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The integration of major fuel source markets in China: Evidence from panel cointegration tests

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  • Ma, Hengyun
  • Oxley, Les
Abstract
The paper tests for energy price co-movement in China over the 'new regime' as part of a strategy to test for the existence of a national energy market. Panel cointegration test statistics suggest that not all energy commodities are spatially homogenous in prices and the processes of energy price cointegration are different over time and over groups of fuels. The statistics demonstrate China's gradual, spatially partial and idiosyncratic energy reform process. Coal and electricity price series have co-moved since 2003, while the national panel cointegration test statistics suggest that gasoline and diesel price series have co-moved since 1997. Regional panel tests also show that there are apparently differences in the emergence of energy price co-movement. This suggests that regional energy markets have emerged in China. One of the important lessons of the research is that an energy market has, to some extent, already emerged in China and, as a consequence, energy prices are much less distorted than previously. If correct, this fact is of major global significance both in terms of future environmental effects and future trade and investment negotiations as China is seen internationally as a 'market driven economy'.

Suggested Citation

  • Ma, Hengyun & Oxley, Les, 2010. "The integration of major fuel source markets in China: Evidence from panel cointegration tests," Energy Economics, Elsevier, vol. 32(5), pages 1139-1146, September.
    • Handle: RePEc:eee:eneeco:v:32:y:2010:i:5:p:1139-1146
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    3. Shengbao Ji & Yin-Fang Zhang & Tooraj Jamasb, 2014. "Reform of the Coal Sector in an Open Economy: The Case of China," Cambridge Working Papers in Economics 1445, Faculty of Economics, University of Cambridge.
    4. Mark J. Holmes & Jesús Otero & Theodore Panagiotidis, 2022. "Convergence in retail gasoline prices: insights from Canadian cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(1), pages 207-228, February.
    5. Buus, Tomáš, 2017. "Energy efficiency and energy prices: A general mathematical framework," Energy, Elsevier, vol. 139(C), pages 743-754.
    6. Herrerias, M.J. & Ordoñez, J., 2012. "New evidence on the role of regional clusters and convergence in China (1952–2008)," China Economic Review, Elsevier, vol. 23(4), pages 1120-1133.
    7. He, Yongxiu & Wang, Bing & Wang, Jianhui & Xiong, Wei & Xia, Tian, 2013. "Correlation between Chinese and international energy prices based on a HP filter and time difference analysis," Energy Policy, Elsevier, vol. 62(C), pages 898-909.
    8. Joëts, Marc & Mignon, Valérie, 2012. "On the link between forward energy prices: A nonlinear panel cointegration approach," Energy Economics, Elsevier, vol. 34(4), pages 1170-1175.
    9. Ma, Hengyun & Oxley, Les, 2012. "The emergence and evolution of regional convergence clusters in China's energy markets," Energy Economics, Elsevier, vol. 34(1), pages 82-94.
    10. Marc Joëts, 2012. "Energy price transmissions during extreme movements," Working Papers hal-04141047, HAL.
    11. Zaghdoudi, Taha & Tissaoui, Kais & Maaloul, Mohamed Hédi & Bahou, Younès & Kammoun, Niazi, 2023. "Asymmetric connectedness between oil price, coal and renewable energy consumption in China: Evidence from Fourier NARDL approach," Energy, Elsevier, vol. 285(C).
    12. repec:ipg:wpaper:28 is not listed on IDEAS
    13. repec:ipg:wpaper:2013-028 is not listed on IDEAS
    14. Ryerson, Megan S. & Ge, Xin, 2014. "The role of turboprops in China’s growing aviation system," Journal of Transport Geography, Elsevier, vol. 40(C), pages 133-144.

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