Science of the Total Environment 804 (2022) 149895

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Science of the Total Environment

journal homepage: www.elsevier.com/locate/scitotenv

Does energy efficiency make sense in China? Based on the perspective of

economic growth quality
Boqiang Lin a,b,⁎, Yicheng Zhou a
a
School of Management, China Institute for Studies in Energy Policy, Xiamen University, Fujian, 361005, PR China
b
Innovation Laboratory for Sciences and Technologies of Energy Materials of Fujian Province (IKKEM), Xiamen, Fujian 361101, PR China

H I G H L I G H T S G R A P H I C A L A B S T R A C T

• China's energy efficiency is still low.

• We assess the impact of energy effi-
ciency on economic growth quality.
• The influence of energy efficiency is
nonlinear.
• The upgrading of industrial structure is
the important influencing mechanism.

a r t i c l e i n f o a b s t r a c t

Article history: Whether energy efficiency can significantly improve economic growth quality is an important perspective to un-
Received 14 April 2021 derstand the relationship between energy and economic growth. Based on the provincial data during 2000–2017
Received in revised form 31 July 2021 in China, this study uses the Shepherd energy distance function and entropy weight method to calculate the en-
Accepted 21 August 2021
ergy efficiency and economic growth quality of each province, and investigates the impact of energy efficiency on
Available online 25 August 2021
economic growth quality. The results indicate that energy efficiency does not significantly improve economic
Editor: Deyi Hou growth quality, but there is an obvious U-shaped relationship between energy efficiency and economic growth
quality. The influence of energy efficiency has significant regional heterogeneity. Energy efficiency significantly
increases economic growth quality in the eastern regions but significantly reduces economic growth quality in
Keywords: the central and western regions. Meanwhile, energy efficiency has a positive U-shaped relationship with eco-
Energy efficiency nomic growth quality in the eastern and central regions. Moreover, the upgrading of industrial structure plays
Economic growth quality an important role in the process of energy efficiency affecting economic growth quality. In response to the
Regional heterogeneity above conclusions, this paper puts forward the targeted policy implications to improve China's energy efficiency
The upgrading of industrial structure
and promote high-quality economic development.
© 2021 Elsevier B.V. All rights reserved.

1. Introduction equivalent, accounting for 50.5% of global coal consumption.1 At pres-

Since the reform and opening-up in 1978, China's economy has
achieved rapid growth with an average annual growth rate of more
than 9%, but economic and social development has also brought huge
energy consumption. In 2018, China's energy consumption was 32,735
million tons of oil equivalent, accounting for 23.6% of global energy con-
sumption, of which coal consumption was 1906.7 million tons of oil
⁎ Corresponding author.
E-mail address: bqlin@xmu.edu.cn (B. Lin).
ent, restructuring the clean, green, low-carbon, and environmentally
friendly energy utilization system and improving energy utilization effi-
ciency have become the important content on the current economic de-
velopment. Long-term environmental problems such as haze and
carbon emissions must also be effectively alleviated in the new round
of supply-side structural reform. It is also an institutional arrangement
concerning people's well-being and social progress. Although the
COVID-19 pandemic has reduced global energy consumption and car-
bon emissions in the short term, economic recovery may lead to the

1 1
The Data from Statistical Review of World Energy 2019 (BP). The Data from Statistical Review of World Energy 2019 (BP).

