The Impacts of Energy Prices on Energy Intensity in China

In this paper, we present a review of the deregulation of energy prices in China between 1981 and 2007, and assess the impacts of changes in energy prices on aggregate energy intensity. We concluded that raising energy prices is an effective policy tool for decreasing energy intensity by increasing efficiency of energy use. According to research, the author suggests that, to save more energy, in addition to optimizing its sectoral structure and technical progress, rising relative energy prices, research and development expenditures, and ownership reform in the enterprise sector to be the principal drivers of China's declining energy intensity and use. Moreover, according to the situation of China, this paper analyzed the mechanism of energy intensity changes and puts forward the government-led energy-saving model.