Predicting the future of China's energy demand in terms of directed technological change

Abstract: With double-digit economic growth, mounting consumer demand and being roused industry potentialities, China’s ascendancy has been marked “the start of a new age in the history of energy.” Understanding the impacts of technological change and diffusion in a large carbon-intensive country like China is essential for getting acquainted with the future trajectory of global energy demand. In this paper, we examine the evolution of long-run energy demand owing to directed technological change (DTC) and predict the future behaviour of the energy demand in China by setting up a theoretical model of DTC with two inputs, energy and labour, and interactional factoraugmenting knowledge, then simulating the model with data about China since 1980. The modelling of knowledge stocks help us to acquire a new understanding of the interaction among energy, technological change and economic growth.