An Empirical Analysis on China’s Energy sector Investments

Abstract

Since the establishment of the People’s Republic of China, the energy sector has been growing for more than 70 years. During the process of industrialization and urbanization, China’s energy sector experienced numerous changes. As the energy sector has been increasingly affecting China’s economic structure, scholars at home and abroad have been constantly working on issues related it. Among them, one of the most important topics is related to investment in the energy sector. It is universally acknowledged that investment plays a fairly important role in improving the development an industry, including the energy sector. In order to analyze the characteristics of China’s investment in its energy sector from both regional and industrial dimensions, an overview of China’s energy sector was conducted and a few factors that could influence its development based on a literature review approach were analyzed. Additionally, an empirical analysis on China’s energy sector investment structure from 2004-2017 using entropy statistics was conducted. Entropy analysis of energy sector investment was performed in both the industrial dimension and the provincial dimension, aiming at providing a scene of energy investment allocation. Based on the entropy analysis of China’s energy sector investment during the period of 2004-2017, a discussion is presented on several factors that have influenced changes in China’s energy investments’ structure such as energy price, environmental regulation, resource endowment, and regional economic development situation. The findings point to 3 different kinds of energy investment portfolios in China, which are resource-based type, economy-based type and mix type. In addition, the energy investment portfolios of each type are affected by different factors in some way.