Industrial Energy Consumption in Northeast China under the Revitalisation Strategy: A Decomposition and Policy Analysis

Abstract

While previous studies have examined China’s changing industrial energy consumption at the national level, this study argues that it is more useful, from a policy standpoint, to conduct a regional-level analysis owing to the significant regional disparity in industrialisation in the country. This study focuses particularly on Northeast China, where the implementation of the Northeast Revitalisation Strategy in 2003 has contributed to rapid reindustrialisation, which has a serious implication for industrial energy consumption. We decompose the region’s energy consumption changes into activity, structure, and intensity effects. Our results show that the intensity effect is not the only negative factor impacting industrial energy consumption during 2003–2012. The structure effect also has a negative impact on industrial energy consumption between 2005 and 2012. However, the negative impact of the two factors is weakening and not strong enough to counter the positive impact of the activity effect. This result highlights the problem of uncoordinated policy-making in Northeast China. The development strategy, which still depends highly on traditional heavy industries, is in conflict with the national strategy of energy conservation. The two conflicting objectives of industrial revitalization and energy conservation must be reconciled for sustainability in the long term. The study concludes with policy recommendations on how to achieve such reconciliation.