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International Journal of Management and Business Development

Open Access Peer Review International
Open Access

The Nexus of Technology, Energy Efficiency, and Sustainable Development in China: An Econometric Analysis

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Dr. Wei Chen 1 , Prof. Anja Schmidt 1 ,
4 School of Economics and Management, Tsinghua University, Beijing, China
4 Institute for Environmental Policy, Technical University of Munich, Munich, Germany

Abstract

Purpose: This paper investigates the dynamic association between technological innovation and energy efficiency in China, a critical factor for achieving national and global sustainable development goals. Against the backdrop of China's rapid economic growth and increasing environmental pressures, this study aims to quantify the long-run and short-run relationships of technology with energy efficiency, alongside other key macroeconomic determinants, including economic growth, urbanization, trade openness, and financial development.

Design/methodology/approach: The study utilizes annual time-series data for China from 1990 to 2023. To analyze the complex relationships among the variables, the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration is employed. This method is robust for small sample sizes and allows for variables with mixed orders of integration. Long-run coefficients, short-run dynamics via an Error Correction Model (ECM), and model stability are rigorously tested.

Findings: The empirical results confirm the existence of a long-run cointegrating relationship among the variables. Technological innovation is found to have a statistically significant and robust negative association with energy intensity, suggesting its crucial role in enhancing energy efficiency. Economic growth and urbanization are identified as primary factors linked to increased energy intensity. Conversely, trade openness and financial development are associated with improvements in energy efficiency. The ECM results indicate a stable and moderate speed of adjustment towards long-run equilibrium after a short-run shock.

Originality/value: This study contributes to the literature by providing updated empirical evidence on the technology-energy efficiency nexus in China using a comprehensive ARDL framework. The findings offer granular policy insights for decoupling economic growth from energy consumption, emphasizing the need for targeted investments in green R&D and sustainable infrastructure to advance China's sustainable development agenda.

Keywords

Energy Efficiency, Energy Intensity, Technological Innovation

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