The-energy-implications-of-Chinese-regional-disparities_2010_Energy-Policy.pdf

communication the energy implications of chinese regional disparities yuanxi huang a b n daniel toddc ainstitute of geographical sciences and resources research cas beijing 100101 china bgraduate university of chinese academy of sciences beijing 100049 china cdepartment of environment and geography university of manitoba winnipeg r3t 2n2 canada a r t i c l e i n f o article history received 24 may 2010 accepted 27 july 2010 available online 19 august 2010 keywords china energy usage regional disparities a b s t r a c t chinese regional disparities are readily apparent with well being seen the highest at the coast and declining steadily inland their mitigation will clearly be hostage to improvement in economic development since the unevenness of that development created them in the fi rst place integral to development is structural change and the key to effecting that change is improved energy effi ciency indeed this paper explores energy usage and regional development from 1952 to the present establishing that they both conform to an inverted u pattern eastern china the leader in industrialization has moved beyond the apogee of the curve but central and western china have failed to follow suit being held back by poor industrial structures and adverse patterns of energy consumption remedying this laggardly performance preoccupies china s government for rendering the country energy effi cient and containing regional disparities both rest on pushing the central and western regions down the curve in the wake of the prosperous coast bairoch 1988 berry 1973 kemp 1989 lowry 1990 williamson 1998 china is about to join the ranks of the modern societies with all such happening connotes in terms of energy use since the reform and opening up policy announced at the end of the 1970s china has witnessed great progress in both social and economic well beings consistent with rapid modernization china has become the world s second largest energy consumer just behind the united states and its huge demands on energy resources to say nothing of the heavy pollution of its environment have drawn more and more attention from both domestic and international scholars on the energy front zhao et al 2009 there is general consensus among such scholars that energy consumption is an important factor that complements capital stock and labour input in infl uencing gdp akinlo 2008 apergis and payne 2009 lee and chang 2008 al iriani 2006 narayan and smyth 2008 in summing up this line of enquiry zhang and huang 2008 selected six major energy consuming countries namely the united states the united kingdom france germany japan and india and proceeded to analyze the relationship of industry structure evolution and the accompanying pattern of unit energy consumption they concluded that energy consump tion intensity will subscribe to an inverted u confi guration over time during the early phases of the development process coinciding with the transition to an industry structure energy consumption intensity will begin to spurt up the curve climaxing when the economy is dominated by manufacturing especially that of the heavy kind defl ection down the curve occurs in tandem with economic diversifi cation famously industrial the workshop of the world contemporary china can be positioned on the curve just beyond its apex however china is such a huge country with so large a land mass and population that it is misleading to view it as a monolithic entity in fact the different regions in this country are at varying stages of development such disparities in regional fortunes have come to preoccupy researchers and policy makers alike for they have enormous implications for the country s future it is no exaggeration to claim that severe disparities left unchecked could destabilize china the gap between the coastal provinces and the western ones in particular is disquieting to the authorities in beijing in short western china is by far the worst off part of china with the central region exhibiting similar albeit less alarming features by way of contrast the east displays all the symptoms of a booming region boasting heightened indica tors of material well being the consequences of these regional differences on the energy sector are quite profound as this paper will demonstrate to put it plainly the aim of this paper is to show how a country s regions may be at different levels of development and that policies designed tobring thelaggingregions up to contents lists available at sciencedirect journal homepage energy policy 0301 4215 see front matter fax 1 204 4747699 e mail addresses huangyx 08b nonohuang y huang energy policy 38 2010 7531 7538 acceptable levels require a nuanced approach to energy develop ment further we will demonstrate that an interactive relation ship between regional development and energy consumption prevails via a simple structural model and that the regions of china display distinct patterns in this relationship the paper concludes with some recommendations for policy makers 2 taking the measure of regional disparities to begin with it is necessary to grasp the nature of the pattern of regional disparities subsequently chinese energy consump tion from the regional perspective will be explored practically it can be explored from 1952 to 2007 a solid half century in which to discern trends spatially data are available at two sub national levels the province and the three regions the former ideal for tracing the origins of causal phenomena and the latter better for summarizing discrepancies between booming and lagging parts of the country 1a summary is of immediate interest and so we concentrate our discussion in this section on the three region division of china 2 1 economic disparities conventionally regional disparities are calculated on the basis of variations in per capita income or gdp the latter being favoured