شدت انرژی و سرمایه گذاری مستقیم خارجی: مطالعه در سطح شهر چینی

In this paper we investigate the relationship between the energy intensity of Chinese cities and the location of foreign firms employing a unique dataset of 206 of the largest prefecture-level cities between 2005 and 2008. Our results reveal a non linear inverted-U shaped relationship between energy intensity and city-level per capita income with the majority of cities on the downward slope of the curve. We also find evidence of a significant and negative relationship between the foreign direct investment (FDI) flows into a city and energy intensity. However, this effect varies by geographic location reflecting differences in the ability of regions to absorb and benefit from environmental spillovers. The relatively small economic effect of FDI can in part explained by the propensity for foreign firms to invest in energy intensive sectors coupled with the trend for China to invest heavily in capital intensive industries.

China has experienced rapid economic growth in the last two decades stimulated by significant capital inflows from abroad. China is now one of the largest recipients of foreign investment in the world with inflows of over $95 billion in 2010 (World Development Indicators, 2010). As China has grown so have its energy needs. From 2000 to 2008 China experienced a 70% increase in total energy consumption at 2.91 billion t of standard coal (Chinese National Bureau of Statistics, 2010) and currently accounts for 17.7% of global energy consumption even though it produces just 8% of global output (BP Statistical Review of World Energy, 2011). The first five months in 2011 saw China's imports of oil reaching 55% of consumption, up from 33% in 2009 (Ministry of Industry and Information Technology, 2011). A commonly held view is that China's dependence on imported oil leaves future growth vulnerable to fluctuations in global energy prices and could also be considered an energy security threat. As a result, an important element of China's sustainable development strategy, as evidenced by the recent Eleventh- (2006–2010) and Twelfth- (2011–2015) Five Year Plans, is the management of energy demand and supply. Between 1978 and 2001, when economic growth in China averaged around 9% a year, the demand for energy rose by just 4% a year and energy intensity fell from nearly 400 t of coal equivalent per million RMB to a little over 100 t of coal equivalent per million RMB. However, after 2001 growth in energy demand began to outstrip GDP growth with an average growth rate of 14% a year (Rosen and Houser, 2007).1 Although China's average energy intensity fell between 1980 and 2010 there was a period between 2002 and 2005 when the falling trend was reversed before it again began to fall (albeit at a much slower rate than the period up to 2001). The relatively slow rate of progress on reducing China's energy intensity since 2001 is a concern to China's government given the importance now placed on sustainable development. The lack of progress on reducing energy intensity is despite rapidly increasing household incomes, continued foreign investment and a much greater awareness of the damaging effects of pollution on health and the natural environment.2 One explanation for the slowing rate of energy intensity improvement in the last decade is the increase in demand for automobiles and air conditioners. However, over the same period China experienced a relative shift in its industrial production patterns towards heavy and energy intensive industries such as cement, iron, and steel and aluminum. In 2007 China accounted for 35% of global steel production, 28% of aluminum production and 48% of global cement production (Rosen and Houser, 2007). Even accounting for a dramatic reduction in energy intensity from 1978 to 2001 China still lags behind the international average energy intensity levels for these industries. The World Bank estimates that Chinese steel, cement and ethylene firms use 20%, 45% and 70% more energy than the developed country averages respectively (New York Times, 2007).3 Although certain industries experienced reductions in energy intensity, as a result of technological advances, innovation and the adoption of new technologies, it is the change in industrial composition that has kept China's aggregate energy intensity at such relatively high levels. An important negative externality from China's energy consumption is the environmental damage as a result of increases in the emissions of local and global pollutants. In 2008 China's emissions of sulfur dioxide (SO2) and carbon dioxide (CO2) were the highest and second highest in the world at 23 million and 2.7 billion t respectively.4 Two important determinants of the change in China's industrial structure were the relocation of heavy industry from developed countries and a proliferation of foreign joint ventures in energy intensive industries not just only to satisfy local demand in China but also to serve global export markets where the demand for energy intensive outputs was also increasing. These developments have reopened the debate on the role of foreign firms in China. The motivation of this paper is to understand the relationship between per capita income growth, energy consumption, energy intensity and the role of foreign firms against a background of China's changing industrial structure. Specifically, this paper will allow us to gauge the extent to which foreign direct investment has contributed to changes in China's energy intensity at the national and regional levels. An early approach to understanding the relationship between GDP growth and energy consumption growth was to use