Making Sense of China’s Energy Intensity Statistics

Stephen Howes (via Roger Pielke) takes a look at recent Chinese statistics and calls recent Chinese claims to have cut energy intensity by 14.38% from 2005 to 2009 into question. I’ll be the last person to defend the integrity of Chinese government statistics. That said, I think there may be a way to understand the discrepancy – but I don’t think it resolves the fundamental problem.

Howes cites the 2009 Statistical Communiqué as putting 2009 energy consumption at 3.10 billion tons of coal equivalent (tce) and the 2008 Statistical Yearbook as putting 2005 energy consumption at 2.25 billion tce, for a growth of 37.97%. He then cites the 2009 Communiqué as showing Chinese GDP grew 9.6% in 2009 and 8.7% in 2008, and the 2008 Statistical Communiqué as indicating that Chinese GDP grew 13% in 2007 and 11.6% in 2006. This adds up to 50.24% growth from 2005 to 2009. Combining these figures gives an energy intensity improvement of only 8.2%. This strikes me as a completely reasonable calculation.

So what gives? One obvious possibility is the officials are just making stuff up. Another explanation, though, may be that different statistics are using different definitions (or more precisely, normalizations) of GDP.

According to the 2009 Communiqué, nominal Chinese GDP grew from 18,493.7 billion yuan in 2005 to 33,535.3 billion yuan in 2009, a jump of 81.3%, or 16.0% annually. Over the same period, if you combine the CPI changes reported in the Communiqué, you find a total CPI increase of 11.9%. If you use that to normalize GDP, you get a 4-year increase of 62%, equivalent to an annual increase of 12.8%. And if you combine that with the reported increase in energy consumption, you get an intensity reduction of about 14.2% – roughly the same as the number that China has claimed.

Of course, China itself has not reported average GDP growth statistics this large – they’ve reported the ones that Stephen Howes cites. That’s because the GDP deflator they use is not the same as the CPI increase: the first index is (appropriately) based on production, while the second is about consumption. The discrepancy is naturally large in export-intensive economies like China’s.

All of this leads to two questions: First, given that I’m not an economist (nor an expert on Chinese statistics), do my numbers correctly explain (if not justify) the Chinese intensity claims? Second, if they do, is this way of measuring things one that the world should accept? After all, when China says that it’s going to cut emissions intensity by 40-45% from 2005 to 2020, the underlying definitions matter -- and using CPI rather than the standard GDP deflator seems to be defining that goal down.