in china many researchers have concluded that disparities have worsened in recent decades especially after the opening and reform policy kanbur and zhang 2005 li and wei 2009 wu 2001 these results are consistent even when the statistical analysis is extended to consider output and consump tion this may be about to change however as fan and sun 2008 who used the most recent data valid to 2006 maintain that the deteriorating trend has improved since 2004 william son s inverted u vw ezcurra and rapu n 2006 petrakos et al 2005 williamson 1965 is a population weighted coeffi cient of variation which measures the dispersion of the regional income per capita levels relative to the national average income while each region deviation is weighted by its share in the national population as a simple but widely accepted indicator it is used here to evaluate the overall trend of regional disparities after amending it to accommodate the most recent data of gdp per capita by province the upshot is a longitudinal analysis extending from 1952 to 2008 in a nutshell our vwresults are consistent with those of other studies they show that regional disparities between the provinces fl uctuated before the 1980s declined during that decade and increased in the 1990s were stable from the mid 1990s to 2004 and began to decline thereafter fig 1 signifi cantly the latest run of vwvalues remains high surpassing 0 7 in constant terms implying that disparities remain severe in order to further investigate the differences between regions we resort to the theil coeffi cient of concentration theil 1967 a very popular index for analyzing the spatial sources of the disparities terrasi 1999 2 our results confi rm that the between group inequality icbr keeps on increasing all the time and its contribution to the total inequality ic has exceeded within group inequality icwr since 1995 fig 2 that means the gap between regions rather than differences within them is the main problem in chinese regional disparities nowadays besides these two population weighted coeffi cients regional disparities in the process of economic development need to be examined gdp gdp per capita and the proportion of the economy devoted to the secondary sector are the preferred measures of regional disparities in this context chan and wang 2008 we make use of them to summarize the differences in well being existing between the three big regions it is immediately apparent that the eastern region has been the richest from fi rst to last while the other two invariably fall behind with western china persistently the worst performing fig 3 it is widely held that the gap between the eastern and western regions is china s chief domesticconcern golley 2007 in2007 gdppercapita differences between the regions in question amounted to 3757 2 rmb 3in real terms about 63 times more than in 1952 fig 3b fig 3a permits us to examine china in this light the country has witnessed a huge increase in gdp most tellingly since 1995 most of this upsurge can be attributed to developments in the eastern region leaving the centre and west to contribute only marginally it is self evident that the structure of the regional economies accounts for their respective contributions an appreciation of differences in structure can be gained from fig 3c which plots the relative importance of the secondary sector since 1952 4 0 0 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 vw current valuesconstant values fig 1 chinese regional disparities measured by vw coeffi cients 1952 2008 0 0 02 0 04 0 06 0 08 0 1 0 12 0 14 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 icicbricwr fig 2 theil coeffi cients for china 1952 2007 1 in this paper china is divided into three regions from east to west following offi cial practices eastern china consists of eleven provinces beijing tianjin shanghai liaoning hebei shandong jiangsu zhejiang fujian guangdong and guangxi central china comprises eight provinces heilongjing jilin shanxi henan hubei hunan jiangxi and anhui and western china has eleven provinces inner mongolia shaanxi gansu ningxia qinghai xinjiang sichuan chongqing yunnan guizhou and tibet 2 the theil coeffi cient of concentration which can be interpreted theil 1967 as the log of a weighted geometric mean of regional per capita incomes defl ated by the national average with the weight being represented by the income shares is calculated according to the following formulas ic x i yilog yi xi icbr icwr icbr x r yrlog yr xr icwr x r yr x i yi yr log yi yr xi xr where ic is total inequality icbris between group inequality icwris within group inequality yiand xiare regional shares of national gdp and population respectively and whereas yrand xrare the same shares of groups of regions 3 rmb is chinese currency also known as yuan and 1 us dollar is currently equal to about 7 rmb 4 classifi cation of economic activities into three strata of industry is a common practice in the world although the grouping varies to some extent from country to country according to china statistical yearbook 2009 national bureau of statistic of china 2009 in china economic activities are categorized into the following three strata y huang d todd energy policy 38 2010 7531 75387532 in embracing manufacturing this sector acts as a pointer for industrialization and all that fl ows from it in respect of material advance not surprisingly the eastern region stands out as possessingthelargestweightingforthesecondarysector constantly serving as the industrial leader while the central and western regions have vied over the years for second place the latter has been forced to concede the position since 1980 apartfrom infl uencingregionaldevelopment economic structure has a strong bearing on energy consumption a subject to which we now turn 2 2 regional dimensions to chinese energy consumption glaringly obvious is the sheer magnitude of the increase in energy consumption enjoyed by all three