China's Energy in Transition: Regional and Global Implications

China is the largest energy user in Asia and the second largest in the world after the US. This paper documents substantial changes of the structure of China's energy use over the past decades. It explores the puzzling phenomena of China's low gross domestic product elasticity of energy consumption. Econometric analysis applying the AutoRegressive Integrated Moving Average model finds that factors such as institutional reforms and structural change can account for a substantial fraction of the downward impacts on the elasticity level. The paper also studies the future energy growth and energy security issues in China, and examines the regional and global impacts of China's rapidly growing energy consumption.