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How global value chain participation affects China's energy intensity
Lafang Wang1, Youfu Yue1, Rui Xie1
1School of Economics and Trade, Hunan University, Changsha, 410079, PR China.
China's global value chain (GVC) participation impacts energy intensity with an inverted U-shaped relationship. While domestic and traditional trade segments have passed critical points, GVC production segments are still evolving toward reduced energy intensity.
Area of Science:
- Economics
- Environmental Science
- Industrial Engineering
Background:
- China is the world's largest energy consumer and a major trading power.
- Increasing complexity of global value chains (GVCs) necessitates understanding their impact on energy intensity.
Purpose of the Study:
- To analyze the influence of GVC participation, measured by production length, on China's manufacturing energy intensity.
- To investigate the non-linear relationships between different segments of GVC production length and energy intensity.
Main Methods:
- Utilized production length to quantify GVC participation, including pure domestic, traditional trade, and GVC activity segments.
- Employed econometric analyses on China's manufacturing sector data from 2000 to 2014.
- Examined the non-linear, inverted U-shaped relationships between production length segments and energy intensity.
Main Results:
- Total GVC activity production length shows a significant inverted U-shaped relationship with energy intensity, with China having surpassed the critical point.
- The pure domestic and traditional trade segments' impact on energy intensity also exhibit an inverted U-shaped curve past the critical point.
- The GVC production segment's impact on energy intensity follows an inverted U-shaped curve but has not yet reached its critical point.
Conclusions:
- Moving China's manufacturing towards the mid-to-high end of GVCs is crucial for reducing energy intensity.
- Addressing captive and "squeezed" positions within GVCs can significantly contribute to energy intensity reduction efforts.
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