The Impact of Foreign and Indigenous Innovations on the Energy Intensity of China’s Industries

Abstract

China’s industrial sectors have an approximate consumption amounting to 70% of the aggregate power of the entire country. Investigating the driving forces of the decline in the energy intensity is essential for accelerating China’s conversion into a low-carbon economy. Nowadays, there has been no agreement as yet when it comes to the impacts of China’s industrial sectors on energy intensity. The current research work studies the impacts of key driving forces, in particular foreign as well as indigenous innovations, on China’s industrial energy intensity in 34 industrial sectors between 2000 and 2010. Linear and nonlinear analysis methodologies are put to use. The linear empirical findings show that indigenous innovation primarily contributes to driving down the industrial energy intensity across the sampling duration. The foreign innovations, which take the shape of FDI as well as imports, are seen as benefiting the decline in industrial energy intensity; on the other hand, exports ramp up the industrial energy intensity. An additional investigation, on the basis of the panel threshold framework, indicates that the impact of foreign innovations by means of openness as well as industrial energy intensity has an association with the technological absorptive potential. The empirical evidence puts forward some pivotal inferences for policymakers with regard to China’s declining industrial energy intensity—for instance, exploitation of the maximum benefit associated with the technology spillovers; in addition, it is important to take into consideration the attributes and scenarios that impact industrial energy intensity.

Does the Level of Absorptive Capacity Matter for Carbon Intensity? Evidence from the USA and China

“…Interestingly, the results are robust under an alternative measure of CO 2 emissions in both economies and validate the choice of the NARDL estimation as a useful tool for policy reforms. Aligned with recent literature [87][88][89], we also suggest that the related studies which have taken into account the traditional linear specification, such as ARDL, may review and extend the phenomena under a non-linear setting introduced in recent literature, for better policy input.…”

Medium- and High-Tech Export and Renewable Energy Consumption: Non-Linear Evidence from the ASEAN Countries

“…In addition, FEM is also recommended to estimate the parameters for a small cross-sectional sample [81] which is our case as we have only 9 countries. Our specification is also in line with previous studies on factors affecting renewable energy use such as Bamati and Raoofi [7] for 25 developed and developing countries, Alam and Murad [16] for 25 OECD countries, Azam, Khan, Zaman, and Ahmad [25] for three ASEAN countries (namely Indonesia, Malaysia, and Thailand); Kahia, Aïssa, and Lanouar [66] for 7 MENA Net Oil Importing Countries; Marques and Fuinhas [68] for 24 European countries; Sadorsky [20] for eight Middle Eastern countries; Bashir, Sheng, Dogan, Sarwar, and Shahzad [31] for 29 OECD countries; Beser and Soyyigit [2] for G20 countries (except Russia), Chen, Du, Huang, and Huang [5] for 34 industrial sectors in China, and Waheed et al [82] for 6 Gulf Cooperation and Council countries.…”

“…High technology industries include, for example, aviation and spacecraft industry, pharmaceutical industry, accounting and information processing technologies, radio, television and communication equipment industry, and medical and optical devices industry [4]. Thus, the production and export of medium-and high-tech products are an important source of export-oriented growth and development, and of the transition to a low-carbon economy [5][6][7].…”