https://doi.org/10.1016/j.scitotenv.2021.149895
0048-9697/© 2021 Elsevier B.V. All rights reserved.
B. Lin and Y. Zhou
retaliatory rebound in energy consumption and carbon emissions
(Wang and Wang, 2020; Q. Wang et al., 2021).
Economic growth is the unity of quantity and quality, the process of
economic growth includes both quantity increase and quality improve-
ment (Kong et al., 2021). China's economic growth pays more attention
to quality development under the background of the new normal, and
the main direction of China's economic growth is to adhere to the devel-
opment idea of quality first and efficiency first. It is necessary to drive
the high-quality development of China's economy by enhancing EFF.
In recent years, the Chinese government has vigorously promoted
high-quality economic development. A high-quality economic system
requires an efficient energy system to support it, which provide a safe
and reliable energy supply for economic development, so improving en-
ergy efficiency has important practical significance for high-quality eco-
nomic development.
The huge consumption of fossil energy determines China's extensive
energy consumption structure and backward energy technologies,
which are rooted in China's low energy efficiency. Inefficient energy
use has become a bottleneck for China's sustainable development. At
the same time, low energy efficiency also restricts the upgrading of in-
dustrial structure. There is a large number of outdated and excess pro-
duction capacity in coal, steel and chemical industries. China faces the
dual pressure of economic growth and environmental protection (Zhu
et al., 2020). In addition, low energy efficiency also causes a large
amount of resources waste. With the economic growth and technolog-
ical development of all countries in the world, some high-income coun-
tries tend to decouple their energy consumption from economic growth
(Wu et al., 2018). Although China's energy efficiency has been improved
under the central government's policy incentives, it lags far behind de-
veloped countries. Thus, it is necessary to discuss the relationship be-
tween energy efficiency (EFF) and economic growth quality (QUAL).
Energy and economic development are closely related, which has al-
ways been the focus of academic attention. From the existing literature,
can energy consumption significantly promote economic growth?
Scholars have not reached a consensus conclusion. One representative
view holds that energy is an essential input to economic growth. As
the increasingly prominent role of energy in the economic develop-
ment, many scholars break through the traditional macroeconomic
growth model to include energy factors into the production function
(Moroney, 1992; Sharma, 2010; Omri, 2013), so as to explore the source
of economic growth. Fang and Chen (2017) used the provincial data of
China and found that a 1% increase in energy consumption would result
in GDP growth by 0.05%, but different types of energy had different im-
pacts on economic growth. Hao et al. (2020) used the VAR model to find
that the lack of energy input would have a significant negative impact
on economic growth. Meanwhile, data from other countries have
found similar findings (Shahbaz et al., 2012; Azam et al., 2015). How-
ever, traditional energy consumption, such as coal and oil, has become
increasingly strained, and environmental pollution and ecological dam-
age caused by it are difficult to maintain sustainable economic develop-
ment. With the increasingly obvious advantages of renewable energy,
the proportion of renewable energy in the energy consumption struc-
ture keeps rising. Many scholars have found that renewable energy con-
sumption can significantly promote economic growth (Lin and
Moubarak, 2014; Wang and Wang, 2020). In addition, a few scholars
also found that EFF can promote economic growth and reduce green-
house gases (Marques et al., 2019).
Another view is that energy consumption has not contributed signif-
icantly to economic growth. Among them, the most typical explanation
is the theory of resource curse. Many scholars find that the dependence
of a country or region on resources will drag down economic growth,
and the economic growth of resource-rich countries or regions will be
slower (Mehrara, 2009; Costa and Santos, 2013; Henry, 2019). The com-
mon explanation is that resource-rich countries and regions are ineffi-
cient in resource allocation through market failure and institutional
destruction, thus crowding out conditions for economic growth, such
2
Science of the Total Environment 804 (2022) 149895
as exports (Sachs and Warner, 2001; Satti et al., 2014). Papyrakis and
Gerlagh (2007) found that the abundance of natural resources reduced
expenditure on education, investment and technology, which was not
conducive to sustainable economic development. China's economic de-
velopment process also supports the resource curse theory. Shao et al.
(2020) found that the prosperity of the resource industry not only
makes labor and capital flow from manufacturing to mining, but also in-
creases the inflation level of local and surrounding regions. Therefore,
the prosperity of the natural resource industry has been bad for the
manufacturing development of China's local and surrounding regions.
Moreover, Song et al. (2020) found that resource-based cities had the
resource curse effect, but non-resource-based cities had the resource
gospel effect.
In addition, some studies have also verified the non-linear relation-
ship between energy and economic growth. Using the data of 19
African countries, Kouton (2019) found that the impact of energy utili-
zation on economic growth is asymmetric and depends on each stage of
the economic cycle. Lee and Chang (2007) used the data of energy con-
sumption in Taiwan from 1955 to 2003 to find that there was an
inverted U-shaped relationship between energy consumption and eco-
nomic growth in Taiwan. Lin and Xu (2020) used China's provincial data
to find that the non-linear relationship between fossil energy abun-
dance and economic growth was significantly different in different re-
gions. Moreover, the non-linear relationship is also subject to some
threshold variables such as government efficiency and energy con-
sumption (Huang et al., 2008; Damette and Seghir, 2018; Chen et al.,
2020). These studies help us to recognize the non-linear relationship
between energy and economic growth.
Many studies have focused on the measurement of EFF. Sun et al.
(2021) evaluated the EFF of 99 countries from 1995 to 2016 and
found that Europe and Central Asia had the highest EFF, followed by
North America, and there was a spatial correlation in EFF among coun-
tries. M. Song et al. (2021) used super-efficiency data envelopment
analysis to measure EFF of China. It found that although China's EFF is in-
creasing, only a few provinces in eastern China reach a high level of EFF,
so China's EFF is relatively low. Chen et al. (2021) evaluated the EFF of
China's manufacturing industry and found that the EFF is generally
low, which is mainly caused by low management efficiency. The differ-
ences in China's natural resource endowments, technological gaps and
economic levels have led to distinctive energy utilization characteristics
in different regions (J. Yu et al., 2019). Therefore, China's EFF has obvious
regional heterogeneity (R. Wang et al., 2021; Cheng et al., 2020), and the
impact of EFF on the QUAL may have regional differences. However, re-
gional heterogeneity is often overlooked when assessing the impact of
EFF, and discussing the heterogeneous impact of EFF on the QUAL can
help policymakers implement differentiated development strategies.
In fact, the improvement of EFF is essentially to maximize the effect
of energy input, optimizing the use efficiency of factor resources. In this
process, factor resources can realize free flow and optimal allocation
among different industries. Therefore, the role of industrial structure
