This book presents some of the major findings from the research project entitled Factors Behind the Fall in China's Energy Intensity conducted by the multi- regional planning research staff at the Massachusetts Institute of Technology (MIT). China reduced the energy intensity of its economy significantly in the 1980s, which was in contrast with the overall trend toward higher energy intensity in many developing countries at similar stages of economic development. Between 1980 and 1990, the growth rate of total primary energy consumption in China was only about half that of the real gross domestic product (GDP). Energy intensity, in grams of standard coal equivalent per renminbi (RMB) of GDP (in 1980 constant prices), decreased by more than 30 percent. The purpose of the project was to explore how this drop in China's energy intensity occurred and to determine major sources of energy savings.
In the project, we combined a quantitative modeling approach with a qualitative policy analysis and studied China's energy-use changes from both macro- and micro-perspectives. We viewed the amount of energy required in an economy as a function of final demand (what final goods and services people consume) and production technology (how those goods and services are produced). The energy consumption of China's economy, for example, will increase if consumers purchase more final goods and services or if they shift their spending patterns from less energy-intensive products, such as services, to more energy-intensive ones, such as durable manufacturing goods. This increase, however, may be moderated or counterbalanced by the introduction of alternative production technologies that reduce the amount of energy input used to produce final goods and services. Our analysis indicated that China's energy savings in the 1980s came primarily from production-technology changes rather than final-demand shifts. We found that the energy efficiency gains in China were the result not only of direct efforts to reduce energy consumption, but more importantly, of the indirect pursuit of other economic goals such as capacity expansion, improved