Analysis of the Mechanism of Foreign Trade Affecting Energy Consumption: Based on Chinese City Data

Chaohua Ma

doi:10.4236/jssm.2020.131008

Abstract

The vigorous development of China’s economy and the rapid growth of foreign trade are inseparable from the huge energy consumption. In this paper, the decomposition analysis method is used to decompose the energy consumption growth of 285 prefecture-level and above cities in China from 2004 to 2013 into the scale, composition and technique effects. Based on the decomposition results, the IV method is used to solve the endogenous problem in the impact mechanism of China’s foreign trade on energy consumption growth. It is concluded that there was a significant positive correlation between foreign trade and total energy consumption growth, mainly through positive correlation of the scale effect and negative correlation of the technique effect, and the scale effect plays a leading role, the composition effect is not significant.

Highlights

Since the reform and opening-up policy was released, the degree of trade opening has been continuously improved and China’s economy has made great progress
Reference to the decomposition framework discussed in Shapiro and Walker, this paper extends this method to the field of energy consumption and decompose energy consumption growth into scale, composition and technique effects
The coefficient between changes in trade openness and energy consumption growth is positive and significant at the level 1%, indicating that the development of foreign trade will promote the growth of energy consumption under the same conditions

Summary

Introduction

Since the reform and opening-up policy was released, the degree of trade opening has been continuously improved and China’s economy has made great progress. According to China Statistical Yearbook-2018, China’s GDP maintained a sustained and rapid development from 1979 to 2017, with an average annual growth rate of 9.5% and an average growth rate of 18.6% in total value of import and export, especially since China’s entry into the World Trade Organization, the ratio of total value of imports and exports to GDP has increased to more than 50%. In the face of the energy crisis and the strategic task of energy conservation and emission reduction, combined with the current status of China’s active trade policy, an in-depth analysis of the impact mechanism of foreign trade on China’s energy consumption growth has important reference and guidance significance for the formulation and implementation of energy conservation and emission reduction policies, as well as has important practical significance for promoting the sound and rapid development of China’s economy

Objectives

Results

Conclusion