upgrading (INDU) cannot be ignored when discussing the impact of
EFF. Jiang et al. (2021) found that EFF can improve the productivity of
textile and chemical enterprises. Due to the differences in productivity
and growth rates of different industries, energy factors always flow
from low productivity sectors to high productivity sectors. In traditional
resource-based areas with low EFF, local governments may rely on
some heavy industries, which result in difficulties in industrial
restructuring and indirectly affect economic growth (Xie and Zhai,
2020). The improvement of EFF is often accompanied by technological
progress. With the improvement of EFF, more factor resources flow to
industries and departments with higher productivity, providing impe-
tus for industrial development, which is conducive to INDU and improv-
ing QUAL.
There are a lot of studies on the influence of energy input on eco-
nomic growth, but less on EFF. The focus on economic growth is also
more on quantity and speed than quality. In the context of the new
B. Lin and Y. Zhou
normal, how to improve the quality of economic growth is the focus of
academia and policymakers. Based on this situation, this study attempts
to analyze the following problems. Does China's EFF play a positive role
in high-quality economic development? If so, what are the influencing
mechanisms? If not, how does EFF affect QUAL? The explanation of
the above questions can help us to understand the meaning of EFF and
improve QUAL. This paper designs a comprehensive index system on
EFF and QUAL, and uses the Shepherd energy distance function and en-
tropy weight method for evaluation respectively. On this basis, we de-
sign a two-way fixed effect model and mediating effect model to test
the impact of EFF on QUAL, including the influencing mechanisms,
which provides a reference for the subsequent evaluation of the impact
of EFF and the influencing factors of QUAL.
The contribution of this paper mainly includes the following ways.
First, the existing literature mainly analyzes the relationship between
energy and economic growth from the perspective of speed or quantity,
and no consistent research conclusion has been reached. Moreover, the
influence of EFF on QUAL is rarely considered in the existing literature.
This paper provides new evidence for understanding the relationship
between energy and economic growth, and helps deepen the under-
standing of EFF. Second, regional heterogeneity is incorporated into
the research perspective, deeply analyzing the differentiated impact of
EFF on QUAL in different regions. We hope that these findings can pro-
vide a reference for policymakers to formulate targeted macroeconomic
plans. In addition, previous studies often neglected the discussion of the
influence mechanisms. This study verifies that the industrial structure is
an important way for EFF to affect QUAL.
This paper is organized as follows. Section 2 presents the methodol-
ogy and data. Section 3 includes the empirical results and discussion.
Section 4 summarizes the conclusion and some policy suggestions.
2. Methodology and data
2.1. Panel data method
Panel data includes the dual characteristics of time series and cross-
sectional dimensions, which can effectively alleviate the problem of
missing variables and multicollinearity, and provide more information
on dynamic behavior (Pindado and Requejo, 2015; J. Sun et al., 2019).
Meanwhile, the large sample size of panel data can improve the estima-
tion accuracy. Referring to (Liu and Zhang, 2020), Wong et al. (2021),
the benchmark model is shown in Eq. (1):
QUALi,t ¼ α 0 þ α 1 EFF i,t þ α 2 EFF 2i,t þ η⋅Controli,t þ μ i þ νt þ εi,t
Next, referring to Baron and Kenny (1986), we designed the mediat-
ing model to further test the mediating effect of INDU between EFF and
QUAL. Therefore, we use Eqs. (1), (2) and (3) to test whether INDU acts
as a mediating variable.
INDU i,t ¼ β0 þ β1 EFF i,t þ β2 EFF 2i,t þ η⋅Controli,t þ μ i þ ν t þ εi,t
QUALi;t ¼ γ 0 þ γ 1 EF F i;t þ γ2 EF F 2i;t þ γ3 INDU i;t þ η  Controli;t þ μ i
þ ν t þ εi;t
where, QUALi, t denotes the economic growth quality, EFFi, t is the energy
efficiency and INDUi, t represents the industrial structure upgrading.
Controli, t presents the control variables. νt denotes year fixed effects,
μi denotes province fixed effects and εi, t is a random error term.
Besides, α0, β0, γ0 are the constant term. α1, α2 are the estimation
coefficients of EFF on QUAL. β1, β2 are the estimation coefficients of
EFF on INDU. γ1, γ2 are the estimation coefficients of EFF on QUAL after
the introduction of mediating variables, γ3 is the estimation coefficient
of INDU on QUAL. η are the estimation coefficients of control variables,
and i and t represent region and time respectively.
Science of the Total Environment 804 (2022) 149895
2.2. Variables specification
2.2.1. Independent variables
Energy efficiency (EFF) is the independent variable, and we use the
Shepherd energy distance function to calculate it for the following rea-
sons. For one thing, energy efficiency includes single-factor EFF and
total-factor EFF. The measurement method of single-factor EFF is repre-
sented by the energy intensity (Yan, 2015; Lin and Zhu, 2017), total-
factor EFF is the energy utilization efficiency obtained by fully consider-
ing the input of labor, capital, energy. It is not accurate to ignore the con-
tribution of production factors such as capital and labor. For another,
energy efficiency is defined as the ratio between the optimal energy
input and the actual energy input (Hu and Wang, 2006). Compared
with other models, the Shepherd energy distance function does not
need to adjust all inputs at the same time and takes full account of
input, output and current technology, so it is highly discriminant (Lin
and Du, 2015; H. Sun et al., 2019). The specific calculation process is as
follows.
The neoclassical framework regards capital (K), labor (L) and energy
(E) as inputs and GDP (Y) as output, so its production technology Pg can
be expressed as:
P g ¼ fðK, L, E, Y Þ : ðK, L, EÞ canproduce Y g ð4Þ
Referring to Zhou et al. (2012), the Shepherd energy distance func-
tion DE is defined as Eq. (5).
DE ðK, L, E, Y Þ ¼ supfα : ðK, L, E=α, Y Þ ∈ T g ð5Þ
Eq. (5) reflects the maximum possible reduction in energy input
under the production technology framework Eq. (4). In this case, the en-
tire range of EFF index can be defined as Eq. (6).
EFF ¼ 1=DE ðK i , Li , Ei , Y i Þ ¼ min θ ð6Þ
Finally, we use the nonparametric DEA method to calculate the
Shepherd energy distance function, as shown in Eq. (7).
T N
s:t: ∑ ∑ λnt K nt ≤ K nt
t¼1 n¼1
T N
∑ ∑ λnt Lnt ≤ Lnt
t¼1 n¼1
T N ð7Þ
∑ ∑ λnt Ent ≤ θEnt
ð1Þ t¼1 n¼1
T N
∑ ∑ λnt Y nt ≥ Y nt
t¼1 n¼1
λnt ≥ 0
In the process of calculation, capital (K) is represented by the fixed
capital stock of each province, which is measured by the perpetual in-
ð2Þ ventory method. The employment number and energy consumption
of each province are measured by labor (L) and energy (E). The output
is expressed by the actual GDP of each province with 2000 as the base
ð3Þ period. Besides, λnτ is the intensity variables for constructing
metafrontier technologies.
2.2.2. Dependent variables
QUAL is the unity of quantity and quality based on economic growth.
Its connotation and extension are broader than economic growth quan-
tity. Under an effective growth model, high-quality economic growth
should be efficient, sustainable and stable (Kong et al., 2020). Referring
to Chao and Ren (2011), this paper constructs the index framework of
QUAL from the five dimensions: efficiency, structure, stability, sustain-
ability, welfare change, and achievement distribution, as shown in
Table 1. In addition, compared with other measurement methods, the
entropy weight method can effectively avoid data differences caused
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B. Lin and Y. Zhou Science of the Total Environment 804 (2022) 149895

