Are There Spillovers from China on the Global Energy-Growth Nexus? Evidence from Four World Regions

Luís Miguel Marques,António Cardoso Marques,José Alberto Fuinhas

doi:10.3390/economies7020059

Luís Miguel Marques, António Cardoso Marques + Show 1 more

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https://doi.org/10.3390/economies7020059

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Journal: Economies	Publication Date: Jun 18, 2019
Citations: 7	License type: CC BY 4.0

Affiliation: University of Beira Interior, University of Coimbra

Abstract

This paper analyses China’s energy consumption and economic growth spillover effects on four world regions: (i) America (North and South); (ii) Europe and Central Asia; (iii) Asia Pacific; and (iv) Africa and the Middle East. An annual aggregated time series by world region, from 1970 to 2016, and an autoregressive distributed lag (ARDL) approach were used. The results are consistent with the feedback hypothesis in the short run. With regard to the long run, feedback is present in America and the Asia Pacific. In Europe and Central Asia and in Africa and the Middle East, the results are consistent with the conservation hypothesis. Additionally, China’s spillover effects on the world energy-growth nexus are essentially a long-run phenomenon, with impacts on Europe and Central Asia, Asia Pacific, and Africa and the Middle East. Accordingly, policy-makers should be aware that China’s policies may have impact around the world, which indirectly may cause a restriction in economic growth.

Highlights

Over the last few decades, China had the largest growth market for energy, as well as being the second largest consumer of oil and the first primary energy consumer
The impact of China’s energy consumption and economic growth on the energy-growth nexus was analysed in four world regions: America; Europe and Central Asia; Pacific Asia; and Africa and the Middle East
The results reveal that China’s spillover effect is essentially a long-run phenomenon, and only America was not affected by China’s economic growth or increased energy consumption

Summary

Introduction

Over the last few decades, China had the largest growth market for energy, as well as being the second largest consumer of oil and the first primary energy consumer (see Figure 1). China superseded the United States of America (USA) for the first place in primary energy consumption in 2009, and is still gaining prominence. With the increasing globalisation in energy markets, it is expected that these relationships will develop further throughout the world in the coming years. Strong growth in Asia will most likely drive increasing energy consumption and, to satisfy this, some oil producers will play a major role by increasing oil supply. China’s primary energy consumption is increasing in recent years, while, on the other hand, it is adjusting its economy to a more sustainable growth pattern by changing from coal to clean energy

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Conclusion