In developing countries, energy consumption normally grows faster than final economic output. 1 Economic development in the People's Republic of China (China) in the 1980s, however, did not follow this pattern. Between 1981 and 1987, the growth rate of total primary energy consumption in China was only about half that of the gross domestic product (GDP), and energy intensity, in grams of standard coal equivalent per renminbi (gsce/RMB) of GDP (in 1980 constant prices), decreased by almost 22 percent, from 1,273 in 1981 to 996 in 1987 ( Polenske and Lin, 1993). The purpose of this research is to explore how this drop in China's energy intensity occurred and to identify the main factors that were responsible for the energy savings.
Because of rapidly growing energy consumption, energy intensity, measured in terms of an energy-to-final-output ratio, typically increases during the early stage of economic development ( Dunkerley et al., 1981; Leach et al., 1986; Ang, 1987; OTA, 1991; Wu and Dong, 1991). Eden and Posner et al. ( 1981) calculate energy-GDP ratios for many countries and find that such ratios rise at the early stage of economic development, decline slightly with industrial maturity, and then are maintained at a fairly high level. Levine et al. ( 1991) indicate that between 1972 and 1988 energy consumption for the developing countries as a whole grew about 20 percent more than GDP. Schipper and Meyers ( 1992) similarly report that in developing countries for most of the past twenty to thirty years commercial energy consumption increased more rapidly than GDP. Researchers, for example, have documented rising energy intensity in Brazil, Greece, Mexico, and Pakistan ( Samouilidis and Mitropoulos, 1984; Sterner, 1985; Riaz, 1987; Schipper and Meyers, 1992). Imran and Barnes