Quality of Life and Relative Household Energy Consumption in China

• Published date: 01 September 2021
• Author: Xunpeng Shi,Tsun Se Cheong,Jian Yu,Xiaoguang Liu
• Date: 01 September 2021
• DOI: http://doi.org/10.1111/cwe.12390

China & World Economy / 127–147, Vol. 29, No. 5, 2021

127

Legal Statement - This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License,

which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for

commercial purposes.

© 2023 The Authors. China & World Economy published by John Wiley & Sons Australia,

Ltd on behalf of Institute of World Economics and Politics, Chinese Academy of Social Sciences.

*Xunpeng Shi, Principal Research Fellow, Australia–China Relations Institute, University of Technology Sydney,

Australia. Email: xunpeng.shi@uts.edu.au; Tsun Se Cheong (corresponding author), Associate Professor, Department

of Economics and Finance, Hang Seng University of Hong Kong, China. Email: jamescheong@hsu.edu.hk; Jian

Yu, Associate Professor, School of Economics, Central University of Finance and Economics, China. Email:

jianyu@cufe.edu.cn; Xiaoguang Liu, Associate Professor, National Academy of Development and Strategy, Renmin

University of China, China. Email: lxg2015@ruc.edu.cn. This research was supported fi nancially by the National

Natural Science Foundation of China (No. 71828401), the Beijing Social Science Fund Project (No. 19LJB001), the

Program for Innovation Research in Central University of Finance and Economics, and the Beijing Research Center

of the Thought on Socialism with Chinese Characteristics for a New Era (No. 19LLLJA001).

Quality of Life and Relative Household Energy

Consumption in China

Xunpeng Shi, Tsun Se Cheong, Jian Yu, Xiaoguang Liu*

Abstract

Increasing household energy consumption, mainly due to consumption upgrading, will

create tough challenges for China if that country is to achieve peak carbon emissions in

2030 and carbon neutrality in 2060. However, this critical issue has not been explored

comprehensively in the literature. Using China Family Panel Studies data and the

distribution dynamics approach, this article is the fi rst study to examine the relationship

between quality of life (QOL) (proxied by consumption upgrading) and relative household

energy consumption (RHEC). The results show that convergence clubs exist in all QOL

groups for the RHEC, but they are more evident in the groups with lower middle and low

QOL. This is encouraging because they suggest that an improvement in QOL does not

necessarily lead to a higher level of energy consumption. The dataset was then divided

into rural-urban and regional subgroups to further explore the impacts of these diff erent

characteristics on energy consumption. Signifi cant disparities are found among the same

QOL groups between urban and rural households and among different regions. The

results derived from this study lead to pragmatic policy suggestions in areas including

energy saving, emissions reduction, and particularly alleviation of inequality.

Key words: consumption upgrading, distribution dynamics, energy consumption, regional

disparity

JEL codes: C16, O13, P28, Q40

I. Introduction

As an emerging global leader in energy consumption, China has taken many measures

to promote energy saving and to reduce emissions, but relatively fewer policies on

Xunpeng Shi et al. / 127–147, Vol. 29, No. 5, 2021

128

Legal Statement - This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License,

which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for

commercial purposes.

© 2023 The Authors. China & World Economy published by John Wiley & Sons Australia,

Ltd on behalf of Institute of World Economics and Politics, Chinese Academy of Social Sciences.

household energy consumption have been implemented (Hu et al., 2020; J. Zhang et al.,

2020; Yu et al., 2021a). Household energy consumption in China continues to rise

rapidly, accounting for 13 percent of the total fi nal energy consumption in 2019 (NBS,

2021).1 Understanding the dynamics and future evolution of energy consumption is

critical for the formulation of policies toward achieving targets for peak carbon emissions

and carbon neutrality. Although income is a key driving factor of household energy

consumption, the relationship between income and household energy consumption may

not be linear because consumption of necessities and consumption of luxury goods have

very diff erent patterns across diff erent income groups. As household income increases,

people tend to consume more normal goods and less fuel. For example, their demand for

electricity will increase, while their demand for fuel will drop. This will lead to a drastic

change in household energy consumption patterns (Yu et al., 2019; Liao et al., 2021) and

emissions patterns (Schipper, 1989). It calls for further investigation into the link between

quality of life (QOL) and energy consumption in China.

To the best of our knowledge, although many papers focus on lifestyle changes,

energy consumption patterns, and energy consumption structure, there are few studies

focusing on the evolution of consumption upgrading itself. Following Yu et al. (2021b),

consumption upgrading is measured by the consumption upgrading index (CUI).2

Consumption upgrading is a good indicator for measuring QOL as it can refl ect changes

in the ratio of expenditure on non-food items. In general, higher QOL implies more

expenditure on clean energy sources (such as electricity and gas), while a lower QOL

suggests more expenditure on energy sources with high emissions (such as coal), but the

relationship between QOL and household energy consumption is not necessarily linear.

However, the overall consumption pattern may also be affected by the level of

urbanization and by geographical location. Due to the increasing availability of household

survey data, research into household energy consumption and emissions has become more

popular in recent years (Shi et al., 2020; H. Zhang et al., 2020; Zhou and Gu, 2020). Some

papers have focused on the relationship between consumer behavior and energy emissions.

For example, Yuan et al. (2015) and Wang et al. (2019) found that changes in consumption

patterns and urbanization have substantially increased the indirect emissions from China’s

residential sector. H. Zhang et al. (2020) found that lifestyle changes contributed more

to emissions growth than demographic factors. Other studies have shown significant

1Due to data unavailability, energy consumption only includes electricity and fuel, and household heating is

not included. Please refer to Section II for details.

2Yu et al. (2021b) provided the defi nition of consumption upgrading as follows:

consumption upgrading index (CUI) = (total consumption expenditure – the food expenditure + eating out) ÷

total consumption expenditure.