Analysis of the Mechanism of Foreign Trade Affecting Energy Consumption: Based on Chinese City Data

The vigorous development of China’s economy and the rapid growth of foreign trade are inseparable from the huge energy consumption. In this paper, the decomposition analysis method is used to decompose the energy consumption growth of 285 prefecture-level and above cities in China from 2004 to 2013 into the scale, composition and technique effects. Based on the decomposition results, the IV method is used to solve the endogenous problem in the impact mechanism of China’s foreign trade on energy consumption growth. It is concluded that there was a significant positive correlation between foreign trade and total energy consumption growth, mainly through positive correlation of the scale effect and negative correlation of the technique effect, and the scale effect plays a leading role, the composition effect is not significant.