Table 1
Evaluation system of QUAL.

Dimensions Sub-index Basic indicators Proxy variables Attribute

EconomicGrowth Factor productivity Capital productivity GDP/capital +

efficiency
Labor productivity
Production organization efficiency
Economic growth structure Industrial structure
Investment and
consumption structure
Financial structure
Balance of payments
structure
Urban and rural structure
Economic growth stability Output fluctuations
Price fluctuations
Employment fluctuations
Economic growth sustainability Resource consumption
Environmental pollution
Innovation ability
Economic growth welfare change and Welfare change
achievement distribution
Achievement distribution
stock
GDP/number of employees +
Total factor productivity TFP +
Technical efficiency EC +
Technological changes TC +
Industrialization rate Non-agricultural employment/total +
employment
The primary industry compares Primary industry output ratio/primary +
labor productivity industry employment ratio
The second industry compares labor Second industry output ratio/second +
productivity industry employment ratio
The tertiary industry compares Tertiary industry output ratio/tertiary +
labor productivity industry employment ratio
Investment rate Gross capital formation/GDP Moderate
Consumption rate Final consumption expenditure/GDP Moderate
Deposit balance ratio Deposit balance/GDP +
Loan balance ratio Loan balance/GDP +
The proportion of import and Total import and export trade/GDP +
export trade
Binary contrast coefficient The ratio of agricultural and non-agricultural +
labor productivity
Binary contrast index ∣Non-agricultural output value minus the −
proportion of labor∣
Economic volatility ∣Change in economic growth rate∣ −
Consumer price index CPI −
Producer price index PPI −
Unemployment rate Urban registered unemployment rate −
Energy consumption per unit of Energy consumption/GDP −
output
Power consumption per unit of Electricity consumption/GDP −
output
Discharge of industrial wastewater Total industrial wastewater discharge/GDP −
per unit of output
Discharge of industrial gas per unit Total industrial gas waste discharge/GDP −
of output
Discharge of industrial waste solid Industrial solid waste production/GDP −
per unit of output
R&D investment intensity R&D investment/GDP +
Number of patents granted Three types of patent approvals per year +
GDP per capita GDP per capita +
Urban household Engel's coefficient Urban food expenditure/urban consumption −
expenditure
Rural households Engel's coefficient Rural food expenditure/rural consumption −
expenditure
Population mortality Population mortality −
Human capital The average number of education years +
Theil index 2 −
Theil ¼ ∑ððpit =pt Þ  ; ln ;ðpit =pt =zit =zt ÞÞ
i¼1
Workers' share of compensation Workers' compensation/GDP +

Notes: In the calculation process of Theil index, i represents urban and rural areas respectively; z and p represent the total population and total income, respectively.

by subjective weighting and reduce the impact of the extreme value of

data, thus having advantages and wide application (Y. Yu et al., 2019;
1.6 Gong et al., 2021). Therefore, we specifically select 34 specific indicators,
1.4 and use the entropy weight method to assign values after the data are
standardized, and finally weighted to acquire QUAL. The specific calcu-
1.2
lation process is shown in Appendix A.
1 Fig. 1 shows trends in EFF and QUAL in China. EFF in the sample pe-
0.8
riod shows a U-shaped trend, but EFF is still relatively low, about
0.5–0.7. The turning point was roughly in 2006, probably because en-
0.6 ergy intensity reduction was made a mandatory target during the
0.4 11th Five-Year Plan period and included in local government assess-
ments (Shao et al., 2018). Meanwhile, although QUAL has been im-
0.2
proved to some extent, it is relatively stable. This result reflects the
0 Chinese government's economic policy of "pursuing progress while en-
suring stability", and there is still much room for improving QUAL in
China.
Energy efficiency (EFF) Economic growth quality (QUAL)
Fig. 2 reports annual averages of EFF and QUAL for each region. As
can be seen from Fig. 2, there are significant regional differences in
Fig. 1. The variation tendency of EFF and QUAL. EFF and QUAL. However, provinces with high EFF tend to have high

4
B. Lin and Y. Zhou Science of the Total Environment 804 (2022) 149895

1.8 Table 2
1.6 The descriptive statistics of data.
1.4
Variable Obs Mean Std. dev. Min Max
1.2
1 EFF 540 0.5909 0.2536 0.1235 1
0.8 QUAL 540 1.4289 0.0796 1.2757 1.7292
0.6
OPEN 540 0.3112 0.3858 0.0169 1.7215
URB 540 0.5008 0.1521 0.233 0.896
0.4
REGU 540 0.0045 0.0037 0.0004 0.0285
0.2
GOV 540 0.1983 0.0915 0.0689 0.6269
0
HC 540 8.4624 1.0765 5.4383 12.5025
Anhui
Shanxi
Inner-Mongolia

Jilin

Shandong

Guizhou

Qinghai
Hebei

Heilongjiang

Jiangxi
Zhejiang

Ningxia
Beijing

Jiangsu

Fujian

Henan

Hainan
Chongqing

Yunnan
Shaanxi
Gansu
Hubei
Tianjin

Hunan

Sichuan
Guangxi
Shanghai

Guangdong
Liaoning

Xinjiang
RATION 540 2.7136 3.9018 0.2815 30.0482
ADVAN 540 0.4128 0.0841 0.2862 0.8056

Energy efficiency (EFF) Economic growth quality (QUAL)
Fig. 2. Provincial EFF and QUAL on average (2000–2017).
QUAL, and there is an obvious symmetry between EFF and QUAL, such
as Shanghai and Guangdong. In addition, EFF and QUAL have significant
regional heterogeneity, and EFF and QUAL in the eastern region are sig-
nificantly higher. The eastern region has a good industrial base and eco-
nomic strength, and a strong capacity for technological innovation, it
has long been a pacesetter for China's openness, but the economic foun-
dation is relatively weak in the central and western regions. They pay
more attention to the quantity rather than the quality, and the level of
resource utilization is relatively low. It is necessary to further narrow
the gap between regions in the new era.
advancement (ADVAN) of industrial structure (Zhu et al., 2019; Zhang
et al., 2020). RATION measures the resource allocation among different
industries, and ADVAN reflects the evolution of industrial structure
from low level to high level. ADVAN is measured by the added value
of the tertiary industry in the added value of the secondary industry
(Jiang et al., 2020). Referring to Zhu et al. (2019), the calculation equa-
tion of RATION is as shown in Eq. (8), then we take the logarithm of RA-
TION.
!
3
Rationi,t ¼ 1= ∑ yn,i,t jlpn,i,t =lpi,t −1j ð8Þ
n¼1
where, n denotes the industrial sector, yn, i, t denotes the proportion of
the output value of the n industry in GDP, and lpn, i, t denotes the labor
productivity of the n industry.