a range of decomposition techniques. This literature searches for evidence of decoupling with the expectation that the growth in energy demand plateaus while economic growth continues on an upward trajectory (see e.g. Ma and Stern, 2008, Wang et al., 2005, Wu et al., 2005, Zhang, 2000 and Chen, 2011). According to Fan et al. (2007) in their study of carbon intensity in China between 1980 and 2003 evidence of decoupling is a result of improved energy efficiency in the primary and materials sectors.5 A second, related, literature uses time series country-level data to look at the impact of economic growth on energy consumption. This literature is related to the well known environmental Kuznets curve (EKC) literature (Cole et al., 1997, Dinda, 2004 and Forsten et al., 2012) which describes a non-linear inverted-U shape relationship between per-capita income and per capita emissions or per capita energy consumption (see e.g. Galli, 1998 and Cole, 2006). There are also several studies on the relationship between economic development and environmental quality in China. He (2006) considers the relationship between FDI and the location of firms in Chinese provinces. Cole et al. (2011) investigate the relationship between economic growth and industrial pollution emissions in China using data for 112 major cities between 2001 and 2004 and find that most air and water emissions rise with increases in economic growth at current income levels. He and Wang (2012) analyze the impact of economic structure, development strategy and environmental regulation on the shape of the EKC using a panel of 74 Chinese cities for the period 1990–2001 and find that all three have important implications for the relationship between environmental quality and economic development but that the impact can vary at different development stages. These studies provide empirical evidence for the existence of different slopes for the pollution–income curve. The literature on the effect of foreign firms on energy intensity is limited. A recent exception is Hübler and Keller (2009) who argue that foreign capital and the transfer of energy-saving technologies from developed countries are a possible channel by which the energy intensity of newly industrializing countries can be reduced (based on the productivity-enhancing technology transfer and spillovers literature e.g. Keller, 2004). The hypothesis that multinational enterprises (MNEs) use less energy per unit of output than their domestic counterparts in developing countries is confirmed by a number of firm-level studies. For example, Eskeland and Harrison (2003) and Cole et al. (2008) show that foreign ownership is associated with more energy-efficient production in the former's analysis of manufacturing plants in Cote d'Ivoire, Mexico and Venezuela and the latter's study of Ghana. One explanation is that MNEs utilize more advanced technologies that also tend to be energy-saving whether by design or simply as a positive externality from using newer materials and processes. However, Hübler and Keller's (2009) study of 60 developing countries for the period 1975–2004 fails to confirm that FDI reduced energy intensity in developing countries. One constraint of their study is the failure to employ micro-level data in terms of foreign investment and energy use. Energy intensity is determined by many cultural, political, and constitutional factors that can differ greatly across countries. Our data is ideally suited to a study of this type as it has regional GDP data and energy intensity data not usually available in studies of this type. Studies of the relationship between foreign capital and energy intensity in China are scarce. Nevertheless, there are some studies that focus on the effect of foreign capital on environmental quality in China. He (2006) examines industrial SO2 emissions for 29 Chinese provinces and shows that a one percent increase in FDI inflow increases industrial SO2 emission by 0.098%. The emission increase caused by the positive FDI effect on economic growth and the structural composition of the economy cancels out any emission reductions due to the energy intensity gains from FDI. In a panel study in 112 cities in China, Cole et al. (2011) find that the share of output of domestic- and foreign-owned firms increases several pollutants in a statistically significant manner while output of firms from Hong Kong, Macao and Taiwan (HTM) either reduces pollution or is statistically insignificant. Finally, it is important to note that understanding energy demand and energy efficiency in China is extremely complex and is complicated by a mix of central planning, regional competition, market forces and variable environmental regulation enforcement at the city and prefecture levels. The availability of finance, land allocation and competition between cities and provinces is also part of the explanation with cities often bidding against each other to attract foreign investment whatever the environment costs of implications for energy demand. Visibility is also obscured by security considerations and the secrecy that continues to surround many state-owned enterprises (SOEs). On a related note, the price firms pay for energy is not always transparent with local energy price subsidies which is an additional distortion to the market.6 The contribution of this paper is to investigate the relationship between energy intensity, per capita incomes and the role of foreign firms in China between 2005 and 2008 employing a dataset of 206 prefectural-level cities. The prefectural-level city is an administrative division, ranking below a province but above a county and represents the second level of the