Technology gap and regional energy efficiency in China's textile industry: A non-parametric meta-frontier approach

Abstract

Based on the theory of total factor production, this paper analyzes energy efficiency in China's textile industry at the regional levels using non-parametric meta-frontier approach and a provincial panel data during the period, 2000–2012. We further analyze the regional differences in energy utilization technology gap using the technology gap ratio. Irrespective of the frontier (meta or group), the empirical result depicts a tremendous energy saving potential in China's textile industry. Relative to meta-frontier, the average energy efficiency of China's textile industry is 0.673 during the sample period; hence, the energy saving potential is 32.7% if output remains unchanged. Relative to group frontier, the average efficiency of China's textile industry is 0.797, which may overestimate the true level of energy utilization. From the regional perspective, significant differences exist in energy technology within the textile industry. During the sample period, the energy utilization technology gap ratio (TGR) of the Textile Industry in eastern China remains above 0.95 and it's steadily improving, approaching the optimum for the whole textile industry. Moreover, the textile industries in central and western China have improvement potentials of 19.6% and 27.4%, respectively. Finally, based on the results from the regional energy efficiency analysis, future policy priorities are suggested.