regions but least of all by the western region fig 4a from a national base of 48 7 mtce million tonnes of coal equivalent in 1952 consumption grew to top 2655 8 mtce by 2007 a 53 fold increase 5the eastern region s growth exactly matched the nation s growth the central region for its part registered a 37 fold increase on its modest 1952 consumption of 19 7 mtce the western region in sharp contrast dramatically outperformed the others increasing consumption no less than 106 times of course this refl ected its very small 1952 base of 5 9 mtce an amount which while growing to 637 mtce by 2007 still managed to fall short of the 757 7 mtce obtaining for the central region while useful as a crude indicator of spatial variations in energy usage the foregoing tells us nothing about effi ciency of energy usage for that purpose we have recourse to measures of energy consumption intensity herein defi ned as tonnes of coal equivalent energy consumed for every 10 000 rmb yuan standardized in 1952 values of wealth generated by the economy it is commonly held that an intensity measure of this naturefurnishesasimplebutaccurate confi rmationofa territory s level of development for development is surely impossible without effi cient wealth generation ang and liu 2006 fisher vanden et al 2004 liao et al 2007 ma and stern 2008 sinton and fridley 2000 yuxiang and chen 2010 clearly high intensity corresponds to ineffi cient usage an undesirable outcome fig 4b makes it plain that apart from in the early years of the people s republic the eastern region has consistently bettered the others on the score of energy effi ciency the western region was prone to more fl uctuations initially doing better than thecentralregion butdeterioratingafter1990tofall substantially behind it of course neither regional development nor regional trends in energy usage exists in a vacuum rather they are shaped by the institutional environment and in particular by policy measures emanating from the central government a review of such measures is now in order 3 government policy response regardless of whether the issue is economic development or energy consumption eastern china is always the leading area with western and central china falling substantially behind eastern china s lead owes much to regional policies which have been implemented over the last 30 years since the opening and reform policy of 1978 china s modernization strategies have been intentionally focused on the development of the coastal 0 500 1000 1500 2000 2500 3000 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 primary energy consumption mtce 0 5 10 15 20 25 30 energy consumption intensity tce 10000 yuan 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 easterncentralwesternnational easterncentralwesternnational fig 4 energy consumption in china 1952 2007 a primary energy consumption and b energy consumption intensity 1952 constant values 0 1000 2000 3000 4000 5000 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 gdp billion yuan 0 1000 2000 3000 4000 5000 6000 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 gdp per capita yuan easterncentralwestern 0 10 20 30 40 50 60 70 80 90 weight of secondary sector easterncentralwesternnational easterncentralwesternnational fig 3 different developments paths among three big regions in china 1952 2007 a gdp 1952 constant values b gdp per capita 1952 constant values and c weight of secondary sector footnote continued primary sector refers to agriculture forestry animal husbandry fi shery and services in support of these industries secondary sector refers to mining and quarrying manufacturing production and supply of electricity water and gas and construction and tertiary sector embraces all other economic activities not included in the primary or secondary sectors 5 the data are calculated from china compendium of statistics 1949 2004 department of comprehensive statistics of national bureau of statistics of china 2005 and china statistical yearbook 2006 china statistical yearbook 2007 and china statistical yearbook 2008 national bureau of statistic of china 2006 2007 2008 use is made of the following 1 mtce 0 714 mt coal 1 4 mt oil 1 33 b stere natural gas 399 bwh hydropower y huang d todd energy policy 38 2010 7531 75387533 areas with the aim of attracting investments from abroad it was the coastal areas of the east and south east that emerged as the locomotive of growth for the entire country hsueh and woo 1991 yuan et al 2010 since economic growth occurs unevenly the growing gap between regions came about to a great extent as a result of government policy alarmed at the size of the gap china s government has lately shifted its focus onto the interior regions as the biggest gap among the regions in china is the imbalance between the eastern coastal zone and the western part of the country the central government has applied two sets of policies in an attempt to counter it fi rst through the china western development program of 1999 and latterly through the rise of central china plan of 2005 owing to abundant energy resources in western china the fi rst of these focuses on energy exploitation unfortunately the large scale energy exploitation that has ensued and the environmental damage in western china that has fallen out from it has not been forthcoming with the expected developmental benefi ts in large part this is because the energy resources coal in particular are exported from the region resulting in an enormous leakage component in the regional multiplier to be sure gdp in western china has increased signifi cantly in recent years as our indicators have endorsed but people in the west continue to experience a worse living standard than their fellow citizens in other regions zhang and huang 2009 while not so starkly disadvantaged central china is in a similar situation as well evidently the mere possession of energy resources is no guarantee of balanced regional developme