Modeling the relationship between energy consumption and economy development in China

This paper investigated the empirical relationship between economy development and energy consumption by material production, nonmaterial production and household. Empirical models accounting for the key influential factors were constructed. Ordinary Least Square Regression (OLS) analysis of the official data of China for the year 1985–2007 permitted the relationship between individual energy consumption components and the corresponding coefficients to be investigated. The results showed that (1) the Unit Energy Consumption by Primary Industry (UECPI), Secondary Industry (UECSI), and Tertiary Industry (UECTI) demonstrated an inverse relationship with Gross Domestic Product (GDP); (2) a linear relationship exists between the Energy Consumption by Nonmaterial Production (ECNP) and GDP; (3) the hypotheses that there is an inverse S-shaped relationship between Unit Energy Consumption by Household (UECH) and Personal Income (PI) is valid. Based on the above findings and an analysis of China’s energy policies, suggestions on China’s energy policy were given in the end.

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