The Relationship between Urbanization, Economic Growth and Energy Consumption in China: An Econometric Perspective Analysis

Abstract

Abstract:As the largest developing country in the world, with rapid economic growth, China has witnessed fast-paced urbanization development over the past three decades. In fact, urbanization has been shown to promote economic growth and improve the livelihood of people, but it can also increase energy consumption and further generate energy crisis. Therefore, a better understanding of the relationship between urbanization, economic growth and energy consumption is important for China's future sustainable development. This paper empirically investigates the long-term equilibrium relationships, temporal dynamic relationships and causal relationships between urbanization, economic growth and energy consumption in China. Econometric models are utilized taking the period 1980-2012 into consideration. Cointegration tests indicate that the variables are found to be of I(1) and cointegrated. Further, vector error-correction model (VECM) indicates that when the short-term fluctuations deviate from the long-term equilibrium, the current changes of energy consumption could eliminate 9.74% non-equilibrium error of the last period, putting back the situation to the equilibrium state through a reverse adjustment. Impulse response analysis intuitively portrays the destabilized changes of the variables in response to some external shocks. However, the impact of energy consumption shock on urbanization and the OPEN ACCESSSustainability 2015, 7 5610 impact of urbanization on economic growth seem to be rather marginal. Moreover, Granger causality results reveal that there is a bi-directional Granger causal relationship between energy consumption and economic growth, and unidirectional causality running from urbanization to energy consumption and economic growth to urbanization. The findings have important implications for Chinese policymakers that on the path towards a sustainable society, the effects of urbanization and economic growth on energy consumption must be taken into consideration.

The relationship between economic growth, energy consumption, and CO2 emissions: Empirical evidence from China

“…The null hypothesis was that GDP, EC, and CE would all contain a unit root. The unit root tests were carried out with individual trends and intercepts for each variable, and the lag lengths were selected automatically using the Schwarz information criteria (Zhao and Wang, 2015). Table 2 reviews the ADF test results, which clearly show that each variables was not stationary in their level forms.…”

“…Ordinarily, with respect to non-stationary time series, differenced methods are further used to identify the stationarity of the variables (Zhao and Wang, 2015). ΔGDP, ΔEC, and ΔCE denote the variables at their first difference.…”

Changing urban forms and carbon dioxide emissions in China: A case study of 30 provincial capital cities

“…Therefore, decrease shape complexity when controlling urban development can reduce urban CO 2 emissions effectively. Ultimately, this knowledge will allow them to address emission reductions and to achieve more sustainable economic growth [64]. Based on the analysis set out in this paper, the empirical findings of this study hold important implications for action on the path towards developing low-carbon cities in China.…”

Sectoral Electricity Consumption and Economic Growth: The Time Difference Case of China, 2006–2015

“…The co-integration relationship between total electricity consumption and economic growth has been verified in the existing literature [2, 10,11,18], which means that there should be no obvious time differences between electricity consumption growth and economic growth. Sectoral electricity consumption growth has varying time difference relationships with economic growth, and our findings show different characteristics at both the industry level and sector level.…”