Rising energy-economic inequality in China and its determinants: A domestic value chain decomposition approach

Abstract

Interregional energy cooperation, exemplified by China's west-to-east electricity and gas transmission projects, plays crucial roles in safeguarding energy security and promoting economic growth. However, imbalanced energy-economic flows in domestic trade could undermine these collaborative efforts. This study investigates energy-economic inequality (EEI) associated with domestic trade, defined as the uneven distribution of energy costs and economic benefits across regions, and its determinants, using a domestic value chain (DVC) decomposition within a multi-regional input-output framework. The results show that: (1) Both energy consumption and value-added embodied in three DVC components (i.e., traditional, simple, complex DVCs) have steadily increased, highlighting substantial energy and economic transfers from resource-dependent inland regions to affluent coastal regions; (2) The national EEI index has demonstrated sustained growth, rising by 134.25 % between 2012 and 2020, with accelerated growth (81.16 %) occurring during 2017–2020. This upward trend was most pronounced within the complex DVC, with the greatest mutual EEIs observed between industrialized provinces (e.g., Beijing, Zhejiang, Guangdong) and resource-rich provinces (e.g., Qinghai, Ningxia); (3) Rising mutual EEIs between 2012 and 2020 were primarily driven by interregional disparities in energy efficiency and production structure. For specific DVC pathways, the EEI in the traditional DVCs was mainly influenced by final demand structure effects, while those in simple and complex DVCs were determined by production structure effects. This study offers a methodological framework for future research on environmental and economic inequalities based on DVC decomposition and provides insights for policymakers seeking to mitigate EEI through coordinated efforts within DVCs.