The effect of industrial structure adjustment on China’s energy intensity: Evidence from linear and nonlinear analysis

Given that the sustainable economic development in China is severely restrained by a rapid increase in energy consumption, an industrial structure adjustment can act as an effective and feasible measure to reduce China’s energy intensity.This study empirically analysed the linear and nonlinear relationships between industrial structure adjustment and energy intensity, using a Chinese provincial panel dataset for 1997–2016. In case of the linear analysis, the regressions suggest that a 1% increase in the tertiary industry’s proportion could lead to an approximately 0.03% decline in energy intensity, whereas a 1% increase in industrial structure optimisation could lead to an approximately 0.02% decline. Unfortunately, the development of high energy-consuming industries has contributed towards an increase in energy intensity. In case of the nonlinear analysis, we used the industrial structure optimisation as a threshold variable in the dynamic threshold panel model. The results indicate that a change in the industrial structure optimisation leads to a change in the relationships among the industrial structure adjustment, technological progress, and energy intensity. This study also shows that the energy intensity in China’s central and western regions has a huge potential downside, through the optimisation of industrial structure. These results provide valuable information for reducing energy intensity from the perspective of industrial structure adjustment.