Nexus between Energy Consumption and Economic Performance in China

Zhipeng Du¹, Yiming He^2,3
(1. South China Agricultural University, China; 2. National School of Agricultural Institution & Development, South China Agricultural University, China; 3.Division of Resource Management, West Virginia University, USA)

Abstract: This study analyzes the relationship between energy consumption and economic performance for China using 32 years of annual-frequency data. The urbanization and industrialization are used as control variables because of their role in mediating the relationship between energy utilization and economic output. Empirical results indicate unidirectional Granger causality from economic performance to natural gas consumption in the short run and long run is consistent with conservation hypothesis and unidirectional Granger causality from liquefied petroleum consumption to economic performance in the short run is consistent with growth hypothesis. The nexus between electricity consumption and economic performance, and the nexus between gas consumption and economic performance are consistent with neutrality hypothesis.

Key words: energy consumption; urbanization; industrialization; economic performance; China

JEL codes: C13, C22, O40, Q43