2.2.3. Control variables 2.3. Data

The control variables introduce trade openness (OPEN), government
intervention (GOV), urbanization (URB), environmental regulation
(REGU), and human capital (HC). The selection of these control variables
refers to Wong et al. (2021). First, we use the share of total import and
export value in GDP (OPEN) as a proxy for openness (Hao et al., 2018).
Trade openness helps to introduce foreign capital and experience,
which generates an obvious technology spillover effect (Lin and Zhu,
2020). China's economic development has also benefited from the op-
portunities brought by economic openness. Second, China is in the
stage of accelerated urbanization. Rapid population concentration and
urban construction may bring serious problems such as energy con-
sumption, environmental pollution and traffic congestion, which may
impose a burden on high-quality economic development. Urbanization
(URB) is expressed as the proportion of the urban population to the total
population. Third, factor supply and resource allocation in China are
more regulated by the government than the market mechanism, and
government intervention may bring serious resource misallocation
and efficiency loss (Tang et al., 2020). This paper uses the proportion
of fiscal expenditure to GDP to measure government intervention (Lin
and Zhu, 2020). Fourth, the Porter Hypothesis holds that environmental
regulation can promote technological innovation, improving the com-
petitiveness and productivity of enterprises (Song et al., 2020; De
Santis et al., 2021), and higher environmental regulation is also condu-
cive to environmental protection. Therefore, environmental regulation
probably contributes to improving QUAL. Environmental regulation
(REGU) is measured by the proportion of industrial pollution control in-
vestment in industrial added value. Fifth, human capital (HC) is an im-
portant driving force for economic growth (Zhang and Wang, 2021),
and the improvement of QUAL cannot be separated from technological
progress and knowledge spillover generated by human capital. In this
paper, the logarithm of the average years of education is used to reflect
human capital (Wang and Lin, 2014).
2.2.4. Mediating variable
The mediating variable is the upgrading of industrial structure
(INDU), specifically including the rationalization (RATION) and
The data adopted in this study includes 30 provinces of China during
2000–2017, excluding Tibet, Hong Kong, Macao, and Taiwan. Appendix
B presents the abbreviations and corresponding full names of variables.
All data are collected from the EPS data platform, China statistical year-
book, China environmental statistical yearbook. The statistical descrip-
tion of the original data is presented in Table 2.
3. Empirical results and discussion
3.1. Correlation analysis
Before the regression analysis, we conduct correlation analysis on
each variable, as shown in Table 3. The results show that most of the cor-
relation coefficients are less than 0.7, indicating that there is a correla-
tion between various variables without considering other factors. In
addition, in order to prevent the estimation error caused by
multicollinearity, we calculate the variance inflation factor (VIF) of
each variable. The results show that the mean value of VIF is 3.35, and
the VIF of each variable is less than 10. Therefore, there is no serious
multicollinearity problem between the variables, and further regression
analysis can be conducted.
3.2. Baseline estimated results
As we can see in Table 4, columns (1) and (2) do not add any control
variables, and columns (3) and (4) add all control variables. According
to the Hausman test results, bidirectional fixed effects are used instead
of random effects. In all cases, the coefficients of EFF are always positive
but has no statistical significance, indicating that the EFF has not signif-
icantly increased QUAL. The reasons may be as follows. First, because
China's energy efficiency is still low and its technology level is relatively
backward, the rapid economic growth comes from a large amount of en-
ergy input rather than efficiency improvement, which leads to serious
environmental pollution and resource waste, and some regions even
fall into the resource curse (Xue et al., 2020), thus failing to significantly

5
 B. Lin and Y. Zhou Science of the Total Environment 804 (2022) 149895

Table 3
Correlation coefficient matrix of the main variables.

Variables QUAL EFF GOV OPEN URB REG HC RATION ADVAN

QUAL 1.000
EFF 0.665⁎⁎⁎ 1.000
GOV −0.181⁎⁎⁎ −0.510⁎⁎⁎ 1.000
OPEN 0.771⁎⁎⁎ 0.600⁎⁎⁎ −0.299⁎⁎⁎ 1.000
URB 0.853⁎⁎⁎ 0.553⁎⁎⁎ −0.084⁎⁎ 0.742⁎⁎⁎ 1.000
REGU −0.297⁎⁎⁎ −0.462⁎⁎⁎ 0.172⁎⁎⁎ −0.179⁎⁎⁎ −0.253⁎⁎⁎ 1.000
HC 0.757⁎⁎⁎ 0.409⁎⁎⁎ −0.036 0.495⁎⁎⁎ 0.844⁎⁎⁎ −0.277⁎⁎⁎ 1.000
RATION 0.906⁎⁎⁎ 0.658⁎⁎⁎ −0.280⁎⁎⁎ 0.763⁎⁎⁎ 0.840⁎⁎⁎ −0.275⁎⁎⁎ 0.705⁎⁎⁎ 1.000
ADVAN 0.629⁎⁎⁎ 0.264⁎⁎⁎ 0.148⁎⁎⁎ 0.402⁎⁎⁎ 0.462⁎⁎⁎ −0.080⁎⁎⁎ 0.461⁎⁎⁎ 0.547⁎⁎⁎ 1.000⁎
⁎⁎⁎ p < 0.01.
⁎⁎ p < 0.05.
⁎ p < 0.1.

improve QUAL. For example, China's Shanxi, Inner Mongolia and
Ningxia are rich in coal resources. These regions have long been over-
dependent on coal-dominated industries, and their economic develop-
ment model is not sustainable. Moreover, due to the poor technological
and economic foundation, these regions have lower QUAL. Second,
there is a large gap in EFF between different regions (Cheng et al.,
2020), leading to obvious regional heterogeneity in the impact of EFF
on QUAL, which makes the impact of EFF more complex. With this in
mind, when EFF2 is included in the econometric model, it is found that
EFF is significantly negative while EFF2 is significantly positive, indicat-
ing that there is an obvious U-shaped relationship between EFF and
QUAL. To show the relationship between EFF and QUAL more clearly,
the corresponding curve graph is drawn according to the calculation re-
sults, as shown in Fig. 3. In the case of low EFF, large-scale resources use
may bring an obvious resource curse, which is not conducive to improv-
ing QUAL. Only when EFF reaches a certain level can it improve QUAL. It
is found that the critical point of EFF is 0.722, and 68% of the sample
points are on the left side of the U-shaped curve, while 32% of the sam-
ple points are on the right side of the U-shaped curve. It can be seen that
the EFF in many regions of China is still low and does not play a role in
improving QUAL.
The coefficient of OPEN is significantly positive, indicating that trade
openness can have a significant promoting effect on improving QUAL,
which is similar to the conclusions of Kong et al. (2020). In recent
decades, China's rapid economic growth has benefited from an open
economy, and the trade openness has brought necessary production
factors such as technology and investment to China's economic growth.
The coefficient of GOV is negative, indicating that government interven-
tion decreases QUAL. Economic growth and industrial development are
inseparable from government intervention and macro-control. K. Wang
et al. (2021) found that the government played different roles in differ-
ent stages of economic development. In the context of political incen-
tives and fiscal decentralization, local government intervention may
bring about resource misallocation effects, inhibiting the improvement
of QUAL. The coefficient of URB is significantly negative, indicating
that the urbanization reduces QUAL. Some studies suggest that China's
urbanization may promote industrial development and increase eco-
nomic output (Song et al., 2018; Y. Song et al., 2021), but overall
China's urbanization is fast but the quality is not high. Concomitant re-
source environmental problems and land problems have not been
completely solved (Wang et al., 2020), which may worsen QUAL. The
coefficient of REGU is significantly positive, indicating that environmen-
tal regulation improves QUAL, and verifies the applicability of the Porter
Hypothesis in China. The coefficient of HC is significantly positive, show-
ing that the accumulation of human capital can significantly improve
QUAL. Li et al. (2021) found that human capital in China's industries
and regions had different degrees of resource mismatch. However, the
level of human capital in China is still low at the present stage, and

