Economic growth, urbanization and energy consumption — A provincial level analysis of China

Highlights: • Bring the energy consumption, trade, and urbanization factors into the same framework; • Heavy industry has a negative effect on China's economic growth; • Static and dynamic panel model are used together; • The relationship between international trade and economic growth is mixed -- Abstract: As the largest developing country, with fast-paced economic growth, China's development has been characterized by a high degree of energy consumption, high level of heavy industry, international trade and urbanization progress. In this study, we extend the current literature by incorporating urbanization, energy consumption and international trade into a production function using a panel data set model over the period from 2001 to 2012. The results show that urbanization and capital are the major contributors to China's economic growth. Meanwhile, there exists a "U-shaped" relationship between urbanization and economic growth; that heavy industry exerts a significant negative effect on economic growth using system generalized methods of moments (GMM-sys) estimation methods; and the relationship between international trade and economic growth is mixed and no consistent results support the conclusion that the international trade promotes economic growth. Adjusting the industry and trade structure in economic growth is the priority for the policy makers.