Empirical study of the economic growth and energy consumption risk in China

Using co-integration analysis, Granger causality test, and error correcting model, the dependent relation between the amount of China energy consumption and gross domestic product was checked. In the further step, an analysis was made to prove the correlation between different industry economic growth and energy consumption in China. An evidence-based study showed that co-integration relation exists between the gross of China energy consumption and the GDP, and the two variables possess bi-directional causality. The energy consumption for the secondary industry has a markedly stimulative effect. This paper also explained the short-term behavior of energy demands by error correcting model (ECM).