Table 4
Results of the benchmark model.

QUAL (1) QUAL (2) QUAL (3) QUAL (4)

EFF 0.009⁎ −0.367⁎⁎⁎ 0.005 −0.457⁎⁎⁎

(0.62) (−5.59) (0.38) (−7.39)
EFF2 0.26⁎⁎⁎ 0.317⁎⁎⁎
(5.87) (7.66)
GOV −0.095⁎⁎ −0.123⁎⁎⁎
(−2.55) (−3.48)
OPEN 0.33⁎⁎⁎ 0.055⁎⁎⁎
(3.31) (5.58)
URB −0.42⁎⁎⁎ −0.444⁎⁎⁎
(−9.49) (−10.57)
REGU 1.165⁎⁎⁎ 1.061⁎⁎⁎
(2.83) (2.73)
HC 0.158⁎⁎⁎ 0.157⁎⁎⁎
(3.74) (3.91)
Constant 1.385⁎⁎⁎ 1.5⁎⁎⁎ 1.241⁎⁎⁎ 1.394⁎⁎⁎
(134.72) (68.25) (15.62) (17.93)
Time effects YES YES YES YES
Province effects YES YES YES YES
Hausman-test 26.71 46.79 158.75 174.93
(0.0000) (0.0000) (0.0000) (0.0000)
R-squared 0.5662 0.5946 0.6421 0.6806
Observations 540 540 540 540

Notes: t-statistics in parentheses.

⁎⁎⁎ p < 0.01.
⁎⁎ p < 0.05.
⁎ p < 0.1.

6
 B. Lin and Y. Zhou Science of the Total Environment 804 (2022) 149895

EFF2 is significantly positive, which is consistent with the previous em-

pirical findings. The above analysis proves that the conclusions are ro-
bust.

3.4. Regional heterogeneity

Fig. 3. Regression curve between EFF and QUAL.
the accumulation of human capital can provide the necessary knowl-
edge and skills for high-quality economic development.
3.3. Robustness checks
This paper conducts various robustness checks. First, explanatory
variables are lagged by one period to eliminate the endogeneity prob-
lem caused by reverse causality, as shown in Table 5. The results show
that the coefficient of EFF is still not statistically significant. Meanwhile,
EFF is significantly negative while EFF2 is significantly positive, which
verifies the U-shaped relationship between EFF and QUAL. Second, we
use the instrumental variable method. This study selects the lag one pe-
riod of EFF and EFF2 as the instrumental variable for two-stage least
squares regression (2SLS). The result indicates that the coefficient of
EFF is positive but does not have statistical significance, indicating that
EFF has no obvious impact on QUAL. EFF is significantly negative and
The relationship between EFF and QUAL has been verified previ-
ously, but do these effects exist significant regional differences? Consid-
ering that there are obvious differences in factor endowment and
economic foundation among different regions in China, it is necessary
to incorporate regional heterogeneity into the empirical framework.
The whole sample is divided into three geographical regions: eastern,
central and western (Zhang and Gao, 2016; Hua et al., 2018), and the re-
sults are shown in Table 6.
We find that the coefficient of EFF in the eastern region is signifi-
cantly positive, but the coefficient is significantly negative in the central
and western regions. This result shows that EFF can significantly in-
crease QUAL in the eastern region, but significantly reduces QUAL in
the central and western regions. But in terms of the quantity of eco-
nomic growth, the result may be different. For example, Ouyang and
Li (2018) used the GMM panel VAR model and China's provincial data
to find that the contribution of energy input to economic growth in
the eastern region is less than that in the central and western regions.
This paper offers two explanations. For one thing, the eastern has
good EFF and resource utilization, and better institutional environment
and market competition mechanism. Therefore, EFF can better trans-
form technological progress and advanced productivity, and effectively
support high-quality economic development. However, the energy uti-
lization technology is backward in the central and western regions, the
energy utilization efficiency of is relatively low, which hinders the im-
provement of the quality of regional economic growth. For another,
the industrial structure of the eastern region is dominated by the ter-
tiary industry, with intensive high-tech industries. High-quality eco-
nomic development relies more on the technology spillover brought
by the improvement of EFF, while the industrial structure and energy
consumption of the central and western regions are mainly based on

Table 5
Robustness checks.

Lag one period IV-2SLS

QUAL (1) QUAL (2) QUAL (3) QUAL (4)

EFF 0.016 −0.403⁎⁎⁎ 0.016 −0.493⁎⁎⁎

(1.16) (−6.57) (0.89) (−5.48)
EFF2 0.285⁎⁎⁎ 0.352⁎⁎⁎
(6.98) (5.88)
GOV −0.104⁎⁎⁎ −0.124⁎⁎⁎ −0.063⁎ −0.094⁎⁎⁎
(−2.87) (−3.57) (−1.94) (−2.89)
OPEN 0.025⁎⁎ 0.045⁎⁎⁎ 0.018 0.043⁎⁎⁎
(2.55) (4.55) (1.21) (3.04)
URB −0.365⁎⁎⁎ −0.388⁎⁎⁎ −0.397⁎⁎⁎ −0.42⁎⁎⁎
(−8.18) (−9.10) (−4.69) (−5.78)
REGU 1.114⁎⁎⁎ 0.996⁎⁎⁎ 0.701⁎⁎ 0.647⁎⁎
(2.80) (2.63) (2.37) (2.02)
HC 0.132⁎⁎⁎ 0.13⁎⁎⁎ 0.173⁎⁎⁎ 0.175⁎⁎⁎
(3.22) (3.33) (4.14) (4.46)
Constant 1.276⁎⁎⁎ 1.417⁎⁎⁎ 1.486⁎⁎⁎ 1.65⁎⁎⁎
(16.59) (18.66) (14.49) (18.21)
Time effects YES YES YES YES
Province effects YES YES YES YES
Hausman-test 135.72 156.41
(0.0000) (0.0000)
R-squared 0.6480 0.6820 0.9423 0.9493
Cragg-Donald Wald F statistic 1128.141 470.449
Observations 510 510 510 510

Notes: t-statistics in parentheses.

