Structural decoupling the sectoral growth from complete energy consumption in China

The decoupling between economic growth and energy consumption in China is a major concern for academics and policy-makers owing to China's large economy, tremendous energy consumption, and the fast growth of both, but less to be discussed at the sectoral level. This paper takes advantage of the input-output tables to take an insight into the complete energy consumption of sectors, including both direct and indirect parts in the supply chain, in the Chinese economy during 1995-2015. Combining with Tapio decoupling index and the Log-Mean Divisia Index (LMDI), this study not only evaluates the decoupling status between the complete energy consumption and sectoral economic growth but also reveals factors that cause the changes of decoupling index at the sectoral level. Our results show that China witnessed a common weak decoupling and end up with a strong decoupling for its sectors. The changes in decoupling status mainly occurred during 1996-1998, 2001-2003, and 2011-2013 due to financial crises, international trade growth, and less energy consumption. The production effect is a positive driving factor of the decoupling index, while the energy intensity effect plays a negative role in the decoupling index growth. The energy structure effect is insignificant compared to the production effect and the energy intensity effect. Our results provide some new insights into the decoupling progress between sectoral growth and complete energy consumption where the sectoral differences are emphasized for both theoretical and practical implications.