The role of intermediate factors in China's energy consumption from the perspective of global production chain

Abstract

With the fragmentation of global production, the share of intermediate trade in international trade has increased significantly. Nevertheless, more research must be done on how intermediate trade factors influence energy consumption. This paper utilized the multi-regional input-output (MRIO) model to categorize China's energy utilization into six parts based on its position within the global production chain. Additionally, it examined the impact of intermediate factors on China's energy consumption through index decomposition analysis (IDA). The results revealed that: (1) from 2000 to 2014, intermediate factors led to an increase of 1380.96Mtces in China's energy consumption, accounting for around 37% of the national total; (2) the reduction in efficiency is the primary cause of the surge in domestic intermediate energy consumption, while the increase in market proportion is the dominant driver promoting international intermediate energy consumption growth; (3) the international intermediate proportion contributed the most among all intermediate factors. Drawing upon the findings above, this paper proposed policy recommendations to regulate China's rising energy consumption, precisely the escalation of intermediate process energy usage, focusing on the global production chain.