⁎⁎⁎ p < 0.01.
⁎⁎ p < 0.05.
⁎ p < 0.1.

7
 B. Lin and Y. Zhou Science of the Total Environment 804 (2022) 149895

Table 6
Regional heterogeneity results.

Eastern Central West

QUAL (1) QUAL (2) QUAL (3) QUAL (4) QUAL (5) QUAL (6)

EFF 0.064⁎⁎⁎ −0.646⁎⁎⁎ −0.066⁎⁎⁎ −0.53⁎⁎⁎ −0.076⁎⁎ 0.032

(3.44) (−3.89) (−4.34) (−4.87) (−2.19) (0.40)
EFF2 0.458⁎⁎⁎ 0.313⁎⁎⁎ −0.136
(4.30) (4.30) (−1.49)
GOV −0.523⁎⁎⁎ −0.502⁎⁎⁎ 0.185 0.173 0.156⁎⁎⁎ 0.155⁎⁎⁎
(−5.91) (−5.95) (1.44) (1.45) (4.50) (4.47)
OPEN 0.07⁎⁎⁎ 0.083⁎⁎⁎ 0.026 0.007 0.146⁎⁎⁎ 0.158⁎⁎⁎
(6.35) (7.63) (0.44) (0.13) (5.07) (5.30)
URB −0.469⁎⁎⁎ −0.431⁎⁎⁎ −0.228⁎⁎⁎ −0.372⁎⁎⁎ −0.039 −0.042
(−8.42) (−8.02) (−4.02) (−5.95) (−0.43) (−0.46)
REGU 2.572⁎⁎⁎ 2.362⁎⁎⁎ 0.138 0.054 0.542 0.477
(3.35) (3.23) (0.17) (0.07) (1.55) (1.36)
HC 0.123 0.032 0.124⁎ 0.107⁎ 0.161⁎⁎⁎ 0.16⁎⁎⁎
(1.62) (0.42) (1.94) (1.80) (3.85) (3.85)
Constant 1.371⁎⁎⁎ 1.786⁎⁎⁎ 1.251⁎⁎⁎ 1.487⁎⁎⁎ 1.051⁎⁎⁎ 1.034⁎⁎⁎
(8.88) (10.17) (10.40) (11.93) (13.34) (13.03)
Time effects YES YES YES YES YES YES
Province effects YES YES YES YES YES YES
Hausman-test 48.14 52.37 69.64 65.42 11.24 9.11
(0.0000) (0.0000) (0.0000) (0.0000) (0.1284) (0.3334)
R-squared 0.8653 0.8790 0.6668 0.7140 0.7866 0.7895
Observations 198 198 144 144 198 198

Notes: t-statistics in parentheses.

⁎⁎⁎ p < 0.01.
⁎⁎ p < 0.05.
⁎ p < 0.1.

the secondary industry and coal. In particular, there are a number of
energy-intensive industries and heavy industries in central and western
(Chen et al., 2010). At the same time, the central and western regions
are rich in resources, but their economic growth still relies on energy
input rather than EFF. The extensive economic growth model based
on large-scale factor input is still an important way for regional
economic growth in the central and western regions, which can easily
lead to the resource curse effect. In addition, we also find that the coef-
ficient of EFF is significantly positive, while the coefficient of EFF2 is sig-
nificantly negative in the eastern and central regions, and EFF and EFF2
are not significant in the western region. Therefore, the U-shaped rela-
tionship between EFF and QUAL only exists in the eastern and central

Table 7
Influence mechanism results.

RATION (1) QUAL (2) ADVAN (3) QUAL (4)

EFF −1.959⁎⁎⁎ −0.354⁎⁎⁎ −1.595⁎⁎⁎ −0.397⁎⁎⁎

(−3.10) (−6.72) (−2.88) (−6.76)
EFF2 1.361⁎⁎⁎ 0.245⁎⁎⁎ 1.182⁎⁎⁎ 0.272⁎⁎⁎
(3.22) (6.95) (3.19) (6.91)
RATION 0.052⁎⁎⁎
(13.98)
ADVAN 0.038⁎⁎⁎
(7.95)
GOV −1.041⁎⁎⁎ −0.069⁎⁎ −0.394 −0.108⁎⁎⁎
(−2.88) (−2.28) (−1.24) (−3.25)
OPEN 0.138 0.048⁎⁎⁎ −0.042 0.057⁎⁎⁎
(1.35) (5.73) (−0.47) (6.09)
URB −0.402 −0.423⁎⁎⁎ −4.507⁎⁎⁎ −0.273⁎⁎⁎
(−0.94) (−11.90) (−11.97) (−6.07)
REGU 8.622⁎⁎ 0.609⁎ −0.673 1.087⁎⁎⁎
(2.17) (1.84) (−0.19) (2.97)
HC −0.393 0.177⁎⁎⁎ 0.375 0.143⁎⁎⁎
(−0.96) (5.24) (1.04) (3.78)
Constant 1.935⁎⁎ 1.293⁎⁎⁎ 2.5⁎⁎⁎ 1.299⁎⁎⁎
(2.43) (19.55) (3.59) (17.52)
Time effects YES YES YES YES
Province effects YES YES YES YES
Hausman-test 68.05 114.94 112.76 105.11
(0.0000) (0.0000) (0.0000) (0.0000)
R-squared 0.4908 0.7723 0.5274 0.7175
Observations 540 540 540 540

Notes: t-statistics in parentheses.

