Marketization of Energy Resources in China: An Environmental CGE Analysis

Abstract

This study aims to examine the effects of energy price fluctuations on China’s energy-environment-economy system under different scenarios. To achieve this, a computable general equilibrium model is constructed using the 2020 macroeconomic SAM table and microeconomic SAM tables that encompass 8 energy sectors and 13 intermediate sectors. The model is utilized to analyze the impacts of various policies on variables within the energy-environment-economy system. The findings indicate that an increase in energy prices will lead to a contraction effect on multiple industrial sectors and the overall macroeconomy. Higher energy prices result in elevated prices, reduced output, decreased investment, and decreased consumer spending across most industrial sectors, negatively affecting the macroeconomy. However, government regulation of secondary energy prices can mitigate the influence of primary energy prices on the national economy. Such regulation hinders the transmission of primary energy price fluctuations to downstream industrial chains, thereby alleviating its impact on different sectors and the macroeconomy to varying extents. In order to mitigate the adverse effects of energy price fluctuations, it is crucial to reduce energy consumption while promoting economic growth and enhancing resident welfare. This paper presents relevant measures and suggestions to address these challenges.