Energy Efficiency, Ownership Structure, and Sustainable Development: Evidence from China

Abstract

Low energy efficiency and severe environmental pollution are two growing issues haunting China’s fast economic development. Under China’s current development model, economic growth still heavily depends on massive energy input, which makes energy efficiency one crucial topic in order to secure future sustainable development of China. This paper focuses on the unique energy ownership structure of China, and designs and adopts MATLAB programming for optimization solutions of multi-variable constrained nonlinear functions to obtain results that can better reflect China’s energy efficiency and solutions to sustainable development of China. Using this model, this paper conducts an empirical analysis on the impact of difference energy investment behaviors between China’s state-owned entities and non-state-owned business on China’s Total Factor Energy Efficiency (TFEE) and sustainable development from 2003 to 2014. We find that Beijing and Shanghai represent the highest energy efficiency level in China. However, except for the more developed regions in Eastern China, for other provinces in Northeast China, Central China and Western China, the TFEE of energy investment by state-owned and non-state-owned economies are both quite low compared with the optimal level. Based on the above findings from the empirical study and detailed analysis by region, this paper discusses the possible reasons for China’s low TFEE and provides implications and policy recommendations.