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By applying co-integration analysis,the Granger causality test and an error correction model,the dependency between the energy consumption and the gross domestic product of China was examined.In a further step an analysis was done to establish a correlation between the economic growth of different industries and China’s energy consumption.An evidence-based study showed that a co-integration relationship exists between the gross energy consumption and the GDP of China and that the two variables possess bi-directional causality.The energy consumption for the secondary industry has a markedly stimulative effect to the economic growth.This paper also uses an error correction model(ECM)to explain the short-term behavior of energy demands.
By applying co-integration analysis, the Granger causality test and an error correction model, the dependency between the energy consumption and the gross domestic product of China was investigated. A further step an analysis was done to establish a correlation between the economic growth of different industries and China’s energy consumption. An evidence-based study showed that a co-integration relationship exists between the gross energy consumption and the GDP of China and that the two variables possess bi-directional causality. energy consumption for the secondary industry has a markedly stimulative effect to the economic growth.This paper also uses an error correction model (ECM) to explain the short-term behavior of energy demands.