Sustain. Energy Rev. 60, 953–959 (2016)

    Article  Google Scholar 

  • Alshehry, A.S., Belloumi, M.: Energy consumption, carbon dioxide emissions and economic growth: the case of Saudi Arabia. Renew. Sustain. Energy Rev. 41, 237–247 (2015)

    Article  Google Scholar 

  • Bai, J., Perron, P.: Estimating and testing linear models with multiple structural changes. Econometrica. 66(1), 47–78 (1998)

    Article  Google Scholar 

  • Begum, R.A., Sohag, K., Abdullah, S.M.S., Jaafar, M.: CO2 emissions, energy consumption, economic and population growth in Malaysia. Renew. Sustain. Energy Rev. 41, 594–601 (2015)

    Article  Google Scholar 

  • Bölük, G., Mert, M.: Fossil & renewable energy consumption, GHGs (greenhouse gases) and economic growth: evidence from a panel of EU (European Union) countries. Energy 74, 439–446 (2014)

    Article  Google Scholar 

  • Chen, S.: The evaluation indicator of ecological development transition in China’s regional economy. Ecol. Ind. 51, 42–52 (2015)

    Article  Google Scholar 

  • Chiou-Wei, S.Z., Chen, C.F., Zhu, Z.: Economic growth and energy consumption revisited—evidence from linear and nonlinear Granger causality. Energy Econ. 30(6), 3063–3076 (2008)

    Article  Google Scholar 

  • Chiou-Wei, S.Z., Zhu, Z., Chen, S.H., Hsueh, S.P.: Controlling for relevant variables: energy consumption and economic growth nexus revisited in an EGARCH-M (Exponential GARCH-in-Mean) model. Energy 109, 391–399 (2016)

    Article  Google Scholar 

  • Dai, H., Masui, T., Matsuoka, Y., Fujimori, S.: Assessment of China’s climate commitment and non-fossil energy plan towards 2020 using hybrid AIM/CGE model. Energy Policy 39(5), 2875–2887 (2011)

    Article  Google Scholar 

  • Dhakal, S.: Urban energy use and carbon emissions from cities in China and policy implications. Energy Policy 37(11), 4208–4219 (2009)

    Article  Google Scholar 

  • Dergiades, T., Martinopoulos, G., Tsoulfidis, L.: Energy consumption and economic growth: parametric and non-parametric causality testing for the case of Greece. Energy economics 36, 686–697 (2013)

    Article  Google Scholar 

  • Dong, X.Y., Hao, Y.: Would income inequality affect electricity consumption? Evidence from China. Energy 142, 215–227 (2018)

    Article  Google Scholar 

  • Démurger, S.: Infrastructure development and economic growth: an explanation for regional disparities in China? J. Comp. Econ. 29(1), 95–117 (2001)

    Article  Google Scholar 

  • Du, J., Zhang, Y.: Does One Belt One Road initiative promote Chinese overseas direct investment? China Econ. Rev. 47, 189–205 (2018)

    Article  Google Scholar 

  • Fang, Y.: Economic welfare impacts from renewable energy consumption: the China experience. Renew. Sustain. Energy Rev. 15(9), 5120–5128 (2011)

    Article  Google Scholar 

  • Hansen, B.E.: Threshold effects in non-dynamic panels: estimation, testing, and inference. J. Econom. 93(2), 345–368 (1999)

    Article  Google Scholar 

  • Hao, Y., Wei, Y.M.: When does the turning point in China’s CO2 emissions occur? Results based on the Green Solow model. Environ. Dev. Econ. 20(6), 723–745 (2015)

    Article  Google Scholar 

  • Hossain, M.S.: Panel estimation for CO2 emissions, energy consumption, economic growth, trade openness and urbanization of newly industrialized countries. Energy Policy 39(11), 6991–6999 (2011)

    Article  Google Scholar 

  • Huang, B.N., Hwang, M.J., Yang, C.W.: Causal relationship between energy consumption and GDP growth revisited: a dynamic panel data approach. Ecol. Econ. 67(1), 41–54 (2008)

    Article  Google Scholar 

  • Inglesi-Lotz, R.: The impact of renewable energy consumption to economic growth: a panel data application. Energy Econ. 53, 58–63 (2016)

    Article  Google Scholar 

  • Jebli, M.B., Youssef, S.B., Ozturk, I.: Testing environmental Kuznets curve hypothesis: the role of renewable and non-renewable energy consumption and trade in OECD countries. Ecol. Ind. 60, 824–831 (2016)

    Article  Google Scholar 

  • Kangning, X., Jian, H.: Resource curse effect on regional economy in China: another explanation to regional discrepancy. Economist 6, 96–102 (2005)

    Google Scholar 

  • Kasman, A., Duman, Y.S.: CO2 emissions, economic growth, energy consumption, trade and urbanization in new EU member and candidate countries: a panel data analysis. Econ. Model. 44, 97–103 (2015)