administrative structure in China. The benefits of this level of disaggregation are that China's integrated national statistical system provides data of comparable quality for energy intensity and a range of economic variables (He and Wang, 2012). Second, prefectural-level city policymakers are relatively independent and have the power to, for example, implement policies to attract more foreign investment or close down pollution intensive plants. Using data that is regionally disaggregated overcomes problems of heterogeneity experienced by country level studies. However, one caveat is that our prefecture-level energy intensity measure does not just capture urban energy use given any prefecture-level city is made up of a main central urban area (a city usually with the same name as the prefectural level city) and a much larger surrounding rural area that may contain a large number of smaller cities, towns and villages. Unfortunately, China's statistical system does not publish energy use in the main central urban area (Dhakal, 2009). Another highlight of our study lies in that we are able to distinguish between three types of firm ownership: domestic; foreign; and Hong Kong, Taiwan and Macao (HTM) owned in order to better understand the relationship between foreign investment and local energy intensity. Finally, we examine the East, Central and Western regions of China separately. This helps to relate changes in energy intensity to China's eleventh and twelfth five year plans. Our results reveal a non-linear inverted-U shape relationship between energy intensity and per capita income with the majority of cities on the downward sloping slide of the curve. We estimate turning points where possible. Our results also provide evidence of a significant and positive energy-saving effect through FDI although we find considerable differences in regions' ability to absorb and benefit from environmental spillovers from technology transfers. Our results indicate that the positive effect on energy saving from FDI is relatively weak in the East of China but is stronger in the relatively less developed Central and Western regions. Over this period it is likely that any improvements in energy efficiency at the individual industry level were overwhelmed by a shift in the structure of China's economy towards more energy intensive industries The simple explanation would be that while the existing energy intensive industries in a prefecture-level city may well have improved their energy intensity, the overall structure of the city's economy had moved towards the relatively high energy intensive sector (output of these goods increased) and that more than offset industry specific intensity improvements from foreign investment and rising per capita incomes. The rest of the paper is organized as follows: Section 2 provides a brief background review and Section 3 presents a description of the data and our empirical methodology. In Section 4 we present our empirical results and Section 5 concludes.

In this paper we explore the relationship between growth in per capita incomes, FDI and energy intensity employing a unique panel of 206 Chinese prefectural-level cities between 2005 and 2008. This was a period of rapid economic growth and structural change in China. Our empirical results confirm an inverted-U relationship between per-capita income and energy intensity which suggests that the impact of an increase in income differs with the level of regional development. The location of a large majority of our cities for the period 2005 to 2008 is on the downward sloping part of the inverted-U curve which means rising income per capita has the effect of reducing energy intensity. We also find a significant and negative relationship between FDI and energy intensity which our regional studies show is stronger for the West and the Central region. This suggests that the beneficial FDI effect on energy intensity is not uniform across China. The differences across regions are of interest for regional policy makers who are striving to develop the central provinces in the West as part of the Twelfth-Five Year Plan. It is important to link energy policy and policies to attract new overseas investment. While foreign investment appears to have a positive energy intensity reducing effect, the economic significance is relatively small. One reason may be the increasing investment by foreign firms in energy intensive sectors which may be linked to the competition between cities and provinces within China to have national champions in key strategic sectors such as iron and steel and aluminum. The local financing of regional state-owned enterprises, which allows firms to borrow at beneficial rates, has also encouraged the growth of energy intensive sectors in spite of China's relative comparative advantage in labor-intensive products. Finally, the local allocation of land can be used by local government to encourage high profile energy intensive investment that can pay high taxes and allow further local growth. In summary, while foreign investment can have a beneficial effect on energy intensity and alleviate pressure on the energy consumption in China via technology spillovers the result is not as clear cut as one might expect. More promising is our evidence which suggests that increasing income helps enhance the energy efficiency once a city passes a certain level of income. There is a lot that China can do to meet its 2020 targets but the implementation is complicated by the complex mix of central policies, local incentives, market forces and the enforcements of environmental regulations. A closer investigation of these issues is left for future research.