Understanding Energy Intensity Data in China: Insights from a Preliminary Study

IMGXYZ2838IMGZYXChina’s economy is undergoing significant change, in large part due to the rapid growth of its high-tech industry. As the country has expanded its efforts to accurately report GDP data, a series of revisions to data from prior years has also affected estimates of its energy efficiency. Wang Yanjia of Tsinghua University in Beijing and Howard Gruenspecht, deputy administrator of the U.S. Energy Information Administration (EIA), discussed how economic data affects understandings of China’s efforts to promote energy efficiency and reduce greenhouse gas emissions. William Chandler of Transition Energy moderated.

China’s Changing Economic Measurements

Estimates of China’s GDP have been modified substantially in recent years due to the introduction of a periodic nationwide census. Such revisions in GDP also affect estimates of energy intensity, which is described as energy use per unit of GDP. Accordingly, accurate data on China’s economic growth will enable a better understanding of the country’s energy use.
 

• Different GDP Sources: Prior to 2004, the Statistical Yearbook of China’s National Bureau of Statistics (NBS) was the only source that collected and published GDP data annually. Its information was based on surveys sent to large firms and agencies. To improve estimates of the country’s economy, a census was performed in 2005, to be repeated every four years. Since then, Wang explained, annual GDP data has been recorded in three separate publications every year.
   
• Varying Details: The annual surveys conducted by the NBS employ a technique that uses data from a small sample of businesses or households to extrapolate a national GDP estimate. As a result, many firms—particularly in the service sector—are omitted, Wang said. In contrast, the economic census aims to collect data on the total economic value added by the activities of all existing enterprises. However, the census does not effectively sort the data by sector, leading to substantial differences in estimates. In 2008, for example, China’s Statistical Yearbook indicated there were 138,086 wholesale and retail enterprises creating a revenue of 18.8 trillion RMB, while the census shows the sector had 1,403,000 enterprises and a revenue of 24.7 trillion RMB.
   
• Level of Analysis: The sum of provincial GDP estimates tends to be larger than the national GDP. This has led to disagreement on which estimate should be used for China as a whole. Wang explained that some experts think the NBS-administered national economic surveys are more reliable than those conducted by the provincial bureaus of statistics because the NBS checks provincial GDP using a growth rate derived from data such as tax revenues, electricity consumption, and the sale of goods. The provincial bureaus, on the other hand, do not perform these kinds of cross checks and are likely to count enterprises that conduct business across provincial borders twice.

Problems with Energy Data

The Chinese government has stated that the country is on track to meet its goal of a 20 percent decrease in its energy intensity, a figure determined by the amount of energy consumed divided by the output produced, by the end of 2010. Chandler and Wang noted that the international community remains skeptical of China’s self-reported data, largely due to inconsistent economic metrics and earlier discrepancies in its energy figures.
 

• Revising Energy Consumption: Total energy consumption and production of coal, crude oil, natural gas, and electricity is reported in the same pre and post-census publications as GDP data. The biggest revision was applied to the data from 2000, as energy consumption was adjusted upward by 6.3 percent after the first census in 2005, and adjusted upward another 5.3 percent after the second census in 2009.
   
• Coal Irregularities: Coal data is recorded in three ways: output before census, output after census, and percentage of total value of all exports (TVE). In 2001, the coal TVE showed an improbable 19 percent drop from the previous year, indicating a clear problem with data collection. Data collection also showed unlikely findings that mining activity and capacity in the Shaanxi province declined at the same time that output increased.

Policy Recommendations and Future Outlook

• Rationale for Revisions: While China’s decision to amend and sharpen energy data is positive, it can do a better job in explaining why major changes have been made, Gruenspecht suggested. He cited the example of 1999-2003 energy data, which was initially revised after the first economic census and later significantly altered after the second economic census without explanation. 
   
• Disaggregating Coal Data: Information on non-energy coal use is often neglected and should be a major target for future data refinement, Gruenspecht said. Such information could be coupled with deeper analysis of the carbon and energy content of specific coal sources within China. This would allow Chinese policy makers to better understand which mines and industries have the most significant impact on country-wide efficiency figures.
   
• Coherency Tests: A basic coherency test could be applied to each round of data collection in order to flag large discrepancies, Wang said. These tests could be coupled with a change in collection that would supply more detailed data on actual consumption of individual fuel types within sectors. 
   
• U.S.-China Collaboration: Gruenspecht suggested that constructive dialogue and collaboration between the U.S. and China on energy issues should extend well beyond issues related to greenhouse gas emissions. With world oil markets paying close attention to China’s oil demand, Gruenspecht proposed that China and the United States could share specific information about changes in, rather than levels of, their total fuel stocks, including strategic stocks, without undermining the right of each sovereign state to protect information it deems as sensitive.  All participants expressed optimism that the EIA and China’s National Energy Administration would formalize a new partnership in 2011 as agreed during the May 2010 meeting of the U.S.-China Strategic and Economic Dialogue.