Factor substitution, diversified sources on biased technological progress and decomposition of energy intensity in China's high-tech industry

On the path to industrialization, the energy and environmental problems caused by the rapid growth of the manufacturing industry have attracted widespread attention. At the top scale of technological innovation, high-tech manufacturing is considered to have achieved a balance between the “Made in China 2025” strategy and energy conservation. Therefore, in this paper, we explore inter-factor substitution and the influence of different sources of technological progress on China's high-tech industries using an estimation model that incorporates a translog cost function and the ‘panel seemingly unrelated regression’ method. Changes in energy intensity are further decomposed into different causes including budget, output, factor substitution, and technological progress at various points throughout the period under study. The empirical findings show Morishima substitutions among three different input factors. The substitution elasticity between labor and energy is the highest, and further most sources of technological progress are biased toward saving energy. Technological progress and budget are the critical driving forces throughout the period. However, the effect of factor substitution has gradually increased in recent years. From a regional perspective, energy intensity in the Beijing-Tianjin-Hebei region shows the most apparent decline, while the smallest decline occurs in China's western region.