⁎⁎⁎ p < 0.01.
⁎⁎ p < 0.05.
⁎ p < 0.1.

8
B. Lin and Y. Zhou
regions, while the negative relationship exists in the western regions.
Due to the low level of urbanization and weak economic foundation in
the western region, there is no nonlinear relationship between EFF
and QUAL in the western region, but a simple negative relationship.
3.5. Influencing mechanism test
Theoretical analysis shows that the U-shaped relationship between
EFF and QUAL may be due to the intermediary role of INDU. Table 7
shows the results of the mediating effects model.
First, from the perspective of RATION, the coefficient of EFF is signif-
icantly negative while the coefficient of EFF2 is significantly positive, in-
dicating that there is an obvious U-shaped relationship between EFF and
RATION. The coefficient of RATION on QUAL is significantly positive,
meaning that RATION can improve QUAL. After incorporating RATION,
it is found that the coefficients of EEI and EFF2 decrease (Relative to col-
umns (4) in Table 4), indicating that RATION mediates the influence of
EFF. Second, from the perspective of ADVAN, there is an obvious U-
shaped relationship between EFF and ADVAN. The coefficient of
ADVAN on QUAL is significantly positive, meaning that ADVAN is con-
ducive to improving QUAL. After the inclusion of ADVAN, it is found
that the coefficients of EFF and EFF2 are also decreased (Relative to col-
umns (4) in Table 4), indicating that ADVAN can partially mediate the
influence of EFF. Therefore, INDU plays an important role between EFF
and QUAL.
These results reflect the following typical facts. First, the upgrading
of industrial structure reflects the rationalization and advancement of
industrial structure, including the continuous improvement of produc-
tion efficiency in various industries, which is beneficial to improving
QUAL. The upgrading of industrial structure is the premise of high-
quality economic development, which is similar to the previous re-
search (Y. Song et al., 2021). Second, areas with low EFF are more de-
pendent on industries dominated by energy exploitation, utilization
and processing, and the resource curse effect exists. The development
of the energy industry in many regions also has a crowding-out effect
on non-energy industries (Xu and Xu, 2021), which restrains the ratio-
nalization and advancement of the industrial structure and is not bene-
ficial to improving QUAL. With the improvement of EFF, more energy
elements flow to high-end industries. In this process, the technological
spillover effect of EFF can promote the upgrading of industrial structure
and further improve QUAL.
4. Conclusion and policy implications
Building a green and efficient energy system and improving EFF is
necessary for high-quality economic development in China. Previous
studies analyzed energy consumption and economic growth quantity
but neglected the impact of EFF on QUAL. Using the provincial data in
China, this study attempts to answer the question of whether EFF can
be an important driver of high-quality economic development. We
have the following findings.
Intuitively, EFF may be beneficial to significantly improve QUAL in
China, but there is no empirical evidence directly to support this view.
We find that the positive impact of EFF on QUAL in China has yet to
emerge, but we cannot deny the important role of EFF in China's eco-
nomic growth process. The result may mean that China's EFF is low
enough to support high-quality economic development, and it probably
reflects the existence of a non-linear effect of EFF. On this basis, we find
that there is an obvious U-shaped relationship between EFF and QUAL.
Further analysis shows that there is a large regional gap in EFF and
QUAL. Specifically, EFF and QIAL in the eastern region are higher than
those in the central and western regions, so the impact of EFF on
QUAL varies in different regions. EFF significantly improves QUAL in
the eastern regions, but significantly decreases QUAL in the central
and western regions. In addition, the industrial structure plays an im-
portant role between EFF and QUAL, and EFF can indirectly influence
9
Science of the Total Environment 804 (2022) 149895
QUAL through the rationalization and advancement of the industrial
structure. Therefore, improving EFF not only contributes to increasing
QUAL, but also promotes the upgrading of industrial structure. In
short, from the perspective of high-quality economic development, im-
proving EFF has important practical significance.
Finally, we put forward some policy implications in the following as-
pects.
(1) Government departments should attach great importance to
building a long-term mechanism for energy production and con-
sumption. In terms of energy production, the central government
should increase its input in energy technology progress and en-
ergy conservation industry, and encourage the development of
new energy industry. An efficient energy supply system should
include traditional energy sources, as well as new energy
sources, which promote the continuous optimization of the en-
ergy supply structure. Meanwhile, the energy consumption side
should adjust the energy consumption structure, and constantly
improve EFF.
(2) The focus of China's economic development has changed, so local
governments should pay more attention to the quality of eco-
nomic growth, and include high-quality content such as energy
efficiency and industrial upgrading into the evaluation criteria.
Local governments should formulate corresponding develop-
ment strategies and introduce fiscal, tax and financial policies
to improve EFF, so as to constantly accelerate the upgrading of
the economic development pattern.
(3) China should fully take into account regional characteristics and
realities in formulating policies and development plans. The east-
ern and central regions should play the exemplary role of devel-
oped regions and strengthen exchanges and cooperation among
them. Promoting the improvement of EFF and QUAL in the east-
ern and central regions through regional integration strategies.
The western region should create a sound institutional environ-
ment, strengthen infrastructure construction, consolidate the
foundation of economic development, and provide good external
incentives for high-quality economic development.
The limitations of this paper are as follows. Due to the lack of energy
consumption data at the urban level, preliminary research can only be
conducted at the provincial level. Meanwhile, there are many influenc-
ing channels for energy efficiency, and more theoretical mechanisms
and influencing factors are expected to analyze the relationship
between EFF and QUAL, which also requires some reliable data. Besides,
it is also important to study the impact of energy efficiency on the qual-
ity of manufacturing development. How to construct the index system
of manufacturing development quality is also the future research
direction.
CRediT authorship contribution statement
Boqiang Lin: Conceptualization, Methodology, Software, Data
curation, Writing – original draft. Yicheng Zhou: Methodology, Soft-
ware, Data curation, Writing – original draft.
Declaration of competing interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influ-
ence the work reported in this paper.
Acknowledgements
This paper is supported by Science and Technology Projects of Inno-
vation Laboratory for Sciences and Technologies of Energy Materials of
Fujian Province (IKKEM), No： RD2020060101.
B. Lin and Y. Zhou Science of the Total Environment 804 (2022) 149895

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