TY - JOUR
T1 - Energy consumption in China and underlying factors in a changing landscape
T2 - Empirical evidence since the reform period
AU - Ahmed, Khalid
AU - Bhattacharya, Mita
AU - Qazi, Ahmer Qasim
AU - Long, Wei
PY - 2016/5/1
Y1 - 2016/5/1
N2 - In recent decades, the phenomenal growth in the Chinese economy has created increasing energy consumption. This is the first study analysing energy consumption in China considering economic, social and political dimensions of globalisation along with the effects from trade and financial sectors. The time period covers the full trajectory since the start of economic reform until recent times. In this respect, we use the Konjunkturforschungsstelle (KOF) globalisation index to explore the dynamic link between economic growth, financial development, trade and various dimensions of globalisation and energy consumption. Modern time series econometric techniques are used in establishing stationarity, long-run dynamics and causality of the series. The findings suggest that globalisation decreases energy consumption in the short run but increases it in the long run. However, the effect of financial development on energy consumption in China is opposite to the globalisation effect on energy consumption. Granger causality reveals a feedback effect between economic globalisation and financial development; globalisation in China can only reduce energy consumption if China develops its financial sector to a greater extent. In future, China should invest in its financial sector and low-carbon energy alternatives to achieve sustainable development. Prevention of energy shortfalls and cleaner environment would assist in bridging the gap both from social and political aspects to ensure China benefits significantly with high economic growth in this Asian century.
AB - In recent decades, the phenomenal growth in the Chinese economy has created increasing energy consumption. This is the first study analysing energy consumption in China considering economic, social and political dimensions of globalisation along with the effects from trade and financial sectors. The time period covers the full trajectory since the start of economic reform until recent times. In this respect, we use the Konjunkturforschungsstelle (KOF) globalisation index to explore the dynamic link between economic growth, financial development, trade and various dimensions of globalisation and energy consumption. Modern time series econometric techniques are used in establishing stationarity, long-run dynamics and causality of the series. The findings suggest that globalisation decreases energy consumption in the short run but increases it in the long run. However, the effect of financial development on energy consumption in China is opposite to the globalisation effect on energy consumption. Granger causality reveals a feedback effect between economic globalisation and financial development; globalisation in China can only reduce energy consumption if China develops its financial sector to a greater extent. In future, China should invest in its financial sector and low-carbon energy alternatives to achieve sustainable development. Prevention of energy shortfalls and cleaner environment would assist in bridging the gap both from social and political aspects to ensure China benefits significantly with high economic growth in this Asian century.
KW - China
KW - Energy
KW - Financial development
KW - Globalisation
UR - http://www.scopus.com/inward/record.url?scp=84954110717&partnerID=8YFLogxK
U2 - 10.1016/j.rser.2015.12.214
DO - 10.1016/j.rser.2015.12.214
M3 - Article
AN - SCOPUS:84954110717
SN - 1364-0321
VL - 58
SP - 224
EP - 234
JO - Renewable and Sustainable Energy Reviews
JF - Renewable and Sustainable Energy Reviews
ER -