The fluctuations of China's energy intensity: Biased technical change

The fluctuations of China's energy intensity have attracted the attention of many scholars, but fewer studies consider the data quality of official input-output tables. This paper conducts a decomposition model by using the Divisia method based on the input-output tables. Because of the problems with input-output tables and price deflators, we first produce constant prices to deflate the input-output tables. And then we consider different levels of biased technical change for different sectors in the adjusting the input-output table. Finally, we use RAS technique to adjust input-output matrix. Then the decomposition model is employed to empirically analyze the change of China's energy intensity. We compare the decomposition results with and without biased technical change and do sensitive analysis on the level of biased technical change. The conclusions are that during 2002-2007, except crude oil and refined oil, the energy intensity increased and the changes were mostly attributed to the structural change, while the changes in the production technology actually decreased the energy intensity. Furthermore, compared to the decomposition without biased technical change, the degree of the influence from structural change on the changes in energy intensity depends on the level of biased technical change.