    Article  Google Scholar 

  • Kraft, J., Kraft, A.: On the relationship between energy and GNP. J. Energy Dev. 3(2), 401–403 (1978)

    Google Scholar 

  • Kuan, C., Hongchang, W., Yuxin, Z., Jefferson, G.H., Rawski, T.G.: Productivity change in Chinese industry: 1953–1985. J. Comp. Econ. 12(4), 570–591 (1988)

    Article  Google Scholar 

  • Liu, Y., Hao, Y., Gao, Y.: The environmental consequences of domestic and foreign investment: evidence from China. Energy Policy 108, 271–280 (2017)

    Article  Google Scholar 

  • Long, X., Naminse, E.Y., Du, J., Zhuang, J.: Nonrenewable energy, renewable energy, carbon dioxide emissions and economic growth in China from 1952 to 2012. Renew. Sustain. Energy Rev. 52, 680–688 (2015)

    Article  Google Scholar 

  • Meadows, D.H., Meadows, D.H., Randers, J., Behrens III, W.W.: The Limits to Growth: A Report to the Club of Rome (1972). Universe Books, New York (1972)

    Google Scholar 

  • Meng, M., Fu, Y., Wang, X.: Decoupling, decomposition and forecasting analysis of China’s fossil energy consumption from industrial output. J. Clean. Prod. 177, 752–759 (2018)

    Article  Google Scholar 

  • Nie, P.Y., Yang, Y.C.: Effects of energy price fluctuations on industries with energy inputs: an application to China. Appl. Energy 165, 329–334 (2016)

    Article  Google Scholar 

  • Ouyang, Y., Li, P.: On the nexus of financial development, economic growth, and energy consumption in China: new perspective from a GMM panel VAR approach. Energy Econ. 71, 238–252 (2018)

    Article  Google Scholar 

  • Rezitis, A.N., Ahammad, S.M.: The relationship between energy consumption and economic growth in South and Southeast Asian countries: a panel VAR approach and causality analysis (2015)

  • Saidi, K., Hammami, S.: The impact of CO2 emissions and economic growth on energy consumption in 58 countries. Energy Rep. 1, 62–70 (2015)

    Article  Google Scholar 

  • Sathaye, J.A., Meyers, S.: Greenhouse Gas Mitigation Assessment: A Guidebook, vol. 6. Springer, Berlin (2013)

    Google Scholar 

  • Shahbaz, M., Khan, S., Tahir, M.I.: The dynamic links between energy consumption, economic growth, financial development and trade in China: fresh evidence from multivariate framework analysis. Energy Econ. 40, 8–21 (2013)

    Article  Google Scholar 

  • Shan, H.J.: Estimation of China’s capital stock K: from 1952 to 2006. J. Quant. Tech. Econ. 25(10), 17–31 (2008). (In Chinese)

    Google Scholar 

  • Shan, Y., Liu, J., Liu, Z., Xu, X., Shao, S., Wang, P., Guan, D.: New provincial CO2 emission inventories in China based on apparent energy consumption data and updated emission factors. Appl. Energy 184, 742–750 (2016)

    Article  Google Scholar 

  • Shi, H., Huang, S.: How much infrastructure is too much? A new approach and evidence from China. World Dev. 56, 272–286 (2014)

    Article  Google Scholar 

  • Sun, Z., Chang, C.P., Hao, Y.: Fiscal decentralization and China’s provincial economic growth: a panel data analysis for China’s tax sharing system. Qual. Quant. 51(5), 2267–2289 (2017)

    Article  Google Scholar 

  • Tang, C.F., Tan, B.W., Ozturk, I.: Energy consumption and economic growth in Vietnam. Renew. Sustain. Energy Rev. 54, 1506–1514 (2016)

    Article  Google Scholar 

  • Tong, H.: On a Threshold Model, vol. 29, pp. 575–586. Sijthoff & Noordhoff, Amsterdam (1978)

    Google Scholar 

  • Wagner, M.: The carbon Kuznets curve: a cloudy picture emitted by bad econometrics? Resour. Energy Econ. 30(3), 388–408 (2008)

    Article  Google Scholar 

  • Wang, Q., Zeng, Y.E., Wu, B.W.: Exploring the relationship between urbanization, energy consumption, and CO2 emissions in different provinces of China. Renew. Sustain. Energy Rev. 54, 1563–1579 (2016a)

    Article  Google Scholar 

  • Wang, Q.: Fixed-effect panel threshold model using Stata. Stata J. 15(1), 121–134 (2015)

    Article  Google Scholar 

  • Wei, Y.D., Liefner, I.: Globalization, industrial restructuring, and regional development in China. Appl. Geogr. 32(1), 102–105 (2012)

    Article  Google Scholar 

  • Wang, S., Fang, C., Guan, X., Pang, B., Ma, H.: Urbanisation, energy consumption, and carbon dioxide emissions in China: a panel data analysis of China’s provinces. Appl. Energy 136, 738–749 (2014)

