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Keywords

trade liberalization, energy consumption intensity, biased technological progress

Abstract

The relationship between economic development and environmental protection has become increasingly important, with energy consumption playing a crucial role in economic and social development. The 14th Five-Year Plan aims to establish a modern energy system, promote low-carbon energy transformation, and improve energy efficiency, while the 20th National Congress sets up the goal to promote green development and strengthen control over total energy consumption. Despite the ongoing energy revolution, coal consumption in China still exceeds 50% of total energy use, and traditional energy sources are expected to dominate China??s energy consumption structure for a long time. Thus, the study of energy consumption intensity of industrial firms is vital in the current Chinese context. This paper offers a theoretical analysis of how technological progress positively impacts factor efficiency. Specifically, it highlights that neutral technological progress reduces overall demand for factors such as energy while biased technological progress occurs in the relative consumption of factors and relative marginal productivity changes of various factors. This paper focuses on the mechanism of biased technological progress, that is, trade liberalization in final and intermediate goods can alter the relative prices of factors (the relative marginal productivity of factors). This process is influenced by import competition, technological spillovers, technological complementarities, and cost reductions, respectively, and reduces energy consumption intensity by promoting biased technological progress. Using data from the Annual Surveys of Industrial Enterprises in China (ASIEC) dataset and dataset of Pollution Emissions from Industrial Enterprises in China from the National Bureau of Statistics (NBS),the Tariff Facility dataset from World Trade Organization (WTO), and the World Integrated Trade Solution (WITS) dataset from 1998 to 2012, we employ a fixed-effects model to investigate the impact of trade liberalization on energy consumption intensity of industrial firms. Our findings indicate that lower tariff levels significantly reduce the energy consumption intensity of industrial firms, primarily through energy-biased technological growth. The effect of trade liberalization is more pronounced in domestic, non-exporting and low-energy-dependent firms, as well as in technology-intensive industries and regions with advanced marketization and digital economy. The paper further demonstrates that the role of energy-biased technological progress varies across firms, industries, and regions. The effect is more significant in domestic, exporting firms, and low-energy-dependent firms, as well as those in technology-intensive industries and regions with less developed marketization and digital economy. Finally, the conclusions of this study remain valid through a series of robustness tests, including deleting the effect of non-tariff barriers (NTBs), replacing non-energy factor biased technological growth as an alternative path variable, and changing the method to measure the explanatory variables. This study explores how trade liberalization affects energy consumption intensity at the firm level, providing micro-empirical evidence for the broader field of energy consumption research. By introducing the theory of biased technological progress, it links trade liberalization, energy-biased technological progress, and firm-level energy consumption. This study also examines the mechanism of energy-biased technological progress and its heterogeneous effects across different firm types, industries, and regions, with the goal of deepening trade liberalization to improve energy efficiency and promote sustainable development in industrial firms.

DOI

10. 16315 / j. stm. 2024. 06. 010

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