Economic Growth and Coal Consumption in China

Abstract

In this paper, we used the methods of cointegration and granger causality estimation to test the relationship between China’s coal consumption and real GDP based on the data of 1978~2010, the results show that the real GDP and coal consumption have no granger causality, and do not have a long run cointegration, which is different from the existing discovery. Because of following reasons, first of all, this paper selected on the basis of the existing economic data since reform and opening up, and for the first time increased the time span to more than 30 years and the inspection of the data generation process (DGP) to ensure that there is no structural break point; secondary, with the deepening of China's reform and opening up, economic growth dependence on coal consumption is not stable, so the GDP and coal consumption does not exist the long-term cointegration; thirdly, hidden problem of inefficient use of coal in the rapid economic growth, resulting in economic growth and coal consumption causality is not obvious. Finally, policy recommendations are offered according to the analysis of this study. DOI: http://dx.doi.org/10.11591/telkomnika.v11i3.2226