    Article  Google Scholar 

  • Wang, S.S., Zhou, D.Q., Zhou, P., Wang, Q.W.: CO2 emissions, energy consumption and economic growth in China: a panel data analysis. Energy Policy 39(9), 4870–4875 (2011)

    Article  Google Scholar 

  • Wang, S., Li, Q., Fang, C., Zhou, C.: The relationship between economic growth, energy consumption, and CO2 emissions: empirical evidence from China. Sci. Total Environ. 542, 360–371 (2016b)

    Article  Google Scholar 

  • Wang, Z.X., Ye, D.J.: Forecasting Chinese carbon emissions from fossil energy consumption using non-linear grey multivariable models. J. Clean. Prod. 142, 600–612 (2017)

    Article  Google Scholar 

  • Wu, H.Q., Shi, Y., Xia, Q., Zhu, W.D.: Effectiveness of the policy of circular economy in China: a DEA-based analysis for the period of 11th five-year-plan. Resour. Conserv. Recycl. 83, 163–175 (2014)

    Article  Google Scholar 

  • Yuan, C., Liu, S., Wu, J.: Research on energy-saving effect of technological progress based on Cobb–Douglas production function. Energy Policy 37(8), 2842–2846 (2009)

    Article  Google Scholar 

  • Yuan, J.H., Kang, J.G., Zhao, C.H., Hu, Z.G.: Energy consumption and economic growth: evidence from China at both aggregated and disaggregated levels. Energy Econ. 30(6), 3077–3094 (2008)

    Article  Google Scholar 

  • Zhang, C., Lin, Y.: Panel estimation for urbanization, energy consumption and CO 2 emissions: a regional analysis in China. Energy Policy 49, 488–498 (2012)

    Article  Google Scholar 

  • Zhang, D.: Oil shock and economic growth in Japan: a nonlinear approach. Energy Econ. 30(5), 2374–2390 (2008)

    Article  Google Scholar 

  • Zhang, Y.J., Da, Y.B.: The decomposition of energy-related carbon emission and its decoupling with economic growth in China. Renew. Sustain. Energy Rev. 41, 1255–1266 (2015)

    Article  Google Scholar 

  • Zhang, J., Wang, G.: Energy saving technologies and productive efficiency in the Chinese iron and steel sector. Energy 33(4), 525–537 (2008)

    Article  Google Scholar 

  • Zhang, C., Xu, J.: Retesting the causality between energy consumption and GDP in China: evidence from sectoral and regional analyses using dynamic panel data. Energy Economics 34(6), 1782–1789 (2012)

    Article  Google Scholar 

  • Zhang, Q., Liao, H., Hao, Y.: Does one path fit all? An empirical study on the relationship between energy consumption and economic development for individual Chinese provinces. Energy 150, 527–543 (2018)

    Article  Google Scholar 

Download references

Acknowledgements

The authors acknowledge financial support from the National Natural Science Foundation of China (71761137001, 71403015, 71521002), the Beijing Natural Science Foundation (9162013), the key research program of the Beijing Social Science Foundation (17JDYJA009), the National Key Research and Development Program of China (2016YFA0602801, 2016YFA0602603), Special Fund for Joint Development Program of the Beijing Municipal Commission of Education, Scientific Research Program for Higher Education in Xinjiang (XJEDU2017T003), and Key Projects of Humanities and Social Sciences Bases for Higher Education in Xinjiang (010116B03). The authors are also very grateful to two anonymous reviewers, and Editor-in-Chief Prof. Vittorio Capecchi for their insightful comments that helped us sufficiently improve the quality of this paper. The usual disclaimer applies.

Author information

Author notes

  1. Xiao-Ying Dong and Qiying Ran have contributed equally to this study and share first authorship.

Authors and Affiliations

  1. School of Management and Economics, Beijing Institute of Technology, 5 Zhongguancun South Street, Haidian District, Beijing, 100081, China

    Xiao-Ying Dong & Yu Hao

  2. Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing, 100081, China

    Xiao-Ying Dong & Yu Hao

  3. Sustainable Development Research Institute for Economy and Society of Beijing, Beijing, 100081, China

    Xiao-Ying Dong & Yu Hao

  4. Beijing Key Lab of Energy Economics and Environmental Management, Beijing, 100081, China

    Yu Hao

  5. Collaborative Innovation Center of Electric Vehicles in Beijing, Beijing, 100081, China

    Yu Hao

  6. Center for Innovation Management, Xinjiang University, Urumqi, 830047, China

    Qiying Ran

  7. College of Economics and Management, Xinjiang University, Urumqi, 830047, China

    Qiying Ran

Authors
  1. Xiao-Ying Dong
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Qiying Ran
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Yu Hao
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Yu Hao.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Dong, XY., Ran, Q. & Hao, Y. On the nonlinear relationship between energy consumption and economic development in China: new evidence from panel data threshold estimations. Qual Quant 53, 1837–1857 (2019). https://doi.org/10.1007/s11135-019-00841-5

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11135-019-00841-5

Keywords

Search

Navigation